MANAGING DIRECTOR`S OPERATIONAL REVIEW

Transcription

KEY MILESTONES OF THE FIRST ISLAMIC BANK IN
MALAYSIA
Hizamuddin Jamalluddin
25 Sept 2014
Strictly Private & Confidential
TABLE OF CONTENTS
Birth of Islamic Financial Institutions
Sec 1
History – Establishment of Bank Islam
Sec 2
Islamic Finance in Malaysia
Sec 3
Islamic Finance – Development Phase
Sec 4
Our Journey
Sec 5
Bank Islam Today
Sec 6
Key Financial Highlights
Sec 7
Conclusion – Evolution of Islamic Financial
Landscape
Sec 8
Managing Director’s Office
Page 2
ISLAMIC BANKS TODAY
“…the total global financial assets of the
Islamic financial industry is now estimated
to be more than US$2 trillion” – GIFF2014
Page 3
BIRTH OF MODERN ISLAMIC FINANCE INSTITUTIONS
1975
1977
1975
Mit Ghamr Savings Bank – 1963
Perbadanan Wang Simpanan BakalBakal Haji (Now – Tabung Haji)– 1963
3. Nasser Social Bank -1972
4. Philippine Amanah Bank - 1973
5. Dubai Islamic Bank – 1975
6. Islamic Development Bank – 1975
7. Faisal Islamic Bank Sudan – 1977
8. Faisal Islamic Bank Egypt – 1977
9. Kuwait Finance House –1977
10. Bahrain Islamic Bank - 1979
11. Bank Islam Malaysia Berhad - 1983
1963
1.
2.
1977
1983
Page 4
HISTORY - ESTABLISHMENT OF THE FIRST ISLAMIC BANK IN MALAYSIA
 Bumiputera Economic Congress 1980 - proposed the establishment of an Islamic bank for
the purpose of moving and investing funds of the Malays and Muslims based on the Shariah
principles
 “Seminar Kebangsaan Tentang Konsep Pembangunan Dalam Islam” (National Seminar on
the Concept of Development in Islam) took place at Universiti Kebangsaan Malaysia in
March 1981 had approved of a resolution asking the government to take urgent steps in
drafting a banking act that operates based on Islamic principles
 “Jawatankuasa Pemandu Kebangsaan Bank Islam” (National Steering Committee for
Islamic Bank) was formed in September 1981 to conduct a research on the possibility of an
Islamic Bank in Malaysia. The Steering Committee comprised of 14 members was chaired
by Y.M Raja Tan Sri Mohar bin Raja Badiozzaman with Lembaga Urusan & Tabung Haji
appointed as its secretariat
 On July 5, 1982, the Steering Committee proposed the establishment of an Islamic bank in
Malaysia. The Parliament and the Senate approved the Islamic Bank Act at the end of 1982,
which was then gazetted in 1983.
 Bank Islam Malaysia Berhad was incorporated as a limited company on 1st March 1983. It
began its operation four months later; on July 1, 1983 with its temporary headquarters at
Tingkat 1, Kompleks Jemaah Haji, Jalan 5C/1A, Subang, Selangor with 30 pioneer staff
Page 5
ISLAMIC FINANCE IN MALAYSIA
The first Islamic
financial institution
& Islamic fund
management entity
in the region
1963
The pioneer
Islamic
Commercial Bank
in Malaysia &
South East Asia
1983
The first Islamic
Takaful operator in
the region
1984
The first fullpledged Shariahcompliant stock
broking
1994
Formed to replace
Bank Islam as the
first listed Islamic
financial institution in
the Kuala Lumpur
Stock Exchange
1997
Page 6
ISLAMIC FINANCE - DEVELOPMENT PHASE
Instituting Foundation
• 1970 – 1992 (Establishment of Enabling Infrastructure)
• Islamic Banking Act 1983 – Establishment of Bank Islam Malaysia Berhad
• Merely as an alternative to conventional banking
Institutional Building, Activity Generation & Market Vibrancy
• 1993-2005 (Deepening, Creating Critical Mass & Liberalisation)
• Ensuring greater access to Islamic finance
Strategic Positioning & International Integration with Global Financial System.
• 2006 -2013
• Becoming hub of international Islamic finance
Advancing in Islamic Financing – Well Developed Marketplace
• 2013 onwards
• Islamic Financial Services Act 2013 - Robust Shariah Framework
• Marketplace for Global Linkages
Page 7
OUR JOURNEY – THE FIRST ISLAMIC BANK IN MALAYSIA
 Stand-alone bank
 Focus on product and market development
 Creation of awareness – Customers' education
 Development of technical competencies (30 pioneer staff)
 Building key infrastructure – branch network
 Attract customers with strong conviction
Key Challenges
 Limited capital for expansion
 Limited distribution channel & branches
 Absence on inter-bank money market
 Basic banking products
 Product differentiation
 Learning process
Initial paid up
capital of
RM79.9 mil
10 years - Exclusivity
1983
1993
Instituting Foundation
• Founding Shareholders – Ministry of Finance (RM30 mil), Lembaga Urusan & Tabung Haji (RM10 mil),
Pertubuhan Kebajikan Islam Malaysia – PERKIM (RM5 mil), Majlis-Majlis Agama Negeri (RM20 mil),
Foundation of Religious Affairs (RM3 mil) and Federal Corporations (RM12 mil)
Page 8
OUR JOURNEY – REGULATORY ENVIRONMENT
Banking And Financial
Institution Act 1989
Islamic Money
Market 1994
Interest Free
Banking Scheme
1993
BNM National
Shariah Advisory
Council May 1997
Islamic Banking
Scheme
December 1998
Takaful Act 1984
The Securities
Commission
1993
Islamic Banking
Act 1983
The Central Bank
of Malaysia Act
2009
Legal Redress
Framework
Government
Investment Act
1983
1983
Islamic Financial
Service Act 2013
1984
1993
1994
1997
1998
2009
2013
Page 9
OUR JOURNEY – MARKET DEVELOPMENT
The Parliament
and the Senate
approved the
Islamic Bank Act
(IBA) at the end of
1982, which was
gazetted in 1983
1983
Introduced
interest-free
banking scheme
on March 4, 1993
and Islamic
banking window
1993
Birth of second
full fledged
Islamic bank,
Bank Muamalat
Berhad
1999
Establishment of
Islamic banking
subsidiary
2004
Entrance of
foreign Islamic
banks
2005
Issuance of
international
Islamic
banking
license
2008
2010
Further
liberalization –
entrance of
foreign banks
Page 10
OUR JOURNEY – CORPORATE DEVELOPMENT
2003 Incorporated
its offshore
trust company
1992 - The
first Islamic
financial
institution to
be listed on
Bursa
Malaysia
2001 – Rated
“A” by
Malaysia
Rating
Corporation
1997 - Launched its
corporate website.
Official
commencement
of Bank Islam’s
operation
1984 –
Incorporated
Al-Wakalah
Nominees
Sdn Bhd
July 1983
1984
1993 Established
the first Islamic
Unit Trust
Company
1992
1993
1995 - Bank
Islam Institute
for Research &
Training Sdn
Bhd,
commenced its
operation.
1995
Transfer of listing
status to BIMB
Holdings Berhad
Incorporated Bank
Islam Labuan Ltd
1997
2000Received ISO
9001:2000
certification by
SIRIM for
trade
financing and
bills operation
2000
2001
2003
Page 11
OUR JOURNEY – CORPORATE DEVELOPMENT…CONT
 2003 Launched
its internet
banking
 2004 - First bank
in Malaysia to
offer SMS
banking service
(bankislam.sms)
2003
2004
 2007 –
Embarked on
corporate
rebranding –
“Banking for All”
and branch
remodeling
2007
 2008 –
Opened its
first bureau
de change at
Low Cost
Carrier
Terminal
(LCCT), KLIA
2008
 2009 – Sole
Islamic bank
and only
commercial
bank that was
approved by the
Securities
Commission
under its list of
Principal
Advisers
2009
 2010 –
Acquired
Farihan
Corporation
Sdn Bhd for
Ar Rahnu
business
2010
 2011 –
Established
Amana Bank
Ltd, the first
Islamic bank
in Sri Lanka
2013
Page 12
OUR JOURNEY – BRANCH EXPANSION
… commenced its first year of operations with 4 branches (Kuala
Lumpur, Kuala Trengganu, Kota Baharu & Alor Setar), to-date
Bank Islam has more than 130 branches nation-wide and
targeted to expand to 150 branches by 2015.
Year
No. of
Branches
1983
4
1988
21
1993
32
1998
80
2003
84
2008
89
2013
133
Page 13
OUR JOURNEY – RETAIL MARKETPLACE
 2003 – First bank to offer
zakat payment via ATM &
credit card
1998 – Collaborated
with Yayasan
Pembangunan Ekonomi
Islam to introduce its first
Ar Rahnu business
(Islamic Pawn-broking)
1998
2003
 2008 –
Launched the
first Islamic
structured and
capital
protected funds
– An Najah
NID-i.
 First to
introduce
“Payment
Holiday” feature
in home
financing
 First to
introduce “No
Payment During
Construction”
feature for
house financing
 Introduced
house financing
based on
floating rate
 Launched
Housing Credit
Guarantee
Scheme
2008
 2009 – First
bank to join
effort with
Lembaga
Tabung Haji in
launching
Uniteller
Service which
enables TH
transactions
and Haj
ragistration to
be performed at
any Bank Islam
branches
 Launched AlAwfar, the first
of its kind
account that
offers cash
prizes
2009
 2010 –
Launched the
first mobile
banking service
without internet
access known
as TAP Mobile
Banking-i ,
where account
owners can
perform
banking
transaction
anywhere and
anytime.
2010
 2012 – First
bank to launch
floating rates for
personal
financing
 Launched the
Bank’s first 7Day Banking
Services at
shopping malls
with full range
of services
2012
 2013 – First
implementation
of low cost
electric payment
facility (mPOS)
in collaboration
with VISA
Malaysia as part
of its financial
inclusion
agenda
2013
Page 14
OUR JOURNEY – CARD BUSINESS
 1992 – First bank
in Malaysia to
introduce chipbased ATM
 1992 – Introduced
the first Islamic
credit card
 First card issuer to
implement global
clearing
management
system
in Asia Pacific to
introduce
EMV2000
compliant credit
cards with chipbased system
following the
launch of Bank
Islam
MasterCard
1992
2002
 2003 – First
Islamic Visa
Smart chip Credit
Card in Asia
Pacific
 2005 - First card
issuer and
acquirer in
Southeast Asia to
implement
MasterCard
SecureCode
in Southeast Asia
to introduce an
Islamic Patinum
MasterCard
 2009 – The first
Islamic World
MasterCard-i
Issuer
 2007 – Strategic
partnership with
MEPS and Arta
Jasa of Indonesia
to enables coss
border automated
teller machines
2003
2005
2006
2007
2009
Page 15
OUR JOURNEY – CARD BUSINESS
 2010 – Launched
Bank Islam-UiTM
Platinum Card
with element of
corporate
responsibility
 2010 – Entered
into a strategic
collaboration with
Tune Talk,
Malaysia’s
newest mobile
service operator,
to increase the
subscriber base
of Bank Islam
Card
2010
2010
Bank Islam Debit
Card-i .
2011
 2012 – Unveiled
its Uni-debit
Card, the first
University Debit
Card-I, an
exclusive
multipurpose allin-one card
designed for
students and staff
of university, as
part of initiatives
to promote
cashless society
its Platinum Visa
Credit Card-i and
TruRewards ,
loyalty
programme for
both credit and
debit card
2012
2013
 2013 – VISA
Debit Card
Co-branding with
Harimau Malaya
team
2013
Page 16
OUR JOURNEY – TREASURY SERVICES
 2008 –
Launched
“Commodity
Undertaking ,
Undertaking-i”
an Islamic
option based
product to be
used for asset
liability
management
purpose
 2006 –
Introduced
Wiqa’ Forward
Rate, a
Shariah-based
financial
hedging tool
 2007 –Entered
into the first
Islamic cross
currency swap
agreement
2006
 2009 –
Appointed as a
Principal Dealer
by Bank Negara
Malaysia
 Transacted the
first Islamic
equity option.
 Introduced Bulk
Payment
Foreign
Exchange
transaction
 Launched Ziyad
NID-i , a 5-year
investment
product in the
form of Islamic
Negotiable
Instruments
2007
2009
 2010 –
Launched
Waheed-I, the
first Malaysian
Ringgit fixed
term deposit
based on
Wakalah
contract that
meets
international
Shariah
standards
 Signed a
collaboration
agreement with
Barclays
Capital Market
for
customization
of Islamic
hedging
solution
2010
 2013 –
Appointed as a
Main Banker for
the Government
of Malaysia to
facilitates
payment of
foreign
telegraphic
transfers to
countries
across the
globe.
 2011 –
Enhanced the
Forex
Telegraphic
Transfer which
allow customers
to remit more
than 100
currencies
globally
 2012 –
launched
Islamic Dual
Currency
Investment-i ,
using Wakalahlil-Istithmar
2011
2012
2013
Page 17
OUR JOURNEY – SUKUK MARKETPLACE
 1990 – Lead
Arranger for the
world’s first
bai’bithaman ajil
Islamic debt
securities by
Shell MDS Sdn
Bhd (RM125
mil)
 2001 – Lead
Arranger for the
world’s first
global sukuk
based on ijarah
contract by
Kumpulan Gutrie
Berhad – First
Global Sukuk Inc
(USD150 mil)
1990
2001
 2002 – Comanager for
the first
sovereign
sukuk ijarah
by the
Government
of Malaysia
(USD600 mil)
2002
 2003 – Joint
Lead Arrangers
for the first
tradable sukuk
istisna’ by SKS
Power Sdn Bhd
(RM2.5 bil)
2003
2013
Page 18
OUR JOURNEY – CORPORATE FINANCE
 2009 – Sole
Islamic bank
and only
commercial
bank that was
approved by the
Securities
Commission
under its list of
Principal
Advisers
Commercial
Bank as
Adviser for
equity-linked
transaction –
YSP Southeast
Asia Holdings
Bhd
2009
Islamic bank to
advise al listing
and initial public
offering exercise,
on the Main Board
of Bursa Malaysia
APFT Berhad,
Malaysia’s leading
flight education &
training provider
2011
Page 19
OUR JOURNEY – IT INFRASTRUCTURE
20 14 AMLA System
Developed its
Total Islamic
Banking IT
Platform
2014 New Internet Banking System
2010 Risk Management System
2009-13 Upgraded Core Banking System
20 12 Asset-Liability Management System
2009-10 Financing Collection System
20 12 Financing Origination System
1983
1997
July 2009 to June 2003
May 2010
June 2010
2012
2003
Page 20
OUR JOURNEY – RISK MANAGEMENT
Proactive
Maximise
Earnings
Potential
Active Portfolio Management
Framework
Active
RAPM Framework
Earnings
Stability
Reactive
Loss Minimization/
Risk Control Framework
Protection
Against
Unforeseen
Losses











Economic capital
RAROC
Bank-wide VaR
Incremental VaR
IRB
Full compliance with Pillar 2
 Risk-based product pricing
 Linking risks and returns
 Measuring risk adjusted
performance
 Integration of market, credit
and operational risks
 RMS(market, operational)
Risk Identification
Risk Management/Assessment
Risk Reporting
Processes & Procedures
RMS(datamart, credit risk, Basel II)
Prior to 2009
2010
Increased Risk Management Sophistication
2012
Page 21
OUR JOURNEY – CAPITAL MANAGEMENT
Measurement of risk and required capital under BIS2
Pillar 1 risks
Pillar 2 risks
External factors
Credit risk
Concentration
risk
Stress tests / scenarios
Credit risk data
issues
Country &
transfer risk
BIS1
Model risk
Market risk data
issues
Legal risk
Market Risk
Interest rate risk
bank book
Business planning and
budgeting
ICAAP
Active credit portfolio and
capital management
Risk adjusted performance
management
Business risk
Strategic risks
Risk Issues
Coherence of risks and results
(EL vs LLP)
Risk appetite / capital
management
Liquidity risk
Operational Risk
Integration of risk and capital
in strategic decisions and
planning
Macro-economic risks
Risk based pricing
Finance Issues
Risk governance and control
Roles and responsibilities
•
Supervisory Board
•
Executive Committee
•
Internal audit
•
Risk Department
•
Finance Department
•
Strategic Planning
•
Investor relations
•
Branches
Risk governance
•
Committees
•
Limit system
•
Reporting
•
Escalations
Minimum Standards for risk
•
Independent internal
control
•
Sound risk assessment
•
Risk disclosure
Corporate Governance
Page 22
OUR JOURNEY – INTERNAL AUDIT FRAMEWORK
Source : PwC
Page 23
OUR JOURNEY - SHARIAH GOVERNANCE FRAMEWORK
Establishment
of dedicated
Shariah Audit
Department
BNM
introduced
Shariah
Governance
Framework
Establishment
of Shariah Risk
Management
Establishment
of Shariah
Department
(dedicated
resources)
Shariah
Coordinator
1983
2000
2004
2006
2010
Page 24
ISLAMIC BANKING JOURNEY …CONT
Simple structure to cater for basic needs
1983 - 1990
 Wadiah Current a/c
 Wadiah Savings a/c
 Mudharabah
Investment a/c
 Mudharabah
Financing
 Ijarah Financing
 BBA Financing
 Murabahah LC
 Musharakah LC
 Wakalah LC
 Bai’ Dayn Trade
Finance
 Murabahah
Working Capital
Financing
Customer-driven structure/products
Cost effective structure to compete in
the competitive marketplace
1991 - 2000
2001 - 2005
2006 - 2008
 Sarf Forex
 Mudharabah
Interbank
Investment
 Musharakah
Financing
 Bai Inah Credit Card
 Ar Rahn
 Bai Dayn,
Musharakah ,
Mudharabah ICDO
 Wadiah Debit Card
 Bai Inah Overdraft
 Bai Inah
Commercial Credit
Card
 Bai Inah Personal
Financing
 Bai Inah Negotiable
Instrument of
Deposit (NID)
 Commodity
Murabahah Profit
Rate Swap
 Commodity
Murabahah Forward
Rate Agreement
 Ijarah Rental Swaps-I
 BBA Floating Rate
 Murabahah Floating
Rate
 Istisna’ Floating Rate
 Mudharabah Capital
Protected Structured
Investment
 Bai Inah Floating Rate
NID
 Mudharabah Savings
Multiplier Deposit
 Tawarruq Commodity
Undertaking
Note – This listing is non exhaustive. Although
they have been developed and/or approved,
some products have yet to be rolled out at the
time this presentation was drafted.
2009 Onwards
 Tawarruq Business
Financing
 Tawarruq Personal
Financing
 Murabahah with
Novation
Agreement
 Istisna’ convertible
to Ijarah
 Bai and Ijarah (Sale
& Lease Back)
 Musharakah
Mutanaqisah
 Istisna’ with
Parallel Istisna’
 Wakalah Deposit
 Waqf
 Tawarruq Revolving
Credit-i
 Etc
Page 25
OUR JOURNEY – ORGANIC GROWTH
Financial Performance
Net financing (RM'mil)
23,740.95
Total Assets (RM'mil)
42,836.53
23,559.42
9,061.32
6,890.77
13,717.16
3,061.23
996.47
609.37
161.11
5,018.55
325.53 1,153.731,890.62
1984*
1988
1993
1998
2003
2008
2013^
1984* 1988
1993
1998
2003
2008 2013^
Shareholders’ Funds (RM'mil)
Profit Before Zakat & Taxation
683.02
(RM'mil)
3,329.37
308.27
1,308.95
927.88 1,113.13
130.33
(1.29)
1984*
6.19
26.85
11.53
1988
1993
1998
2003
2008
2013^
78.13
85.75
196.32
1984*
1988
1993
1998
2003
2008
2013^
* Since date of incorporation 1 March 1983 to 30 June 1984 hence 16 months financial period.
^ Financial period of 12 months ending 31 December 2013.
All financial years ended as of 30 June, with the exception of financial years 2010 onwards ending as at 31 December of respective financial years.
Page 26
OUR JOURNEY – BUILDING CAPABILITY
‘
.
.
 Bank Islam Institute for Research & Training Sdn Bhd (BIRT)
Page 27
OUR JOURNEY – ENABLING INSTITUTIONS
‘
.
.
Page 28
BANK ISLAM TODAY
Malaysia’s 1st
Islamic bank
Incorporated on 1 March
1983
Universal
licence
able to offer commercial
and investment banking
activities all under one roof
>4,000 staff
Top 50 Malaysia’s Most
Preferred Employers
Originating Department
Islamic Bank
of the Year by
The Banker in 2013
Primarily a
>135 branches
nationwide with more than
1,200 self-service terminals
Voted
retail bank
with more than 70%
financing driven by
Consumer banking
Page 29
UNIVERSAL LICENSE
Page 30
CPORPORATE STRUCTURE AS AT MARCH 2014
5.11%
54.4%
9.98%
5.05%
60.4%
100%
14.4%
Page 31
GOVERNANCE STRUCTURE
Page 32
BOARD OF DIRECTORS
Page 33
SENIOR MANAGEMENT
Page 34
VISION
TO BE A GLOBAL LEADER IN ISLAMIC BANKING
“Global Leader” is defined as being the ultimate
guidance and source of reference for innovative
Shariah-based products and services
Value-Based Organization
Page 35
NEW BUILDING BLOCKS
TURNAROUND
PLAN
SUSTAINABLE
GROWTH
PLAN
OCT 2006 – JUNE 2009
JULY 2009 – DEC 2012
JAN 2013 – DEC 2015
…in our pursuit to be a “Global Leader in Islamic Banking”
Page 36
TURNAROUND PLAN
Recapitalization &
Balance Sheet
Restructuring
Transformation
Programme
IT
Infrastructure
Revamp
Cost
Rationalization
Human Capital
Development
Page 37
SUSTAINABLE GROWTH PLAN
Business
Innovation
Robust Risk
Management
Strengthening
Enabling
Infrastructure
Building
Capability
& Capacity
Franchise
Development
InIn
organic
Growth &
Corporate
Expansion
Page 38
HIJRAH TO EXCELLENCE PLAN
Robust
Organic
Growth
Service
Excellence
Shariah-led
Innovation
Resource
Optimisation
Employer
of Choice
Regionalisation
Page 39
KEY DRIVERS TO CUSTOMER SATISFACTION
 People
 Basic Shariah knowledge,
Ethics, Islamic values, Courtesy
and etc
 Place/Presentation
 Ambiance, Accessibility,
Branding, Signage, Marketing
etc
 Product
 Value Proposition,
Transparency, Innovative,
Differentiation and etc
 Process
 Paper-work, waiting time,
hassle free, etc
 Price
 Value, Price Option
Page 40
SERVICE DELIVERY/DISTRIBUTION CHANNELS
INTERNET BANKING
BRANCH NETWORKS
CONSUMER BANKING
CENTERS
CORPORATE DESKTOP
BANKING
AR RAHNU OUTLETS
BUREAU DE CHANGE
ELECTRONIC BANKING
CENTERS
SMS BANKING
Page 41
BRANCH NETWORKS
Perlis - 1
Kedah - 11
Pulau
Pinang - 5
Kelantan - 13
Terengganu - 5
Perak - 9
Pahang - 9
Selangor – 26
Kuala Lumpur - 0
Labuan- 1
Negeri
Sembilan -7
Melaka - 4
Johor - 15
Region
Sarawak - 6
Sabah - 5
Total
Central
46
Northern
26
Eastern
27
Southern
26
East Malaysia
12
Total @ 31 Dec 2013
134
Page 42
SELF SERVICE TERMINALS
ATM – 8
CDM – 4
CQM – 1
SP - 1
ATM – 56
CDM –31
CQM – 11
SP - 4
ATM – 33
CDM – 16
CQM – 6
SP - 4
ATM – 67
CDM – 36
CQM – 11
SP - 4
ATM – Automated Teller Machine
CDM – Cash Deposit Machine
CQM – Cheque Deposit Machine
SP – Statement Printer
COIN – Coin Deposit Machine
COIN - 1
ATM – 55
CDM – 20
CQM – 12
SP - 7
CDM – 57
CQM – 28
SP - 10
ATM – 78
CDM - 36
CQM – 14
SP – 7
CDM – 17
CQM – 5
SP - 0
COIN - 1
COIN - 1
ATM -158
ATM – 39
ATM – 39
CDM – 22
CQM – 7
SP - 2
ATM – 32
CDM – 13
CQM – 3
SP - 1
ATM – 31
CDM – 14
CQM – 6
SP -2
ATM – 58
CDM – 27
CQM – 14
SP -4
ATM – 36
CDM – 14
CQM – 7
SP -1
ATM – 2
CDM – 1
CQM – 1
SP - 1
Location type
Branches
IPTA/IPTS
Shopping Centres
Corporate Offices
TH Branches
Petrol Stations
Hospitals
Mosques
Others
Total
ATM
291
119
92
67
40
34
21
15
43
722
CDM
211
19
9
23
29
2
0
10
21
324
CQM
116
4
1
7
0
0
1
0
4
133
ATM – 30
CDM – 16
CQM – 7
SP -3
SP
43
4
2
1
0
0
0
0
1
51
Coin
3
0
0
0
0
0
0
0
0
3
Total
664
146
104
98
69
36
22
25
69
1,233
Page 43
AR RAHNU OUTLETS
Kubang Kerian Outlet
Kota Bharu Outlet
Pasir Mas Outlet
Tanah Merah Outlet
Pasir Puteh Outlet
State
Day 1
1
Kota Bahru
KLN
10 Jun 2010
2
Pasir Puteh
KLN
15 Jul 2010
3
Pasir Mas
KLN
29 Jul 2011
4
Tanah Merah
KLN
28 Jun 2012
5
Kubang Kerian
KLN
11 Jul 2013
6
Kuantan
PHG
24 Aug 2013
7
Sungai Petani
KDH
10 Jun 2013
8
Kuala Treengganu
TGN
21 Aug 2013
9
Alor Setar
KDH
No. Location
Page 44
BUREAU DE CHANGE
Penang International Airport*
Bukit Bintang
BDC
Kota Kinabalu International Airport
Gateway @ KLIA 2
KL Sentral
Contact Pier,
Kuala Lumpur International Airport
.
1
Location
Contact Pier International,
KLIA
State
SGR
Day 1
01 Oct 2010
2
Bukit Bintang
KL
03 Dec 2010
3
Kota Kinabalu International
Airport
SBH
26 Jul 2012
4
Penang International Airport
PNG
1 Feb 2013
5
KL Sentral
KL
13 Sept 2013
6
Setiawalk, Pusat Bandar
Puchong
SEL
21 Nov 2013
7
Swiss Inn, Jalan Sultan
KL
22 April 2014
8
Taman Sri Muda, Shah Alam
SEL
12 May 2014
9
Gateway@KLIA 2
SEL
26 May 2014
Page 45
BUSINESS INNOVATION
2009
2010
2011
2012
2013
Page 46
ACHIEVEMENTS
2010
2011
2012
2013
Page 47
FINANCIAL HIGHLIGHTS
Key Indicators
Actual
June 14
FYE
Dec 13
Islamic
Banking
System
Banking
System
*
15.9%
*
Return on equity (%) - PBT
19.0%
^
21.2%
17.3%
Return on equity (%) - PAT
13.7%
^
15.3%
NA
Return on assets (%) - PBT
1.6%
^
1.7%
1.2%
Return on assets (%) - PAT
1.1%
^
1.2%
NA
Non-fund based income (%)
12.0%
12.6%
8.1%
*
19.2%
*
Gross impaired financing (%)
1.1%
1.2%
1.3%
#
1.8%
#
(Less IA)
0.6%
0.6%
1.0%
#
1.3%
#
(Less IA & CA)
-0.9%
-0.9%
-0.3%
#
-0.1%
#
CASA growth (RM billion)
-RM0.7 billion
RM1.1 billion
RM4.0 billion
#
RM3.7 billion
#
Individual deposits growth (RM billion)
RM0.3 billion
-RM0.0 billion
RM6.1 billion
#
RM20.6 billion
#
14.6%
14.1%
18.9%
#
36.4 %
#
NA
*
1.5%
*
NA
Net impaired financing (%)
Individual Deposits1 to Total Deposits (%)
^
Annualised
* Bank Negara Malaysia Annual Report 2013
# Bank Negara Malaysia Monthly Statistical Bulletin @ June 2014
1
Include foreign individuals
Page 48
FINANCIAL HIGHLIGHTS…CONT
Key Indicators
Actual
June 14
FYE
Dec 13
Islamic Banking
System
Banking
System
PROFITABILITY
52.5%
54.1%
47.4%
*
45.6%
*
Financing to Deposits (%)
70.2%
65.0%
83.1%
#
81.9%
#
CASA to Total Deposits (%)
36.4%
39.1%
25.7%
#
26.3%
#
179.5%
175.8%
126.6%
#
104.4%
#
13.8%
14.0%
15.7%
#
14.8%
#
Cost Income Ratio (%)
EFFICIENCY
ASSET QUALITY
Financing Loss Coverage Ratio (%)
CAPITALISATION
RWCR (%)
PRODUCTIVITY
Profit before tax over average employee (RM‘000)
159.3
^
163.9
164.2
*+
235.5
*
Profit before allowance for impairment over average
employee (RM‘000)
174.6
^
161.2
176.5
*+
254.4
*
Personnel cost per employee (RM‘000)
106.6
^
103.2
57.3
*+
107.5
*
10,110.4
10,072.1
14,285.7
*+
16,192.0
*
Gross financing per employee (RM’000)
6,312.6
5,700.1
9,356.2
*+
9,712.3
*
Deposits per employee (RM’000)
8,987.9
8,763.8
11,497.6
*+
12,103.2
*
Assets per employee (RM’000)
^ Annualised
* Bank Negara Malaysia Annual Report 2013
+ Number of employees is estimated based on the percentage of institution’s Islamic assets
# Bank Negara Malaysia Monthly Statistical Bulletin @ June 2014
Page 49
FINANCIAL HIGHLIGHTS…NET INCOME SPREAD TREND
6.0%
5.0%
5.13%
5.03%
4.0%
3.18%
3.03%
3.0%
2.0%
2.10%
1.85%
1.0%
Average assets rate
Average liabilities rate
Net income spread
As at
Dec
11
5.03%
1.85%
3.18%
As at
June
12
5.26%
1.93%
3.33%
As at
Dec
12
5.23%
1.98%
3.25%
As at
June
13
5.09%
2.11%
2.98%
As at
Dec
13
5.09%
2.13%
2.96%
As at
June
14
5.13%
2.10%
3.03%
Page 50
FINANCIAL HIGHLIGHTS…NET INCOME SPREAD
As at
30 June
2014
As at 31
December
2013
As at 31
December
2012
The above are based on the respective financial institution’s latest financial statements
Page 51
FINANCIAL HIGHLIGHTS - MARKET SHARE OF TOTAL ASSETS
Banking System
Selected Banking Group #
Banking
RM Billion System^
Total
assets
2,125.2
42.9
583.9
323.7
315.7
116.7
6 months
growth
66.9
0.1
23.5
17.9
12.3
(4.4)
% growth
3.3%
0.2%
4.2%
5.9%
4.1%
-3.6%
June 14
2.0%
27.5%
15.2%
14.9%
5.5%
Dec 13
2.1%
27.2%
14.9%
14.7%
5.9%
Market
share
Islamic Banking System
Others
34.9%
AmIslamic
7.4%
PBB-i
8.1%
MBB-i
29.2%
Bank
Islam
9.5%
CIMB-i
10.9%
Others
34.9%
Bank
Islam
2.0%
AmBank
5.5%
CIMB
14.9%
PBB
15.2%
Selected Islamic Banks #
Islamic
Banking
RM Billion System^
Total
assets
MBB
27.5%
453.0
42.9
132.3
49.5
36.8
33.4
6 months
growth
19.5
0.1
7.3
0.0
2.3
0.4
% growth
4.5%
0.2%
5.8%
0.1%
6.6%
1.1%
June 14
9.5%
29.2%
10.9%
8.1%
7.4%
Dec 13
9.9%
28.8%
11.4%
8.0%
7.6%
Market
share
^ based on Bank Negara Malaysia Monthly Statistical Bulletin @ June 2014
# based on latest available financial statements of respective banks
Page 52
FINANCIAL HIGHLIGHTS - FINANCING GROWTH
Growth
↑ 22.9%
Growth
↑ 10.6%
Page 53
FINANCIAL HIGHLIGHTS – MARKET SHARE OF FINANCING ASSETS
RM Billion
Net
financing
Bank
Islam
2.1%
Banking
System^
1,249.5
26.3
368.3
230.4
189.3
84.4
6 months
growth
46.8
2.5
12.7
11.0
3.8
0.9
% growth
3.9%
10.6%
3.6%
5.0%
2.1%
1.1%
June 14
2.1%
29.5%
18.4%
15.1%
6.8%
Dec 13
2.0%
29.6%
18.2%
15.4%
6.9%
Market
share
Others
32.2%
PBB-i
8.0%
MBB-i
31.5%
Bank
Islam
8.8%
AmIslamic
8.1%
CIMB-i
11.4%
Banking System
Others
28.1%
AmBank
6.8%
MBB
29.5%
CIMB
15.1%
PBB
18.4%
Islamic
Banking
RM Billion System^
Net
financing
298.5
26.3
94.0
34.1
24.2
24.0
6 months
growth
20.6
2.5
7.9
(1.0)
1.0
1.1
% growth
7.4%
10.6%
9.1%
-2.9%
4.4%
4.8%
June 14
8.8%
31.5%
11.4%
8.1%
8.0%
Dec 13
8.5%
31.0%
12.6%
8.3%
8.2%
Market
share
Page 54
FINANCIAL HIGHLIGHTS – CUSTOMER DEPOSITS
Growth
↑ 9.5%
Growth
↑ 2.4%
Financing to
Deposits %
51.5%
61.2%
62.7%
65.0%
70.2%
Individual
Deposits* to
Total Deposits %
16.8%
16.2%
14.6%
14.1%
14.6%
Page 55
FINANCIAL HIGHLIGHTS – MARKET SHARE OF DEPOSITS
Banking System
Banking
RM Billion System^
Deposits
1,554.3
38.2
406.5
264.5
225.2
87.6
6 months
growth
41.5
0.9
10.9
13.7
5.0
(0.5)
% growth
2.7%
2.4%
2.8%
5.4%
2.3%
-0.5%
June 14
2.5%
26.2%
17.0%
14.5%
5.6%
Dec 13
2.5%
26.2%
16.6%
14.6%
5.8%
Market
share
Others
38.7%
AmIslamic
6.9%
MBB-i
25.1%
Bank
Islam
10.4%
PBB-i
8.0%
CIMB-i
10.9%
MBB
26.2%
Others
34.2%
Bank
Islam
2.5%
AmBank
5.6%
PBB
17.0%
CIMB
14.5%
Islamic
Banking
RM Billion System^
Deposits
366.4
38.2
92.0
40.1
29.4
25.2
6 months
growth
17.5
0.9
9.0
1.6
1.0
2.5
% growth
5.0%
2.4%
10.9%
4.2%
3.6%
11.1%
June 14
10.4%
25.1%
10.9%
8.0%
6.9%
Dec 13
10.7%
23.8%
11.0%
8.1%
6.5%
Market
share
Page 56
FINANCIAL HIGHLIGHT-LOWER COST OF FUNDING
Page 57
FINANCIAL HIGHLIGHTS – MARKET SHARE OF CASA
RM Billion
CASA
408.4
Banking System
Banking
System^
13.9
145.2
73.1
66.7
6 months
growth
3.7
(0.7)
2.5
1.6
2.6
1.5
% growth
0.9%
-4.5%
1.7%
2.2%
4.1%
8.5%
% to Total
Deposit
26.3%
36.4%
35.7 %
32.5%
25.2%
21.9%
June 14
3.4%
35.6%
17.9%
16.3%
4.7%
Dec 13
3.6%
35.3%
17.7%
15.8%
4.4%
Market
share
RM Billion
Others
27.8%
AmIslamic
6.5%
PBB-i
8.7%
MBB-i
31.3%
CIMB-i
11.0%
Bank
Islam
14.7%
CASA
PBB
16.3%
19.2
AmBank
4.7%
CIMB
17.9%
Bank
Islam
3.4%
Others
22.2%
MBB
35.5%
Islamic
Banking
System^
94.3
13.9
29.5
10.4
8.2
6.1
6 months
growth
4.0
(0.7)
2.6
0.4
0.3
0.8
% growth
4.4%
-4.5%
9.6%
3.6%
3.2%
15.6%
% to Total
Deposit
25.7%
36.4%
32.0%
25.8%
27.8%
24.3%
June 14
14.7%
31.3%
11.0%
8.7%
6.5%
Dec 13
16.1%
29.8%
11.1%
8.8%
5.8%
Market
share
Page 58
FINANCIAL HIGHLIGHTS – CREDIT QUALITY TRENDS
Page 59
FINANCIAL HIGHLIGHTS – ASSET QUALITY
of which Gross Impaired Financing (GIF)
by Business Units:
Page 60
FINANCIAL HIGHLIGHTS – CAPITAL ADEQUACY
RM million
Total Risk-Weighted Assets
Dec 11
16,863
Dec 12
22,466
Dec 13
25,449
June 14
27,488
Page 61
CONCLUSION - EVOLUTION OF ISLAMIC FINANCIAL LANDSCAPE
Banking
Comprehensive
Financial System
Monopoly
Diversity of Players
Windows
Full-Fledged Islamic
Banks
Alternative Banking &
Specific Agenda
National Agenda
Traditional Markets
Non-Traditional Market
… changing financial landscape has accelerated expansion of Islamic finance industry
Page 62
EVOLUTION OF ISLAMIC FINANCIAL LANDSCAPE …CONT
Basic Shariah Principles
(i.e. BBA & Murabaha)
Variety of Shariah Principles
(i.e. Ijarah, Ujrah, Istisna’ etc)
Basic Infrastructure
Comprehensive Infrastructure
Limited Tax Neutrality
Universal Tax Neutrality
“Plain Vanilla” Products
Hybrid & Structured Products
(Investment Accounts)
Domestic/Local Players
Cross-Border /Regional/Global
Players
… wide spectrum of financial products and services to cater the needs of all customers from small
businesses to conglomerates, from common households to high net-worth individuals
Page 63
Commercial Islamic Banks
Mega Islamic Banks
Shariah Compliant Products
Shariah Based Products
Financial Intermediary
Financial & Investment
Intermediary
… increased focus on financial stability
(…strengthened prudential standards focusing on building capital and capital buffers, increased
transparency in financial transactions and exposures)
… evolves to become more diversified and more comprehensive to meet the changing
requirements of the real economy & international connectivity (cross-border transaction)
… accompanied by development of ancillary support services
Page 64
Acts as both, financial intermediary and investment intermediary
1st Leg
Contract under IA :
 Wakalah
 Mudarabah
 Musharakah
Investors
Principal non-guaranteed
Shariah contracts
INVESTMENT ACCOUNT
(Assets ring-fenced to meet
liabilities-account upon winding
up)
2nd Leg
Bank
 As Agent (Wakalah); or
 As Entrepreneur (Mudarabah); or
 As Business Partner (Musharakah)
Venture
Contract between Bank and
business owner
 Equity financing
(Musharakah, Mudarabah)
 Lease-based financing
(Ijarah)
 Sale-based (Murabahah,
Istisna’, Inah)
 Fee based (Wakalah ,
Ujra’))
 Guarantee (Kafalah)
Page 65
Moving Forward - Balance Sheet Structure
Excluded from
calculation of
Statutory Reserve
Requirement
Zero capital charge
for assets tagged
to investment
account
Liabilities
Assets
Demand Deposits
Qard / Wadiah Yad Dhamanah)
(Qard
Financing Assets
(Debt-based : i.e. MPO, IMBT,
Istisna’ Parallel Istisna’, Inah
Equity –based : Mudharabah,
Musharakah, MM)
Term Deposits
(Tawarruq)
Treasury Assets
(Cash, Sukuk, Money Market)
Investment Accounts
(Mudharabah/Wakalah/Musharakah)
Ijarah Assets (Operating lease)
Shareholders’ Funds
Investments
(Subsidiary or Associates)
Inventory
Capital Instruments (Tier I/II Sukuk)
Non-Financial Assets
Page 66
FLAGBEARER OF ISLAMIC BANK
Source : Annual Report Bank Islam
Page 67
Page 68

MANAGING DIRECTOR`S OPERATIONAL REVIEW

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