Financial Highlights 1H 2015 Analyst Briefing by: Dato Sri Zukri - - PowerPoint PPT Presentation

Financial Highlights 1H 2015

Analyst Briefing by: Dato’ Sri Zukri Samat 8 October 2015

TABLE OF CONTENTS

Page 2

BIMB Holdings Financial Results Bank Islam Financial Results

Takaful Malaysia Financial Results

Section 1 Section 2 Section 3

Originating Department Page 3

1H 2015 HIGHLIGHTS

Page 4

Revenue growth from RM1.46 billion to RM1.62 billion or +11.1% YoY (Bank Islam 80% : Takaful Malaysia 20%) PBZT of RM430.2 million or +7.3% YoY Total assets grew from RM53.0 billion to RM55.8 billion (+10.6% annualised) Net financing grew from RM29.5 billion to RM31.1 billion (+10.7% annualised) Gross impaired financing of 1.18% (1.14% in FY2014) in tandem with financing growth Healthy RWCR of 14.3%

1 3 4 5 6 2

588.2 588.9 717.4 819.4 815.4 500 1000 2010 2011 2012 2013 2014

PBZT (RM mil)

342.5 493 600.3 683 701.2 500 1000 2010 2011 2012 2013 2014

PBZT (RM mil)

97.4* 100.7 124.5 177.8 186.3 50 100 150 200 2010 2011 2012 2013 2014

PBT (RM mil)

GROUP KEY PERFORMANCE INDICATORS

Page 5 * Annualised

˜ Bank Negara Malaysia Annual Report 2014

^ Price of RM4.27 as at 30 June 2014 ** Price of RM4.04 as at 30 June 2015 *** Price of RM4.07 as at 31 December 2014

Jun-14 Actual Jun-15 Dec-14 Banking System Return on equity (%) - based on PBT 24.9%* 24.2%* 26.1% 15.2%˜ Return on assets (%) - based on PBT 1.6%* 1.6%* 1.6% 1.5%˜ Cost Income Ratio (%) 56.2% 53.3% 57.6% 45.5%˜ Earnings per share (sen) 16.95 17.26 35.64 NA Net tangible assets per share (sen) 1.95 2.21 1.97 NA Price earnings ratio (time) 16.52^ 11.34** 11.42*** NA Market capitalisation (RM’ billion) 6.38 6.23 6.08 NA

CONSOLIDATED GROUP INCOME STATEMENT

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(RM’ million) 1H 2015 1H 2014 Variance Amount % Total revenue 1,623.8 1,461.5 162.3 11.1% Profit to depositors (499.6) (394.9) (104.7) 26.5% Net income 1,124.2 1,066.6 57.6 5.4% Total operating overheads (599.4) (599.2) (0.2) 0.0% Operating results 524.8 467.4 57.4 12.3% Write-back/(allowance) for impairment on financial assets (56.0) (32.4) (23.6) 72.7% Finance cost from issuance of sukuk (38.6) (33.9) (4.7) 13.7% Profit before zakat and taxation 430.2 401.1 29.1 7.3%

335.3 101.7 350.3 113.5 Bank Islam Group STMB Group 1H 2014 1H 2015

MAJOR PROFIT CONTRIBUTORS

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Prof

• fit

it Bef Befor

• re

e Zaka akat & T & Tax ax (RM RM’ million)

PROFITABILITY TREND

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567.6 717.4 819.4 815.4 430.2 2011 2012 2013 2014 1H 2015 Prof

• fit

it Bef Befor

• re

e Zaka akat & T & Tax ax (RM RM’ million)

+7.3% YoY 1H 2015 Vs 1H 2014

KEY CONSOLIDATED FINANCIAL POSITION ITEMS

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(RM’ million) Jun-15 Dec-14 Variance Amount % Total Assets 55,837.7 53,030.2 2,807.5 5.3%

• f which:

Cash, short-term funds and placements 5,359.6 4,619.5 740.1 16.0% Marketable securities 16,006.4 15,528.7 477.7 3.1% Net financing, advances and others 31,109.6 29,524.6 1,585.0 5.4% Takaful assets 993.1 811.1 182.0 22.4% Deposits from customers 42,967.2 40,678.4 2,288.8 5.6% Deposits and placements of banks and other FIs 37.7 300.0 (262.3)

• 87.4%

Takaful liabilities 6,529.1 6,323.6 268.5 4.2% Sukuk liabilities 1,468.5 1,133.3 335.3 29.6% Equity 3,662.0 3,189.3 472.7 14.8%

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PROFITABILITY

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469.6 597.4 677.3 702.8 350.3 470.1 600.3 683.0 701.2 350.0 2011 2012 2013 2014 1H 2015 Profit

• fit Be

Befor

• re

e Zaka akat & T & Tax ax (RM RM’ million) Group Bank

Group +4.5% Bank +4.3% 1H 2015 vs 1H 2014

KEY FINANCIAL INDICATORS

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Jun-15 Dec-14 Islamic Banking System Banking System Targets PROFITABILITY Return on equity (%) – based on PBT 17.8%* 19.9% 15.5%˜ 15.2%˜ >15% Return on assets (%) – based on PBT 1.5%* 1.6% 1.1%˜ 1.5%˜ Non-Fund Based Income Ratio (%) 10.9% 11.8% 6.0%˜ 18.2%˜ Cost Income Ratio (%) 48.9% 51.9% 45.8%˜ 45.5%˜ ASSET QUALITY Gross impaired financing ratio (%) 1.2% 1.1% 1.2%ˆ 1.6%ˆ <1.5% Net impaired financing ratio – less IA & CA (%)

• 0.8%
• 0.8%
• 0.0%ˆ

0.0%ˆ Financing loss coverage ratio (%) 166.9% 170.4% 101.2%ˆ 97.5%ˆ EFFICIENCY Financing to Deposits (%) 73.3% 73.4% 84.8%ˆ 82.4%ˆ <80% CASA to Total Deposits (%) 33.8% 38.1% 24.8%ˆ 25.8%ˆ

* Annualised ˜ Bank Negara Malaysia Annual Report 2014 ˆ Bank Negara Malaysia Monthly Statistical Bulletin @ June 2015

INCOME STATEMENT

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(RM’ million) 1H 2015 1H 2014 Variance Amount % Total income 1,299.6 1,172.9 126.7 10.8% Profit to depositors (502.1) (398.0) (104.1)

• 26.2%

Net income 797.5 774.9 22.6 2.9% Total overheads (388.2) (406.9) 18.7 4.6% Finance cost (3.3)

• (3.3)
• Profit before allowance for

impairment 406.0 368.0 38.0 10.3% Allowance for impairment on financing and advances (56.0) (32.4) (23.6)

• 72.7%

Profit before zakat and tax 350.0 335.6 14.4 4.3% Zakat (6.0) (4.5) (1.5)

• 32.8%

Tax (96.7) (89.0) (7.7)

• 8.6%

Profit for the period 247.3 242.1 5.2 2.2%

NET INCOME SPREAD TREND

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As at June 13 As at Sep 13 As at Dec 13 As at Mar 14 As at June 14 As at Sep 14 As at Dec 14 As at Mar 15 As at June 15 Average assets rate 5.09% 5.10% 5.09% 5.12% 5.13% 5.16% 5.18% 5.23% 5.23% Average liabilities rate 2.11% 2.11% 2.13% 2.08% 2.11% 2.15% 2.20% 2.41% 2.44% Net income spread 2.98% 2.99% 2.96% 3.04% 3.02% 3.01% 2.98% 2.82% 2.79%

5.09% 5.13% 5.23% 2.11% 2.11% 2.44% 2.98% 3.02% 2.79%

1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5%

Target NIM for FY2015 = >2.75%

ROBUST FINANCING GROWTH

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14,140 19,509 23,741 29,525 31,110 2011 2012 2013 2014 Jun-15 Net et Financing Financing (RM RM' million) million)

↑ RM1.6 billion

Target financing FY2015 = At par with the industry vs 10.7% annualised

GROSS FINANCING BY BUSINESS UNITS

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11,000 14,697 18,238 22,357 23,912 2011 2012 2013 2014 Jun-15 Consu sume mer 1,813 2,454 3,206 4,116 4,394 2011 2012 2013 2014 Jun-15 Comme mmercial rcial 1,501 2,611 2,632 3,518 3,201 2011 2012 2013 2014 Jun-15

Co Corporate

(RM’ million)

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CONSUMER FINANCING DRIVEN BY HOUSE & PERSONAL FINANCING

(RM’ million) Dec -14 Jun-15 Growth Jun-15 vs Dec-14 Amount % House & Fixed Assets financing (HFA) 9,667 10,869 1,202 12.4% Personal financing (PF) 9,436 9,867 431 4.6% Vehicle financing 2,728 2,678 (50)

• 1.8%

Credit card 436 421 (15)

• 3.3%

Ar-Rahnu 90 77 (13)

• 14.6%

Total Consumer Financing 22,357 23,912 1,555 7.0%

90% of PF is Package Financing

90% 10%

Dec 2014

90% 10%

Jun 2015

Package Non-package Personal Financing

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PERSONAL FINANCING: PACKAGE CUSTOMERS

Government 49.8% GLCs 21.0% PLCs 5.7% Oil & Gas 4.8% Education 4.6% Health Industry 0.9% Others 13.2%

Federal 16% State 78% Statutory Bodies 6%

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INITIATIVES TO ENHANCE UNDERWRITING CRITERIA

Bank Islam Responsible Financing Guidelines and Other Institutions 1 Increase minimum income for Non Package customer from RM3,000 to RM3,500 (implemented June 2014) Industry practice ranging from RM1,500 to RM3,500 2 •Capped maximum financing to RM150k

• For mass affluent customers earning RM10k and

above, maximum financing of RM200k

• Industry practice - maximum of RM200k
• Industry practice - for customers earning

RM10k and above, maximum of RM 400k 3 Tightened DSR for customers earning <RM3k from 60% to 50% (implemented in Nov 2014) Results for Jan – Jun 2015:

• For DSR ranging between 41-60%, accounts approved

have reduced to 44% from 60% in 2014

• For DSR ranging below 40%, accounts approved have

increased to 56% from 40% in 2014

• Financial institutions to use prudent DSR

4 Increased net take home pay minimum requirement for applicants (implemented in November 2014): a) Klang Valley from RM1,000 to RM1,250 b) Non Klang Valley from RM750 to RM1,000 To take consideration of customers’ basic needs and subsequently preserve asset quality

• Not industry practice.

Per erson sonal al Fina Financ ncing ing

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HOUSE FINANCING STATISTICS

Bank Islam’s HFA 1 Focus on first time house owners 2 Low exposure on Developer Interest Bearing Scheme

• 0.04% from total number of HFA
• 0.13% from total outstanding HFA

3 No exposure on overseas house financing 4 Gross NPF for HFA 0.97% Net NPF for HFA – 0.07% 5 Average financing size has improved in the last 5 years e.g.: 2010 June 2015 RM100k-RM250k 46% 38% RM250k-RM500k 13% 33% RM500-RM 1mil 2% 11%

SECTORAL ANALYSIS (JUNE 2015)

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Portfolio Top 5 Broad Sector TOS @ June 2015 (RM ‘million) % to Overall TOS

• Commercial
• Corporate
• Investment

Fin, Ins, Real Estate & Business Activities 5,020.20 33.1% Electricity, Gas & Water Supply 2,798.83 18.4% Construction 2,716.32 17.9% Transport, Storage, Communication 1,695.15 11.2% Wholesale, Retail Trade, Restaurants & Hotels 1,011.37 6.7% Total 13, 241.88 87.2%

Top 5 Sectors: Commercial / Corporate / Investment

Note: Exposure to primary agriculture as at June 15 was RM388.72 (2.6%)

31% 23% 20% 69% 77% 80% 2013 2014 Jun-15 Fixed Rate Floating Rate

Fixed vs Floating

43% 48% 50% 57% 52% 50% 2013 2014 Jun-15 Secured Unsecured

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GROSS FINANCING

Secured vs Unsecured

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CUSTOMER DEPOSITS

28,305 32,583 37,272 41,022 43,314 2011 2012 2013 2014 Jun-15 Total l De Deposi sits (RM RM' ' mil milli lion)

+11.2% annualised

↑ RM2.3 billion 12,283 13,426 14,566 15,631 14,640 2011 2012 2013 2014 Jun-15 CA CASA SA (RM’ million)

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ASSET QUALITY

380 309 285 345 375 (24) (131) (216) (244) (251) 2.61% 1.55% 1.18% 1.14% 1.18%

• 0.17%
• 0.67%
• 0.91%
• 0.82%
• 0.81%

Dec-11 Dec-12 Dec-13 Dec-14 Jun-15

Gross Impaired Financing Net Impaired Financing (less IA & CA) Gross Impaired Financing Ratio Net Impaired Financing Ratio

Total Bank Impaired Financing

(RM’ million)

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BRANCH NETWORK

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Perlis 1 Kedah 11 Kelantan 14 Pulau Pinang 5 Perak 9 Pahang 9 Terengganu 6 Selangor 27 N. Sembilan 7 Melaka 5 Johor 16 Sarawak 6 Sabah 6 Labuan 1

Region Total Central 47 Eastern 29 Southern 28 Northern 26 East Malaysia 13 Total @ 31 July 2015 143 Since December 2014 … New Branches 4 Keningau, Sabah, Austin Height, Johor, Banda Kaba, Melaka and Denai Alam, Selangor

Kuala Lumpur 20

Additional new branches to be opened in 2015 New Branches 7 Kodiang (Bsc) – Kedah Setia Alam (Bsc) – Selangor Bangi 2, Branch – Selangor Ampang 2 Branch - Selangor Tapah Branch - Perak Bdr Seri Putra Branch – Selangor Kuala Selangor Branch – Selangor

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GROUP OPERATING REVENUE

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(RM’ million)

+16 +16% +16 +16%

866,317 743,721 129,674 113,111 995,991 856,832 YTD Jun-15 YTD Jun-14 Gross Contribution Investment Income Operating Revenue

PROFITABILITY

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+12%* 12%*

(RM’ million)

+10%* 10%*

112,029 85,258 100,314 77,655 Profit Before Zakat & Tax Profit After Zakat & Tax YTD Jun-15 YTD Jun-14

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(RM’ million)

793.2 73.1 866.3 675.0 68.7 743.7 Syarikat Takaful Malaysia Berhad (STMB) P.T. Syarikat Takaful Indonesia (STI) Total YTD Jun-15 YTD Jun-14

GROSS CONTRIBUTION BY ENTITY

KEY FINANCIAL RATIOS

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10.50 3.74 9.52 3.58 Earning per Share (Sen) Net Assets per Share (RM) YTD Jun-15 YTD Jun-14 28.6% 24.3% Return on shareholders' equity YTD June 15 (annualised) 2014

KEY FINANCIAL RATIOS

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68.0% 35.6% 60.7% 36.8% Family Fund General Fund YTD Jun-15 YTD Jun-14 13.1% 13.9% Management expenses / Gross contributions YTD June 15 YTD June 14

Net claims incurred ratio

STRATEGIC PRIORITIES

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STRATEGIC PRIORITIES MOVING FORWARD

Robust Liability Management Capital Preservation Safeguard Asset Quality Earnings Stability

1 2 3 4

INVESTMENT ACCOUNT – “A NEW FRONTIER”

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INVESTMENT ACCOUNT (IA) What is an Investment Account?

• Money paid and accepted for the purposes of investment in

accordance with Shariah

• Shariah contracts:
• Mudarabah, Musharakah, Wakalah, etc.
• The return in an investment account commensurate with the

risk taken

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DIFFERENCES BETWEEN DEPOSIT & INVESTMENT ACCOUNT

Islamic Deposit Investment Account

• Sum of money accepted or

paid in accordance with Shariah.

• Money is paid and accepted for the

purpose of investment in accordance with Shariah.

• Will be repaid in full on

maturity.

• No expressed or implied obligation to

repay the Money in full (Principal and/or Profit).

• Shariah contracts:

Wadiah, Tawarruq, Bai’ ‘Inah

• Shariah contracts:

Mudarabah, Musharakah, Wakalah

• Capital guaranteed.
• Capital is not guaranteed.
• PIDM protection – YES
• PIDM protection – NO

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DIFFERENCES BETWEEN UNRESTRICTED IA (URIA) & RESTRICTED IA (RIA)

URIA RIA

• General mandate or allow the

Bank to make ultimate investment decision without restrictions or any conditions

• Specific Investment Mandate/Asset Class
• Unlimited withdrawal
• Fixed tenure
• Mismatch maturity
• Redemption upon maturity of assets; or

redemption only upon realisation of underlying assets to a third party; or redemption only upon finding replacement of funds from other IAH (other than the Bank)

• On-balance Sheet

(subject to compliance with principles of FRS10)

• Off-balance Sheet

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IA: OPPORTUNITY FOR BANK ISLAM TO GROW ITS BUSINESS

Why? Benefits from 3 perspectives:

• 1. Deposits perspective
• 2. Finance perspective
• 3. Customers perspective

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IA: OPPORTUNITY FOR BANK ISLAM TO GROW ITS BUSINESS Deposit’s perspective: 1. Manage capital more effectively - Risk weighted assets funded by investment accounts are excluded from the calculation of capital adequacy ratio. 2. Reduce regulatory cost - All ‘deposits’ i.e. placement accounts are excluded from Eligible Liabilities (EL) base for the purposes of statutory reserve requirement (SRR) computation 3. Cost savings from PIDM premium approximately 0.04%- 0.06%

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IA: OPPORTUNITY FOR BANK ISLAM TO GROW ITS BUSINESS Finance’s perspective: 1. Option for on-balance sheet and off-balance sheet – Restricted Investment Account and Unrestricted Investment Account 2. Capital management – Potential improvement on level of Risk Weighted Capital Ratio (RWCR) 3. New source of revenue – opportunity to earn fee based income (e.g. wakalah fees) 4. As an Investment intermediary – Bank Islam will not take any risk

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IA: OPPORTUNITY FOR BANK ISLAM TO GROW ITS BUSINESS

Customer’s perspective: 1. So, is IA riskier than deposit? Not necessarily, in fact IA can be safer than deposit and customer may enjoy higher return if placement is made under URIA. 2. How?

• Placements are tagged against assets of the bank(secured

position)

• Opportunity to earn higher return than deposit as the bank

enjoys savings from: a. Tagged assets are excluded from capital adequacy ratio calculation b. IA excluded from Eligible Liabilities (EL) base for the purposes of statutory reserve requirement (SRR) computation c. Savings from PIDM premium

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FY2015 EXPECTATIONS

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BHB GROUP’S YEAR END FY2015 EXPECTATIONS Target Earnings (PBZT) growth Maintain FY2014 performance Financing growth 14%-15% Deposits and IA growth Circa 5% Gross impaired financing ratio <1.5%

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