Malaysia’s BIMB second-quarter net profit rises 34 pct on Bank Islam, takaful units

Malaysia’s BIMB Holdings posted a rise in profit after zakat and tax of 33.94 per cent for the second quarter of 2019 compared to the same period last year.

The Group’s net profit for the three months ending June 30 was 228.23 million ringgit ($54.18 million) versus 170.39 million ringgit in the same quarter last year, it reported in a bourse filing on Wednesday.

This takes the Group’s six-month profit after zakat and tax to 469.82 million ringgit, up 26.65 per cent compared to 370.97 million ringgit for the same period in 2018.

It held 73.58 billion ringgit in assets at June 30, a nudge up of 1.64 per cent from the end of 2018.

The Group said its six-month performance is mainly due to subsidiaries Bank Islam and Takaful Malaysia.

BANK ISLAM INCOME RISES

Malaysia’s oldest Shariah-compliant retail bank ended June 30 with a 9.2 per cent increase in profit before zakat and tax to 437.4 million ringgit versus the same period in 2018.

BIMB Holdings said this is mainly due to higher total income.

The bank recorded higher fund-based income of 154.5 million ringgit, attributed to 7.3 per cent year-on-year growth in net financing assets to 46.4 billion as at end June 2019.

“The non-fund based income also increased as compared to the corresponding period, which was mainly from higher investment income from sales and revaluation of financial assets,” said BIMB Holdings.

FAMILY TAKAFUL SALES UP 23.5 PCT

Takaful Malaysia posted a 43.7 per cent increase in profit before zakat and tax to reach 210.4 million ringgit compared to the same half last year.

BIMB said the profit growth was mainly because of higher net wakalah fee income arising from business growth in family takaful.

The takaful company’s operating revenue rose 23.5 per cent to 1,591 million ringgit for H1 2019, which was largely due to higher sales from the family business.

The family takaful business line generated gross earned contributions of 967.5 million ringgit for H1 2019, representing a 43.5 per cent increase compared to the same period last year.

The Group said this was mainly because of higher sales form credit-related products.

The business line’s benefits and claims rose by 1.1 per cent to 384.6 million ringgit in the first six months of the year versus the corresponding period in 2018. This was mainly due to higher surrender claims, said BIMB.

OUTLOOK

The Group believes Bank Islam will be able to maintain a stable outlook on profitability for 2019 amid what it said is a “challenging economic environment”, citing competition for deposits, a decrease in financing growth, and thinning margins.

“That said, overall profitability indicators are likely to remain intact, as the Bank continues expanding its financing assets while taking certain measures in cost management,” said the Group.

“Despite a small percentage of gross income contributed by non-fund based income, the pursuit for digitalisation is hoped to provide a boost in the longer term,” it added.

The Group expects Takaful Malaysia to expand its market share in 2019.

It will continue with its digital strategy, introduction of online solutions, expansion of distribution capabilities, strategic partnership with Islamic banks, and brand awareness initiatives, it said.

($1 = 4.2116 Malaysian ringgit)

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