Wednesday, Jun 02, 2004
The ratings reaffirmation reflect the Bank’s strategic importance in the development of Islamic banking as a viable alternative to the conventional banking system coupled with the consistent double digit growth in its financing assets, supported by a solid liquidity and strengthening profitability position. These positives are, however, moderated by the Bank’s asset performance, which affected the Bank’s regulatory capital and efficiency measures.
BIMB’s gross customer financing assets recorded higher growth rate of 21.6% in FY 2003 in tandem with the robust growth recorded by the Islamic banking industry. Despite 22.2% growth in gross non-performing financing (NPF) in FY 2003, net NPF ratio declined to 9.9% from 10.8% previously, owing to the burgeoning financing assets.
The consistent growth in financing assets has resulted in downward pressure in the Bank’s risk weighted capital ratio (RWCR) and core capital ratio which declined to 12.3% and 10.9% respectively at end-June 2003. The Bank’s RWCR and core capital ratio is lower than the Islamic banking system of 13.1% and 11.4% respectively.
The Bank remains as a net interbank lender for the past five years; reflecting the stability and strength of its funding base, with net interbank assets amounting to RM2.15 billion (end-June 2002: RM2.42 billion). The bulk of the Bank’s customers financing assets are long term in nature, earning a fixed rate of return. However, a substantial amount of the Bank’s customer deposits tend to be short term, exposing the Bank’s profit margin to fluctuations in market rates.
The Bank recorded improvement in most of its profitability measures as profit before tax more than doubled during the year owing to robust 18% growth in financing revenue coupled with satisfactory cost control. This is mainly attributed to expansion in the Bank’s financing base coupled with change in revenue recognition policy. The early adoption of MASBi-1 which came into effect on and after 1st January 2003 effectively changed the Bank’s basis of revenue recognition from cash to accruals basis.
BIMB’s gross customer financing assets recorded higher growth rate of 21.6% in FY 2003 in tandem with the robust growth recorded by the Islamic banking industry. Despite 22.2% growth in gross non-performing financing (NPF) in FY 2003, net NPF ratio declined to 9.9% from 10.8% previously, owing to the burgeoning financing assets.
The consistent growth in financing assets has resulted in downward pressure in the Bank’s risk weighted capital ratio (RWCR) and core capital ratio which declined to 12.3% and 10.9% respectively at end-June 2003. The Bank’s RWCR and core capital ratio is lower than the Islamic banking system of 13.1% and 11.4% respectively.
The Bank remains as a net interbank lender for the past five years; reflecting the stability and strength of its funding base, with net interbank assets amounting to RM2.15 billion (end-June 2002: RM2.42 billion). The bulk of the Bank’s customers financing assets are long term in nature, earning a fixed rate of return. However, a substantial amount of the Bank’s customer deposits tend to be short term, exposing the Bank’s profit margin to fluctuations in market rates.
The Bank recorded improvement in most of its profitability measures as profit before tax more than doubled during the year owing to robust 18% growth in financing revenue coupled with satisfactory cost control. This is mainly attributed to expansion in the Bank’s financing base coupled with change in revenue recognition policy. The early adoption of MASBi-1 which came into effect on and after 1st January 2003 effectively changed the Bank’s basis of revenue recognition from cash to accruals basis.