BIMB CEO sees temporary impact from OPR cut

The board appointed its chief financial officer, Mohd Muazzam Mohamed as acting CEO of Bank Islam effective Friday.

KUALA LUMPUR: BIMB Holdings Bhd (BHB) expects the impact from the recent cut in the overnight policy rate (OPR) to be temporary.

The Islamic banking group remains neutral on the OPR's impact towards its bottom line for the financial year ending Dec 31, 2019 (FY19).

Chief executive officer Mohd Muazzam Mohamed said following the recent reduction of 25 basis points (bps) in the OPR by Bank Negara Malaysia (BNM), it has also reduced its base rate, which subsequently would lower income.

“But, at the same time, we also lowered our deposit rate. Hence, the impact is temporary,” he told reporters on the sidelines of the bank's annual general meeting here, on Wednesday.

BIMB has recently lowered its base rate BR by 26 bps to 3.77 per cent per annum from 4.03 per cent previously, while its base financing rate was also reduced to 6.72 per cent per annum from 6.98 per cent.

Commenting on the company's neutral outlook, Mohd Muazzam said the impact from the OPR cut would be mitigated by another source of income, which they anticipated to perform better this year.  That includes the fee-based income, especially the wealth management products from its wholly-owned unit Bank Islam Malaysia Bhd, as well as advisory arrangements from Syarikat Takaful Malaysia Keluarga Bhd, he said.

On loan growth target, it would moderate to between six and seven per cent for FY19 from 8.5 per cent previously, due to the challenging economic situation, he said.

“I believe the target would still higher than the industry's average level,” he said, adding that currently, BIMB's loan size has grown to about RM46 billion.

According to BNM recent banking data, loan growth slowed to 4.9 per cent year-on-year (y-o-y) in March this year compared with five per cent y-o-y in February 2019.

Meanwhile, Mohd Muazzam also expected the group's return on equity (ROE) before tax to maintain above 15 per cent for FY19.

BIMB's profit before zakat and taxation rose to RM810.3 million for FY18, up 5.6 per cent from RM767.1 million previously.

Its gross financing increased 8.9 per cent y-o-y to RM45.7 billion for FY18, following a robust growth in all segments, such as consumer (up 9.6 per cent y-o-y), commercial (up 9.8 per cent y-o-y ) and corporate (up 4.3 per cent y-o-y). - Bernama