Bank Islam manages to mitigate impact of static OPR in 2023

KUALA LUMPUR: Bank Islam Malaysia Bhd managed to mitigate the impact of the static overnight policy rate (OPR), leading to an improved net income margin (NIM) over the course of last year.

Group chief executive officer Datuk Mohd Muazzam Mohamed said there was a sequential improvement in its NIM from 2.06 per cent in the first quarter of 2023 (1Q 2023) to 2.11 per cent in 2Q 2023 and 2.17 per cent in 3Q 2023.

He said the bank further sustained the momentum to achieve a 2.13 per cent NIM in 4Q 2023, resulting in an overall NIM of 2.12 per cent for 2023.

"The OPR remained unchanged in the early months of 2023, leading to an increased cost of deposits and, consequently, a reduction in our NIM in 1Q 2023 from 2.28 per cent in 2022.

"This unexpected development required a strategic and prompt response to align our funding costs with the prevailing rates, thereby protecting our profitability,” he said in Bank Islam's annual report 2023 filed with Bursa Malaysia yesterday.

Mohd Muazzam said the bank "managed the slight dip in NIM efficiently, reflecting its proactive measures to align finance costs with the static OPR environment.”

Meanwhile, the group registered a net profit of RM553.1 million for the financial year ended Dec 31, 2023 (FY2023), an improvement of 12.5 per cent over the previous year.

For outlook, Bank Islam intends to align its strategies with the nation’s economic and environmental goals, mainly focusing on sectors identified for growth and sustainability.

"We will emphasise adapting our products and services to meet the demands of a changing market, enhancing our digital capabilities, and investing in the skills and technologies necessary for the future.

"This approach aims to capture strategic opportunities presented by Malaysia’s economic policies and green initiatives,” it said.

The focus in 2024 will be on growth, asset quality, liquidity and funding management, and profitability to lead Malaysia’s Islamic banking sector, it added. - Bernama

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