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Bank Islam Malaysia Berhad: Interim Financial Statements - 30 June 2019

IM Insights
By IM Insights
4 years ago
Bank Islam Malaysia Berhad: Interim Financial Statements - 30 June 2019

Hibah, Islam, Islamic banking, Murabahah, Shariah, Sukuk, Takaful, Wakalah, Zakat, Credit Risk, Receivables, Reserves

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  1. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Financial Position as at 30 June 2019 Note Assets Cash and short-term funds Deposits and placements with banks and other financial institutions Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Financing, advances and others Other financial assets at amortised cost Statutory deposits with Bank Negara Malaysia Current tax assets Deferred tax assets Right-of-use assets Investments in subsidiaries Property and equipment Total assets Liabilities and equity Deposits from customers Investment accounts of customers Derivative financial liabilities Bills and acceptance payable Recourse obligations on financing sold to Cagamas Subordinated Sukuk Murabahah Other liabilities Lease Liabilities Zakat and taxation Total liabilities Group 30.06.2019 31.12.2018 RM’000 RM’000 Bank 30.06.2019 31.12.2018 RM’000 RM’000 10 1,652,882 2,092,654 1,649,941 2,086,703 11 616,147 2,432,000 616,147 2,432,000 12 13 1,022,055 24,346 364,959 34,148 1,016,525 24,346 359,533 34,148 14 12,326,761 11,354,299 12,327,551 11,355,089 15 46,395,469 45,680,680 46,395,469 45,680,680 16 207,784 129,042 203,006 126,533 17 1,523,932 33,747 28,209 223,190 189,059 64,243,581 1,602,284 8,466 51,385 188,816 63,938,733 1,523,932 33,737 26,703 223,190 15,525 188,488 64,244,560 1,602,284 8,403 49,842 15,525 188,153 63,938,893 18 47,187,254 49,895,232 47,199,733 49,909,199 19 7,546,750 5,176,819 7,546,750 5,176,819 13 6,763 19,520 6,763 19,520 26,876 41,114 26,876 41,114 20 1,501,187 1,501,187 1,501,187 1,501,187 21 22 17 1,308,526 789,551 315,543 47,270 58,729,720 1,308,634 706,133 13,687 58,662,326 1,308,526 782,268 315,543 47,093 58,734,739 1,308,634 695,714 13,539 58,665,726 1
  2. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Financial Position as at 30 June 2019 (continued) Note Equity Share capital Reserves Total equity Total liabilities and equity Restricted investment accounts managed by the Bank 19 Total Islamic banking asset owned and managed by the Bank Commitments and Contingencies 34 Group 30.06.2019 31.12.2018 RM’000 RM’000 Bank 30.06.2019 31.12.2018 RM’000 RM’000 3,012,368 2,501,493 5,513,861 3,012,368 2,264,039 5,276,407 3,012,368 2,497,453 5,509,821 3,012,368 2,260,799 5,273,167 64,243,581 63,938,733 64,244,560 63,938,893 56,318 78,717 56,318 78,717 64,299,899 64,017,450 64,300,878 64,017,610 16,351,097 14,162,355 16,351,097 14,162,355 The Unaudited Interim Financial Statements should be read in conjunction with the Audited Financial Statements of the Group and of the Bank for the financial year ended 31 December 2018. 2
  3. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the six months ended 30 June 2019 Group Note Income derived from investment of depositors’ funds Income derived from investment account funds Income derived from investment of shareholders’ funds Net allowance for impairment on financing and advances, net of recoveries Net allowance for impairment on debt securities Net allowance for impairment on other financial assets Direct expenses 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 23 686,799 623,740 1,394,606 1,236,293 24 97,584 62,818 174,011 124,573 25 125,088 125,289 240,616 235,377 26 (29,619) (14,758) (52,818) (35,921) 42 (12) 21 86 (5,000) (3,865) (4,590) (4,147) (7,768) (9,056) 871,029 792,487 1,744,521 1,551,352 7 333 233 333 27 (342,806) (311,464) (695,814) (608,338) 28 (44,845) (22,915) (74,875) (45,720) 29 30 31 483,385 (151,182) (92,778) (21,912) 458,441 (145,779) (105,691) (13,465) 974,065 (305,598) (187,415) (43,651) 897,627 (277,518) (192,521) (26,901) Profit before zakat and tax 217,513 193,506 437,401 400,687 Zakat Tax expense (3,795) (51,419) (3,764) (51,055) (7,591) (107,153) (7,520) (104,739) Profit for the period 162,299 138,687 322,657 288,428 12.85 11.70 Total distributable income Wakalah fees from restricted investment accounts Income attributable to depositors Income attributable to investment account holders Total net income Personnel expenses Other overhead expenses Finance cost Earnings per share (sen) 3
  4. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the six months ended 30 June 2019 (continued) Group Note Profit for the period Other comprehensive income/(expense), net of tax: Items that are or may be reclassified subsequently to profit or loss Currency translation differences in respect of foreign operations Movement in fair value reserve (debt securities) : Net change in fair value Net allowance for impairment on debt securities Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 162,299 138,687 322,657 288,428 (5,074) (17,768) (47) 832 109,833 (26,403) 230,588 (35,351) 42 (12) 21 86 (26,920) (339) (43,389) (1,921) (18,247) 6,421 (43,199) 8,925 59,634 (38,101) 143,974 (27,429) Items that will not be reclassified to profit or loss Movement in fair value reserve (equity investments) : Net change in fair value 12,005 654 11,707 (1,487) Other comprehensive income for the period, net of tax 71,639 (37,447) 155,681 (28,916) Total comprehensive income for the period 233,938 101,240 478,338 259,512 The Unaudited Interim Financial Statements should be read in conjunction with the Audited Financial Statements of the Group and of the Bank for the financial year ended 31 December 2018. 4
  5. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the six months ended 30 June 2019 (continued) Bank Note Income derived from investment of depositors’ funds Income derived from investment account funds Income derived from investment of shareholders’ funds Net allowance for impairment on financing and advances, net of recoveries Net allowance for impairment on debt securities Net allowance for impairment on other financial assets Direct expenses 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 23 686,799 623,740 1,394,606 1,236,293 24 97,584 62,818 174,011 124,573 25 117,097 115,880 224,898 219,847 26 (29,619) (14,758) (52,818) (35,921) 42 (12) 21 86 (5,000) (3,865) (4,590) (4,147) (7,768) (9,056) 863,038 783,078 1,728,803 1,535,822 7 333 233 333 27 (342,875) (311,528) (695,950) (608,466) 28 (44,845) (22,915) (74,875) (45,720) 29 30 31 475,325 (148,059) (88,442) (21,912) 448,968 (142,909) (99,631) (13,465) 958,211 (299,290) (178,894) (43,651) 881,969 (271,831) (183,598) (26,901) Profit before zakat and tax 216,912 192,963 436,376 399,639 Zakat Tax expense (3,750) (51,381) (3,750) (51,020) (7,500) (107,018) (7,500) (106,239) Profit for the period 161,781 138,193 321,858 285,900 Total distributable income Wakalah fees from restricted investment accounts Income attributable to depositors Income attributable to investment account holders Total net income Personnel expenses Other overhead expenses Finance cost 5
  6. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the six months ended 30 June 2019 (continued) Bank Note Profit for the period Other comprehensive income/(expense), net of tax: Items that are or may be reclassified subsequently to profit or loss Currency translation differences in respect of foreign operations Movement in fair value reserve (debt securities) : Net change in fair value Net allowance for impairment on debt securities Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 161,781 138,193 321,858 285,900 (5,085) (17,467) (48) 1,166 109,833 (26,403) 230,588 (35,351) 42 (12) 21 86 (26,920) (339) (43,389) (1,921) (18,247) 6,421 (43,199) 8,925 59,623 (37,800) 143,973 (27,095) Items that will not be reclassified to profit or loss Movement in fair value reserve (equity investments) : Net change in fair value 12,005 654 11,707 (1,487) Other comprehensive income for the period, net of tax 71,628 (37,146) 155,680 (28,582) Total comprehensive income for the period 233,409 101,047 477,538 257,318 The Unaudited Interim Financial Statements should be read in conjunction with the Audited Financial Statements of the Group and of the Bank for the financial year ended 31 December 2018. 6
  7. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Consolidated Statement of Changes in Equity for the six months ended 30 June 2019 Group Note At 1 January 2019 Effects of adoption of MFRS 16 Adjusted total equity at 1 January 2019 Attributable to equity holders of the Bank Non-distributable Distributable Share Share Other Retained capital premium reserves earnings RM’000 RM’000 RM’000 RM’000 Total equity RM’000 3,012,368 3,012,368 - (98,437) (98,437) 2,362,476 (88,574) 2,273,902 5,276,407 (88,574) 5,187,833 Profit for the period Currency translation difference in respect of foreign operations Fair value reserve – Net change in fair value – Net allowance for impairment on debt securities – Net amount reclassified to profit or loss Income tax expense relating to components of other comprehensive income Total comprehensive income for the period Dividends paid on ordinary shares At 30 June 2019 3,012,368 - (47) 242,295 21 (43,389) (43,199) 155,681 57,244 322,657 322,657 (152,310) 2,444,249 322,657 (47) 242,295 21 (43,389) (43,199) 478,338 (152,310) 5,513,861 At 1 January 2018 Adjustment on adoption of MFRS 9 (net of tax) Restated total equity at 1 January 2018 2,869,498 2,869,498 - (60,196) 13,190 (47,006) 2,150,402 (143,408) 2,006,994 4,959,704 (130,218) 4,829,486 Profit for the period Currency translation difference in respect of foreign operations Fair value reserve – Net change in fair value – Net allowance for impairment on debt securities – Net amount reclassified to profit or loss Income tax expense relating to components of other comprehensive income Total comprehensive income for the period Transfer from regulatory reserve to retained earnings Dividends paid on ordinary shares At 30 June 2018 2,869,498 - 832 (36,838) 86 (1,921) 8,925 (28,916) (64,645) (140,567) 288,428 288,428 64,645 (150,180) 2,209,887 288,428 832 (36,838) 86 (1,921) 8,925 259,512 (150,180) 4,938,818 6 9 The Unaudited Interim Financial Statements should be read in conjunction with the Audited Financial Statements of the Group and of the Bank for the financial year ended 31 December 2018. 7
  8. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Statement of Changes in Equity for the six months ended 30 June 2019 Bank Note At 1 January 2019 Effects of adoption of MFRS 16 Adjusted total equity at 1 January 2019 Attributable to equity holders of the Bank Non-distributable Distributable Share Share Other Retained capital premium reserves earnings RM’000 RM’000 RM’000 RM’000 Total Equity RM’000 3,012,368 3,012,368 - (98,261) (98,261) 2,359,060 (88,574) 2,270,486 5,273,167 (88,574) 5,184,593 Profit for the period Currency translation difference in respect of foreign operations Fair value reserve – Net change in fair value – Net allowance for impairment on debt securities – Net amount reclassified to profit or loss Income tax expense relating to components of other comprehensive income Total comprehensive income for the period Dividends paid on ordinary shares At 30 June 2019 3,012,368 - (48) 242,295 21 (43,389) (43,199) 155,680 57,419 321,858 321,858 (152,310) 2,440,034 321,858 (48) 242,295 21 (43,389) (43,199) 477,538 (152,310) 5,509,821 At 1 January 2018 Adjustment on adoption of MFRS 9 (net of tax) Adjusted total equity at 1 January 2018 2,869,498 2,869,498 - (60,337) 13,190 (47,147) 2,150,345 (143,408) 2,006,937 4,959,506 (130,218) 4,829,288 - - 1,166 (37,308) 86 (1,921) 8,925 (28,582) 285,900 285,900 285,900 1,166 (37,308) 86 (1,921) 8,925 257,318 2,869,498 - (64,645) (140,374) 64,645 (150,180) 2,207,302 (150,180) 4,936,426 6 Profit for the period Currency translation difference in respect of foreign operations Fair value reserve – Net change in fair value – Net allowance for impairment on debt securities – Net amount reclassified to profit or loss Income tax expense relating to components of other comprehensive income Total comprehensive income for the period Transfer from regulatory reserve to retained earnings Dividends paid on ordinary shares At 30 June 2018 9 The Unaudited Interim Financial Statements should be read in conjunction with the Audited Financial Statements of the Group and of the Bank for the financial year ended 31 December 2018. 8
  9. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Condensed Statements of Cash Flow for the six months ended 30 June 2019 Group 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 Profit before zakat and tax Adjustment for non-cash items Operating profit before working capital changes Changes in working capital: Net changes in operating assets Net changes in operating liabilities Net cash used in operations Zakat and tax paid Tax refund Net cash used in operating activities Net cash used in investing activities Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Exchange difference on translation Cash and cash equivalents at end of the period Cash and cash equivalents comprise: Cash and short-term funds Deposits and placements with banks and other financial institutions Bank 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 437,401 105,756 400,687 135,335 436,376 105,733 399,639 135,296 543,157 536,022 542,109 534,935 (808,034) (1,399,177) (805,765) (1,398,570) (282,341) 304,266 (280,693) 292,526 (547,218) (125,830) 27 (558,889) (102,077) 60 (544,349) (125,696) - (571,109) (101,961) - (673,021) (660,906) (670,045) (673,070) (1,383,671) (1,118,462) (1,383,636) (1,118,711) (198,886) (177,531) (198,886) (177,531) (2,255,578) (1,956,899) (2,252,567) (1,969,312) 4,524,654 4,185,697 4,518,703 4,185,561 (47) 832 (48) 1,166 2,269,029 2,229,630 2,266,088 2,217,415 1,652,882 2,229,630 1,649,941 2,217,415 616,147 2,269,029 2,229,630 616,147 2,266,088 2,217,415 The Unaudited Interim Financial Statements should be read in conjunction with the Audited Financial Statements of the Group and of the Bank for the financial year ended 31 December 2018. 9
  10. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements Notes to the unaudited interim financial statements for the six months ended 30 June 2019 1. Basis of preparation The unaudited interim financial statements of the Group and of the Bank for the six months ended 30 June 2019 have been prepared in accordance with the applicable requirements of MFRS 134: Interim Financial Reporting in Malaysia issued by Malaysian Accounting Standards Board (“MASB”), Financial Reporting for Islamic Banking Institution policy document issued by Bank Negara Malaysia (“BNM”), the provisions of the Companies Act 2016 and Shariah requirements. The unaudited interim financial statements have been prepared under the historical cost convention except for derivative financial instruments, financial assets at fair value through profit or loss and financial assets through other comprehensive income, which have been measured at fair value. The unaudited interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited financial statements of the Group and of the Bank for the financial year ended 31 December 2018. The explanatory notes attached to the unaudited interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Bank since the financial year ended 31 December 2018. The significant accounting policies and methods of computation applied in the unaudited interim financial statements are consistent with those adopted in the recent audited financial statements for the financial year ended 31 December 2018, except for the adoption of the following Malaysian Financial Reporting Standards (“MFRS”), interpretation and amendments to MFRSs:  MFRS 16, Leases  IC Interpretation 23, Uncertainty over Income Tax Treatments  Amendments to MFRS 3, Business Combinations (Annual Improvements to MFRS Standards 2015-2017 Cycle)  Amendments to MFRS 9, Financial Instruments – Prepayment Features with Negative Compensation  Amendments to MFRS 11, Joint Arrangements (Annual Improvements to MFRS Standards 2015-2017 Cycle)  Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS Standards 20152017 Cycle)  Amendments to MFRS 119, Employee Benefits – Plan Amendment , Curtailment or Settlement  Amendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRS Standards 2015-2017 Cycle)  Amendments to MFRS 128, Investments in Associates and Joint Ventures – Long-term Interests in Associates and Joint Ventures The adoption of the new standards, amendments to published standards and interpretation are not expected to have impact on the financial results of the Group and the Bank, except for MFRS 16. The principal effects of the changes in accounting policies arising from adoption of MFRS 16 are disclosed in Note 6. 10
  11. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 2. Auditors’ reports on preceding financial period financial statements The auditors’ report on the audited financial statements for the financial year ended 31 December 2018 was not qualified. 3. Seasonal or cyclical factors The operations of the Bank were not materially affected by any seasonal or cyclical factors in the six months ended 30 June 2019. 4. Unusual items There were no unusual items in the six months ended 30 June 2019. 5. Changes in accounting estimates There were no material changes in estimates of amounts reported in the prior financial year that have a material effect in the six months ended 30 June 2019. 6. Changes in accounting policies The accounting policies applied in these interim financial statements are the same as those applied in the Group and the Bank’s consolidated financial statements as at and for the year ended 31 December 2018, except for the impact of adopting MFRS 16 as described below. The changes in accounting policies are also expected to be reflected in the Group and the Bank’s consolidated financial statements as at and for the year ending 31 December 2019. MFRS 16, Leases MFRS 16 supersedes MFRS 117 ‘Leases’ and the related interpretations. The Group and the Bank have adopted MFRS 16 retrospectively from 1 January 2019 upon its mandatory adoption date, but have not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019. Prior to 1 January 2019, the Group and the Bank classified leases of property and equipment as operating leases. Payments made under operating leases were charged to profit or loss on a straightline basis over the period of the lease. On adoption of MFRS 16, leases with non-cancellable agreements are recognised as right-of-use assets and corresponding liabilities at the date at which the leased assets are available for use by the Group and the Bank. Right-of-use assets are measured on a retrospective basis as if the new rules had always been applied, adjusted by the amount of any prepaid or accrued lease payments using the incremental borrowing rate at the date of transition of 5.7 per cent (%). The right-of-use assets are depreciated over the lease term on a straight-line basis. The associated lease liabilities are measured at the present value of the remaining lease payments, discounted using the same incremental borrowing rate as of 1 January 2019. 11
  12. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 6. Changes in accounting policies (continued) MFRS 16, Leases (continued) Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of profit on the remaining balance of the liability for each period. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. The following table summarises the effects of adoption of MFRS 16 as at 1 January 2019. Effects of adoption of MFRS 16 Note Right-of-use assets Lease liabilities 17 17 Retained earnings Group and Bank RM’000 229,786 (318,360) (88,574) The reconciliation on operating lease commitments under MFRS 117 to MFRS 16 are as follows: Group and Bank RM’000 Operating lease commitments as at 31 December 2018: - Lease - Service charges Discounted using the incremental borrowing rate Lease liability recognised as at 1 January 2019 381,308 137,580 518,888 (200,528) 318,360 The recognised right-of-use assets relate to the following type of assets: Property 7. 229,786 Sukuk and equity securities There was no issuance or repayment of Sukuk or share buy-back during the six months ended 30 June 2019. 8. Significant events during the six months ended 30 June 2019 There was no other significant event during the six months ended 30 June 2019. 9. Dividends On 27 May 2019, the Bank paid a final dividend of approximately 6.07 sen per ordinary share totalling RM152,310,000 for the financial year ended 31 December 2018. 12
  13. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 10. Cash and short-term funds Group 30.06.2019 31.12.2018 RM’000 RM’000 Cash and balances with banks and other financial institutions Money at call and interbank placements with remaining maturity not exceeding one month 11. Bank 30.06.2019 31.12.2018 RM’000 RM’000 851,246 891,697 848,633 886,074 801,636 1,200,957 801,308 1,200,629 1,652,882 2,092,654 1,649,941 2,086,703 Deposits and placements with banks and other financial institutions Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Bank Negara Malaysia 12. 616,147 2,432,000 Financial assets at fair value through profit and loss The Group and the Bank had designated or mandatorily measured the following financial assets at fair value through profit or loss: Group 30.06.2019 31.12.2018 RM’000 RM’000 At fair value Malaysian Government Investment Issues Unit trust Bank Negara Monetary Notes Sukuk Islamic Commercial Papers Malaysian Islamic Treasury Bills Bank 30.06.2019 31.12.2018 RM’000 RM’000 431,732 230,696 94,924 109,460 105,412 30,328 219,808 114,823 - 431,732 225,166 94,924 109,460 105,412 30,328 214,382 114,823 - 49,831 - 49,831 - 1,022,055 364,959 1,016,525 359,533 13
  14. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. Derivative financial assets/liabilities The following tables summarise the contractual or underlying principal amounts of derivative financial instruments held at fair value through profit or loss and held for hedging purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at financial position date, and do not represent amounts at risk. Trading derivative financial instruments are revalued on a gross position and any unrealised gains or losses are reflected as derivative financial assets and liabilities respectively. Principal amount RM’000 5,014,504 162,952 5,177,456 Group and Bank 30.06.2019 Forward contracts Profit rate swaps 31.12.2018 Forward contracts Profit rate swaps 14. Fair value Assets Liabilities RM’000 RM’000 22,573 (6,079) 1,773 (684) 24,346 (6,763) 2,869,455 578,379 3,447,834 30,653 3,495 34,148 (17,752) (1,768) (19,520) Financial assets at fair value through other comprehensive income Group 30.06.2019 31.12.2018 RM’000 RM’000 Financial assets at fair value through other comprehensive income: (a) Debt securities (b) Equity investments Bank 30.06.2019 31.12.2018 RM’000 RM’000 12,279,536 47,225 11,318,781 35,518 12,279,536 48,015 11,318,781 36,308 12,326,761 11,354,299 12,327,551 11,355,089 (a) Debt securities at fair value through other comprehensive income Group 30.06.2019 31.12.2018 RM’000 RM’000 Malaysian Government Investment Issues Sukuk Bank Negara Monetary Notes Islamic Commercial Papers Bank 30.06.2019 31.12.2018 RM’000 RM’000 2,432,089 9,697,966 2,129,754 8,493,541 2,432,089 9,697,966 2,129,754 8,493,541 - 389,231 - 389,231 149,481 12,279,536 306,255 11,318,781 149,481 12,279,536 306,255 11,318,781 14
  15. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 14. Financial assets at fair value through other comprehensive income (continued) (a) Debt securities at fair value through other comprehensive income (continued) Movement of allowance for impairment on financial assets at fair value through other comprehensive income. Group and Bank 30.06.2019 31.12.2018 12 months expected credit loss (“ECL”) RM’000 RM’000 At 1 January 2019/1 January 2018 Net allowance for impairment during the period/ year At 30 June 2019/31 December 2018 302 (21) 281 345 (43) 302 (b) Equity investments at fair value through other comprehensive income Group 30.06.2019 31.12.2018 RM’000 RM’000 Quoted Shares - outside Malaysia Unquoted Shares - in Malaysia - outside Malaysia Bank 30.06.2019 31.12.2018 RM’000 RM’000 9,295 12,446 9,295 12,446 37,928 2 37,930 23,056 16 23,072 38,718 2 38,720 23,846 16 23,862 47,225 35,518 48,015 36,308 15
  16. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (a) By type and Shariah contract Group and Bank 30 June 2019 At amortised cost Cash line Term financing House financing Syndicated financing Leasing financing Bridging financing Personal financing Other term financing Staff financing Credit cards Trade bills discounted Trust receipts Pawn broking Investment Account Platform * Bai’ Bithaman Ajil Murabahah RM’000 RM’000 Bai’ Al-Dayn RM’000 Bai’ Al-Inah RM’000 AtTawarruq RM’000 Ijarah Muntahiah BitTamleek^ RM’000 Ijarah Thumma Al-Bai’^ RM’000 Istisna’ Ar-Rahnu RM’000 RM’000 Total RM’000 - - - 1,532 1,363,098 - - - - 1,364,630 3,573,231 892,395 56,032 - 1,266,529 9,734 839,734 4,716 - 138,062 - 39,355 8,134 1,311 4,288 - 15,239,539 753,434 14,028,792 7,896,717 165,575 476,395 - 118,656 - 79,103 - 49,782 58,339 1,161 9,033 - 65,035 18,862,552 871,892 118,656 58,339 14,036,926 10,058,113 240,374 476,395 982,084 4,716 65,035 - - - - 8,535 - - - - 8,535 4,521,658 2,120,713 138,062 54,620 39,932,085 118,656 79,103 118,315 65,035 47,148,247 Allowance for impairment on financing, advances and others :- collective assessment allowance - 12 months ECL - collective assessment allowance - lifetime ECL - individual assessment allowance- lifetime ECL (410,065) (239,465) (103,248) Net financing, advances and others 46,395,469 16
  17. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (a) By type and Shariah contract (continued) Group and Bank 31 December 2018 At amortised cost Cash line Term financing House financing Syndicated financing Leasing financing Bridging financing Personal financing Other term financing Staff financing Credit cards Trade bills discounted Trust receipts Pawn broking Investment Account Platform * Bai’ Bithaman Ajil Murabahah RM’000 RM’000 Bai’ Al-Dayn RM’000 Bai’ Al-Inah RM’000 AtTawarruq RM’000 Ijarah Muntahiah BitTamleek^ RM’000 Ijarah Thumma Al-Bai’^ RM’000 Istisna’ Ar-Rahnu RM’000 RM’000 Total RM’000 - - - 1,875 1,521,991 - - - - 1,523,866 3,764,219 1,099,152 60,777 - 1,239,988 9,322 820,833 10,113 - 144,827 - 41,327 10,178 6,650 - 14,285,203 665,745 13,755,492 7,992,899 155,590 477,602 - 106,520 - 89,540 35 - 51,490 65,268 1,194 9,846 - 73,110 18,100,912 796,612 106,555 65,268 13,765,670 10,339,883 235,535 477,602 965,660 10,113 73,110 - - - - 9,599 - - - - 9,599 4,924,148 2,080,256 144,827 60,030 38,864,121 106,520 89,575 127,798 73,110 46,470,385 Allowance for impairment on financing, advances and others :- collective assessment allowance - 12 months ECL - collective assessment allowance - lifetime ECL - individual assessment allowance- lifetime ECL (416,450) (216,564) (156,691) Net financing, advances and others 45,680,680 17
  18. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (a) By type of and Shariah contract (continued) Included in financing, advances and others are house financing and personal financing that are used for the underlying assets of Unrestricted Investment Accounts (“UA”) and financing sold to Cagamas with recourse to the Group and the Bank. The details are as follows: Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 House financing Unrestricted Investment Accounts Sold to Cagamas with recourse 19 20 Personal financing Unrestricted Investment Accounts 19 5,290,698 1,501,187 3,886,107 1,501,187 6,791,885 5,387,294 2,256,052 1,290,712 * This represents a term financing of the Group’s and the Bank’s participation through Investment Account Platform (“IAP”) to finance viable ventures. ^ Assets funded under Ijarah financing are owned by the Bank throughout the tenure of the Ijarah financing and ownership of the assets will be transferred to customer at the end of financing tenure for a token consideration or other amount as specified in the Ijarah financing contract. (b) By type of customer Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Domestic non-bank financial institutions Domestic business enterprise Small and medium industries Government and statutory bodies Individuals Other domestic entities Foreign entities 18 1,367,609 6,899,760 2,081,152 591,832 35,947,384 59,124 201,386 1,637,318 6,924,836 2,092,024 601,285 35,069,160 18,947 126,815 47,148,247 46,470,385
  19. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (c) By profit rate sensitivity Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Fixed rate House financing Others Floating rate House financing Others 1,025,098 3,006,853 1,073,575 3,102,294 18,458,265 24,658,031 17,636,273 24,658,243 47,148,247 46,470,385 (d) By remaining contractual maturity Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Maturity within one year More than one year to three years More than three years to five years More than five years 4,624,252 1,344,202 2,899,938 38,279,855 4,774,098 1,299,229 2,921,287 37,475,771 47,148,247 46,470,385 (e) By geographical distribution Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Central Region Eastern Region Northern Region Southern Region East Malaysia Region 19 21,959,653 7,855,104 6,682,354 7,148,635 3,502,501 22,125,064 7,646,307 6,640,816 6,723,490 3,334,708 47,148,247 46,470,385
  20. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (f) By sector Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Primary agriculture Mining and quarrying Manufacturing (including agro-based) Electricity, gas and water Wholesale & retail trade, and hotels & restaurants Construction Real estate Transport, storage and communications Finance, insurance and business activities Education, health and others Household sectors 868,559 8,037 794,380 537,727 1,077,001 2,348,097 1,540,209 870,981 2,139,164 1,012,540 35,951,552 754,835 9,060 909,850 371,479 1,098,346 2,417,262 1,712,250 824,949 2,299,319 1,000,735 35,072,300 47,148,247 46,470,385 (g) Movement in impaired financing and advances (“impaired financing”) are as follows: Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 At 1 January 2019/ 2018 Classified as impaired during the period/ year Reclassified as not impaired during the period/ year Amount recovered Amount written off At 30 June 2019/ 31 December 2018 Gross impaired financing as a percentage of gross financing, advances and others 425,937 398,277 443,821 (132,376) (44,110) (133,871) 621,974 (321,635) (117,477) (155,202) 559,401 425,937 1.19% 0.92% The contractual amount outstanding on financing and advances that were written off during the period are still subject to enforcement activity. 20
  21. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (h) Impaired financing by geographical distribution Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Central Region Eastern Region Northern Region Southern Region East Malaysia Region 257,783 104,933 123,388 47,848 25,449 245,531 101,868 25,349 31,320 21,869 559,401 425,937 (i) Impaired financing by sector Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Manufacturing (including agro-based) Wholesale & retail trade, and hotels & restaurants Construction Real estate Transport, storage and communications Finance, insurance and business activities Education, health and others Household sectors 21 37,396 110,925 57,181 24,278 10,272 73,884 4,449 241,016 21,426 56,665 121,506 1,501 10,936 3,066 4,642 206,195 559,401 425,937
  22. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (j) Movement of allowance for impairment on financing, advances and others Group and Bank 30.06.2019 At 1 January 2019 Transfer to 12-month ECL Transfer to Lifetime ECL not credit impaired Transfer to Lifetime ECL credit impaired Net allowance made during the period New financial assets originated or purchased Financial assets that have been derecognised Write-offs Exchange differences At 30 June 2019 Collective Lifetime ECL creditimpaired RM’000 12-month ECL RM’000 Lifetime ECL not creditimpaired RM’000 416,450 129,402 1,613 Total collective RM’000 Individual RM’000 87,162 633,014 156,691 789,705 (1,478) (135) - - - (5,932) 9,548 (3,616) - - - (383) (12,946) 13,329 - - - (21,561) 36,474 54,648 69,561 22,834 92,395 41,340 3,239 1,172 45,751 - 45,751 (19,786) (1,676) 410,065 (17,942) 146,297 (1,908) (57,484) 93,168 (39,636) (57,484) (1,676) 649,530 (76,277) - (39,636) (133,761) (1,676) 103,248 752,778 446,069 126,447 572,516 187,404 1,695 189,099 Total RM’000 31.12.2018 At 1 January 2018 - effects of adoption of MFRS 9 Restated at 1 January 2018 Transfer to 12-month ECL Transfer to Lifetime ECL not credit impaired Transfer to Lifetime ECL credit impaired Net allowance made during the year New financial assets originated or purchased Financial assets that have been derecognised Write-offs Exchange differences At 31 December 2018 390,478 139,501 103,494 633,473 128,142 761,615 6,841 (6,525) (316) - - - (4,419) 8,639 (4,220) - - - (523) (8,454) 8,977 - - - (22,326) 1,175 101,690 80,539 58,801 139,340 88,675 7,437 5,090 101,202 - 101,202 (39,166) (3,110) 416,450 (12,371) 129,402 (2,603) (124,950) 87,162 (54,140) (124,950) (3,110) 633,014 (30,252) - (54,140) (155,202) (3,110) 156,691 789,705 22
  23. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 16. Other financial assets at amortised cost Group 30.06.2019 31.12.2018 RM’000 RM’000 Sukuk Other receivables Deposit and prepayments Related companies* Less : Accumulated impairment loss: Individual assessment - Sukuk - Other receivables Bank 30.06.2019 31.12.2018 RM’000 RM’000 6,034 170,321 42,254 684 219,293 6,887 97,473 31,458 586 136,404 6,034 166,532 41,227 722 214,515 6,887 95,680 30,434 894 133,895 (6,034) (5,475) 207,784 (6,887) (475) 129,042 (6,034) (5,475) 203,006 (6,887) (475) 126,533 * This relates to amounts due from holding and related companies that are unsecured, not subject to compensation charges for late payment and repayable on demand. 17. Right-of-use assets and lease liabilities The Group and the Bank have adopted MFRS 16 Leases and applied this standard retrospectively during the financial period and the comparatives are not restated. (a) Right-of-use assets Group and Bank RM’000 30.06.2019 Cost At 1 January 2019 Effects of adoption of MFRS 16 229,786 At 30 June 2019 229,786 Accumulated depreciation At 1 January 2019 Depreciation for the period 6,596 At 30 June 2019 6,596 223,190 The Group and the Bank have entered into non-cancellable operating lease agreement for the use of office building. The lease is for a period of 25 years with no renewal or purchase option included in the agreements. The Group and the Bank shall not enter into any sub-letting agreement or arrangement with any person for the office space or any section of it without the express prior written approval of the lessor. 23
  24. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 17. Right-of-use asset and lease liability (continued) (b) Lease liabilities Group and Bank RM’000 30.06.2019 Current Lease liabilities 6,039 Non-current Lease liabilities 309,504 Total lease liabilities 315,543 The movement of lease liabilities during the financial year is as follows: Group and Bank RM’000 30.06.2019 At 1 January 2019 - Effects of adoption of MFRS 16 Profit expense on leases Lease payments 318,360 8,968 (11,785) At 30 June 2019 315,543 24
  25. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 18. Deposits from customers a) By type and Shariah contract Group 30.06.2019 31.12.2018 RM’000 RM’000 Bank 30.06.2019 31.12.2018 RM’000 RM’000 Saving Deposit Qard 4,633,804 4,410,537 4,633,804 4,410,537 Demand Deposit Qard 9,552,254 10,663,456 9,558,024 10,670,826 32,902,784 34,727,635 32,909,493 34,734,232 6,252 6,252 6,252 6,252 263,660 287,013 263,660 287,013 31,255,491 30,751,990 31,262,200 30,758,587 1,377,381 3,682,380 1,377,381 3,682,380 98,412 93,604 98,412 93,604 47,187,254 49,895,232 47,199,733 49,909,199 Term Deposit Special Investment Deposit Mudharabah General Investment Deposit Mudharabah Term Deposit Tawarruq Negotiable Islamic Debt Certificates (NIDC) Others Total Deposits b) Maturity structure of term deposits are as follows: Group 30.06.2019 31.12.2018 Due within six months More than six months to one year More than one year to three years More than three years to five years Bank 30.06.2019 31.12.2018 RM’000 RM’000 RM’000 RM’000 13,344,497 16,428,971 13,346,909 16,429,087 9,789,623 9,685,966 9,793,195 9,691,736 7,394,998 6,484,593 7,395,723 6,485,304 2,373,666 2,128,105 2,373,666 2,128,105 32,902,784 34,727,635 32,909,493 34,734,232 25
  26. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 18. Deposits from customers (continued) c) By type of customers Group 30.06.2019 31.12.2018 RM’000 RM’000 Domestic non-bank financial institutions Business enterprises Government and statutory bodies Individuals Domestic banking institutions Others 19. Bank 30.06.2019 31.12.2018 RM’000 RM’000 8,916,828 18,229,753 12,385,381 16,725,704 8,929,307 18,229,753 12,399,348 16,725,704 9,934,566 6,845,345 12,049,184 5,199,550 9,934,566 6,845,345 12,049,184 5,199,550 1,026,904 2,233,858 1,634,224 1,901,189 1,026,904 2,233,858 1,634,224 1,901,189 47,187,254 49,895,232 47,199,733 49,909,199 Investment accounts of customers (a) By type and Shariah contract Note Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Unrestricted investment accounts Without maturity : Mudharabah - Saving - Demand 3,034,087 2,596,064 438,023 2,594,846 2,413,645 181,201 With maturity : Wakalah 4,512,663 2,581,973 7,546,750 5,176,819 5,290,698 2,256,052 7,546,750 3,886,107 1,290,712 5,176,819 Restricted investment accounts (“RIA”) managed by the Bank^ With maturity : Wakalah 56,318 78,717 Investment portfolio : Other term financing 56,318 78,717 Investment portfolio : House financing Personal financing 15 15 26
  27. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 19. Investment accounts of customers (continued) (a) By type and Shariah contract (continued) ^ Restricted investment accounts (“RIA”) is an arrangement between the Bank and the investment account holders (“IAH”) where the Bank acts as the investment agent to manage and administer the RIA and its underlying assets. RIA is accounted for as off balance sheet as the Bank has no right and obligation in respect of the assets related to the RIA or to the residual cash flows from those assets except for the Wakalah fee income generated by the Bank for managing the RIA. Included in RIA managed by the Bank is an arrangement between the Bank and its ultimate holding entity with underlying assets amounting to RM56,318,000 (2018: RM78,717,000). (b) By type of customers Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Individuals Government and statutory bodies Business enterprises Non-bank financial institutions International Islamic Bank Others 20. 2,858,136 2,348,273 708,953 1,545,013 2,600 83,775 2,674,428 767,996 507,160 1,175,273 2,400 49,562 7,546,750 5,176,819 Recourse obligations on financing sold to Cagamas Recourse obligations on financing sold to Cagamas represents house financing accounts that are sold to Cagamas with recourse. Under the agreement, the Bank undertakes to administer the financing on behalf of Cagamas and to buy back any financing which are regarded as defective based on predetermined and agreed-upon prudential criteria with recourse against the Bank. Such financing transactions and the obligation to buy back the financing are reflected as a liability on the statements of financial position. The financing are not de-recognised and are analysed in Note 15. 27
  28. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 21. Subordinated Sukuk Murabahah Note Issued under the RM1.0 billion Subordinated Sukuk Murabahah Programme First tranche Second tranche Third tranche Issued under the RM10.0 billion Sukuk Murabahah Programme First tranche (a) (b) (c) (d) Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 303,308 400,844 302,046 303,450 400,851 302,005 1,006,198 1,006,306 302,328 302,328 1,308,526 1,308,634 The details of the issued subordinated Sukuk are as follows: Note Nominal value RM’000 Issue date First call date* Maturity Date Profit rate (% p.a.)# (a) 300,000 22 April 2015 22 April 2020 22 April 2025 5.75 (b) 400,000 15 December 2015 15 December 2020 15 December 2025 5.50 (c) 300,000 13 November 2017 12 December 2022 12 November 2027 5.08 (d) 300,000 7 November 2018 7 December 2023 7 November 2028 5.15 * Optional redemption date or any periodic payment date thereafter. # Accrued and payable semi-annually in arrears. The Subordinated Sukuk Murabahah qualifies as Tier II capital for the computation of the regulatory capital of the Bank in accordance with the Capital Adequacy Framework (Capital Components) for Islamic Banks issued by BNM. 28
  29. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 22. Other liabilities Group 30.06.2019 31.12.2018 RM’000 RM’000 Other payables Accruals 23. Bank 30.06.2019 31.12.2018 RM’000 RM’000 699,993 89,558 564,632 141,501 694,660 87,608 556,880 138,834 789,551 706,133 782,268 695,714 Income derived from investment of depositors’ funds Group and Bank Income derived from investment of: (i) Saving and demand Deposits (ii) General investment Deposits (iii) Term deposits (iv) Other deposits (i) 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 204,344 192,683 413,521 386,441 4,161 455,751 22,543 4,662 371,254 55,141 8,437 917,530 55,118 9,536 728,534 111,782 686,799 623,740 1,394,606 1,236,293 Income derived from investment of saving and demand deposits Group and Bank Finance income and hibah Financing, advances and others Financial assets: - fair value through profit and loss - fair value through other comprehensive income - other financial assets at amortised cost Money at call and deposits with financial institutions 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 166,796 171,425 339,461 340,278 1,274 1,251 2,462 2,514 19,870 15,633 41,128 32,581 84 87 84 87 6,578 194,602 4,181 12,143 395,278 10,012 385,472 192,577 29
  30. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 23. Income derived from investment of depositors’ funds (continued) (i) Income derived from investment of saving and demand deposits (continued) Group and Bank Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net gain on revaluation of financial assets at fair value through profit or loss Other operating income Net gain from sale of financial assets at fair value through other comprehensive income of which Financing income earned on impaired financing (ii) 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 2,340 8 4,074 260 (562) 1,778 (5) 3 1,335 5,409 107 367 7,964 103 12,834 602 204,344 192,683 413,521 386,441 2,689 2,488 5,217 5,727 Income derived from investment of general investment deposits Group and Bank Finance income and hibah Financing, advances and others Financial assets: - fair value through profit and loss - fair value through other comprehensive income - other financial assets at amortised cost Money at call and deposits with financial institutions 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 3,481 4,183 7,075 8,478 22 27 44 56 353 343 745 729 2 2 2 2 130 3,988 106 4,661 245 8,111 250 9,515 30
  31. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 23. Income derived from investment of depositors’ funds (continued) (ii) Income derived from investment of general investment deposits (continued) Group and Bank Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net gain on revaluation of financial assets at fair value through profit or loss Other operating income Net gain from sale of financial assets at fair value through other comprehensive income of which Financing income earned on impaired financing (iii) 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 42 - 73 6 (8) 34 (1) (1) 25 98 2 8 139 2 228 13 4,161 4,662 8,437 9,536 48 55 95 129 Income derived from investment of term deposits Group and Bank Finance income and hibah Financing, advances and others Financial assets: - fair value through profit and loss - fair value through other comprehensive income - other financial assets at amortised cost Money at call and deposits with financial institutions 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 371,910 330,308 752,899 641,657 2,828 2,411 5,452 4,738 44,285 30,097 91,150 61,350 181 164 181 164 14,846 434,050 8,085 371,065 27,205 876,887 18,837 726,746 31
  32. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 23. Income derived from investment of depositors’ funds (continued) (iii) Income derived from investment of term deposits (continued) Group and Bank Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net gain on revaluation of financial assets at fair value through profit or loss Other operating income Net gain from sale of financial assets at fair value through other comprehensive income of which Financing income earned on impaired financing 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 5,194 24 9,040 488 (1,414) 3,780 (35) (11) 2,909 11,949 180 668 17,921 200 28,694 1,120 455,751 371,254 917,530 728,534 5,963 4,795 11,560 10,761 (iv) Income derived from investment of other deposits Group and Bank Finance income and hibah Financing, advances and others Financial assets: - fair value through profit and loss - fair value through other comprehensive income - other financial assets at amortised cost Money at call and deposits with financial institutions 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 18,416 49,057 45,339 98,411 140 358 322 725 2,193 4,453 5,505 9,403 10 22 10 22 734 21,493 1,235 55,125 1,613 52,789 2,959 111,520 32
  33. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 23. Income derived from investment of depositors’ funds (continued) (iv) Income derived from investment of other deposits (continued) Group and Bank Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net gain on revaluation of financial assets at fair value through profit or loss Other operating income Net gain from sale of financial assets at fair value through other comprehensive income of which Financing income earned on impaired financing 24. 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 257 11 517 91 (103) 154 (29) (18) 179 696 (15) 76 896 34 1,633 186 22,543 55,141 55,118 111,782 312 724 718 1,674 Income derived from investment account funds Group and Bank Finance income Unrestricted investment accounts - Mudharabah - Wakalah 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 30,222 32,596 62,818 37,355 60,229 97,584 33 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 71,444 102,567 174,011 59,921 64,652 124,573
  34. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 25. Income derived from investment of shareholders’ funds Group Finance income and hibah Financing, advances and others Financial assets at fair value through other comprehensive income Money at call and deposits with financial institutions Other dealing income Net gain from foreign exchange transactions Net loss from sale of financial assets at fair value through profit or loss Net gain/(loss) on revaluation of financial assets at fair value through profit or loss Net derivatives gain/(loss) Other operating income Gross dividend income from: - unit trust in Malaysia - quoted shares outside Malaysia Fees and commission Fees Commission Others Other income Net gain/(loss) on disposal of property and equipment Rental income Other income 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 1,561 1,820 3,419 3,604 49,430 48,960 92,570 87,104 2 50,993 1 50,781 3 95,992 2 90,710 12,366 12,033 29,002 26,793 - 14 - - 5,440 16 17,822 (152) 11,895 5,442 (55) 34,389 (1) 77 26,869 4,596 44 4,683 867 259 4,855 44 259 4,942 867 41,328 3,954 5,359 50,641 50,263 5,360 6,273 61,896 85,880 7,643 10,264 103,787 92,796 11,609 11,155 115,560 (1) 521 257 777 229 418 26 673 (2) 1,222 286 1,506 270 1,051 50 1,371 125,088 125,289 240,616 235,377 34
  35. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 25. Income derived from investment of shareholders’ funds (continued) Bank Finance income and hibah Financing, advances and others Financial assets at fair value through other comprehensive income Money at call and deposits with financial institutions Other dealing income Net gain from foreign exchange transactions Net gain/(loss) on revaluation of financial assets at fair value through profit or loss Net derivatives gain/(loss) Other operating income Gross dividend income from: - unit trust in Malaysia - quoted shares outside Malaysia Fees and commission Fees Commission Others Other income Net gain/(loss) on disposal of property and equipment Rental income Other income 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 1,561 1,820 3,419 3,604 49,430 48,960 92,570 87,104 1 50,992 1 50,781 2 95,991 2 90,710 12,368 12,050 29,002 26,810 5,441 16 17,825 (152) 11,898 5,441 (55) 34,388 77 26,887 4,547 - 4,590 778 259 4,806 - 259 4,849 778 32,335 5,632 4,565 42,532 39,914 6,698 5,846 52,458 67,664 10,990 9,372 88,026 74,576 14,831 10,544 99,951 (1) 702 241 942 229 511 3 743 (2) 1,403 243 1,644 270 1,235 16 1,521 117,097 115,880 224,898 219,847 35
  36. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 26. Net allowance for impairment on financing and advances Group and Bank 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 Net allowance for impairment on financing, advances and others: - Collective assessment - 12 months expected credit losses (ECL) - Collective assessment Lifetime ECL - Individual assessment Lifetime ECL Bad debts and financing recovered 27. 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 (3,354) (11,550) (7) (7,594) 33,598 51,144 75,683 58,011 20,959 1,713 22,834 38,675 51,203 41,307 98,510 89,092 (21,584) (26,549) (45,692) (53,171) 29,619 14,758 52,818 35,921 Income attributable to depositors Group Deposits from customers - Mudharabah fund - Non-Mudharabah fund 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 2,076 322,607 2,463 301,755 4,110 655,769 4,962 595,799 Deposits and placements of banks and other financial institutions - Mudharabah fund - Non-Mudharabah fund 321 43 78 321 43 409 Recourse obligation on financing sold to Cagamas 17,802 7,125 35,614 7,125 342,806 311,464 695,814 608,338 36
  37. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 27. Income attributable to depositors (continued) Bank Deposits from customers - Mudharabah fund - Non-Mudharabah fund 28. 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 2,076 322,676 2,463 301,819 4,110 655,905 4,962 595,927 Deposits and placements of banks and other financial institutions - Mudharabah fund - Non-Mudharabah fund 321 43 78 321 43 409 Recourse obligation on financing sold to Cagamas 17,802 7,125 35,614 7,125 342,875 311,528 695,950 608,466 Income attributable to investment account holders Group and Bank Unrestricted investment accounts - Mudharabah - Wakalah 29. 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 3 months ended 30.06.2019 30.06.2019 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 3,382 41,463 1,184 21,731 5,299 69,576 2,895 42,825 44,845 22,915 74,875 45,720 Personnel expenses Group Salaries, allowances and bonuses Employees’ Provident Fund Other staff related costs Bank Salaries, allowances and bonuses Employees’ Provident Fund Other staff related costs 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 118,790 14,397 12,592 145,779 116,775 16,387 18,020 151,182 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 116,561 14,089 12,259 142,909 114,331 16,054 17,674 148,059 37 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 239,262 31,898 34,438 305,598 222,029 28,983 26,506 277,518 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 234,323 31,213 33,754 299,290 217,557 28,362 25,912 271,831
  38. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 30. Other overhead expenses Group Promotion Credit and debit card expenses Advertisement and publicity Others Establishment Office rental Depreciation of property and equipment Depreciation right-of-use assets Information technology expenses Security services Utilities Office maintenance Rental of equipment Takaful Others General expenses Outsourcing fees Office supplies Subscription fees Travelling and transportation Security services - cash in transit Professional fees Others Bank Promotion Credit and debit card expenses Advertisement and publicity Others 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 8,541 2,554 6,063 17,158 6,631 2,572 9,052 18,255 15,898 3,679 12,411 31,988 15,778 4,438 14,387 34,603 7,789 13,628 15,829 26,556 12,309 3,298 12,104 - 24,696 6,596 23,589 - 10,111 2,390 3,821 2,911 1,338 2,402 46,369 15,127 3,280 3,445 3,771 897 2,035 241 54,528 22,219 4,620 6,948 4,931 2,492 4,511 281 93,123 22,293 6,054 6,815 5,980 2,313 4,334 280 98,214 4,024 2,306 1,327 1,880 4,394 2,494 958 2,198 8,818 4,503 2,483 3,542 7,476 3,962 1,705 3,998 2,275 1,682 15,757 29,251 1,311 2,892 18,661 32,908 3,421 4,987 34,550 62,304 2,773 4,989 34,801 59,704 92,778 105,691 187,415 192,521 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6,631 2,486 2,730 11,847 8,541 2,421 2,006 12,968 38 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 15,898 3,422 4,382 23,702 15,778 4,260 5,076 25,114
  39. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 30. Other overhead expenses (continued) Bank 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 Establishment Office rental Depreciation of property and equipment Depreciation right-of-use assets Information technology expenses Security services Utilities Office maintenance Rental of equipment Takaful Others General expenses Outsourcing fees Office supplies Subscription fees Travelling and transportation Security services - cash in transit Professional fees Others 31. 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 7,877 13,614 15,801 26,528 12,251 3,298 12,042 - 24,580 6,596 23,466 - 10,111 2,390 3,803 2,854 1,315 2,400 46,299 15,127 3,280 3,429 3,715 878 2,035 241 54,361 22,219 4,620 6,913 4,816 2,446 4,508 281 92,780 22,293 6,054 6,783 5,878 2,272 4,329 280 97,883 4,024 2,269 1,327 1,825 4,394 2,456 958 2,164 8,818 4,432 2,483 3,455 7,476 3,904 1,705 3,924 2,275 1,614 15,841 29,175 1,311 2,863 19,277 33,423 3,421 4,841 34,962 62,412 2,773 4,923 35,896 60,601 88,442 99,631 178,894 183,598 Finance cost Group and Bank Finance cost: - Subordinated Sukuk Murabahah - Profit expense on leases Notes 17 3 months ended 30.06.2019 30.06.2018 RM’000 RM’000 6 months ended 30.06.2019 30.06.2018 RM’000 RM’000 17,438 4,474 13,465 - 34,683 8,968 26,901 - 21,912 13,465 43,651 26,901 39
  40. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 32. Segmental Reporting on Revenue, Profit and Assets Consumer Banking RM’000 Corporate and Commercial Banking RM’000 1,087,811 Treasury RM’000 Shareholders unit RM’000 Elimination RM’000 Total RM’000 317,903 376,798 34,400 (7,446) 1,809,466 483,847 71,302 555,149 (55,224) 499,925 196,330 15,772 212,102 (2,594) 209,508 52,693 95,937 148,630 21 148,651 99,509 30,697 130,206 853 131,059 (7,310) (7,310) (7,310) 832,379 206,398 1,038,777 (56,944) 981,833 (544,432) 437,401 1,011,411 301,933 261,961 28,152 (6,881) 1,596,576 467,584 81,180 548,764 (17,814) 530,950 188,576 18,723 207,299 (18,107) 189,192 (11,959) 30,471 18,512 86 18,598 150,277 24,419 174,696 174,696 (6,753) (6,753) (6,753) 794,478 148,040 942,518 (35,835) 906,683 (505,996) 400,687 6 months ended 30 June 2019 Total Revenue Net fund based income Non-fund based income Net income Net allowance for impairment Profit before overheads, zakat & tax Operating expenses Profit before zakat & tax 6 months ended 30 June 2018 Total Revenue Net fund based income Non-fund based income Net income Net allowance for impairment Profit before overheads, zakat & tax Operating expenses Profit before zakat & tax Effective 1 January 2019, the Group and the Bank have adopted a new methodology in allocating the net fund based income. 40
  41. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 32. Segmental Reporting on Revenue, Profit and Assets (continued) At 30 June 2019 Segment assets Unallocated assets Total assets At 31 December 2018 Segment assets Unallocated assets Total assets Consumer Banking RM’000 Corporate and Commercial Banking RM’000 Treasury RM’000 Shareholders unit RM’000 Elimination RM’000 Total RM’000 35,557,291 10,838,178 14,785,877 46,321 (29,778) 61,197,889 3,045,692 64,243,581 15,381,399 46,194 (30,829) 61,077,445 2,861,288 63,938,733 34,711,553 10,969,128 41
  42. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Fair value of Financial Instruments Fair value hierarchy MFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources and unobservable inputs reflect the Group’s market assumptions. The fair value hierarchy is as follows:  Level 1 – Quoted price (unadjusted) in active markets for the identical assets or liabilities. This level includes listed equity securities and debt instruments.  Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This level includes profit rates swap and structured debt. The sources of input parameters include Bank Negara Malaysia (BNM) indicative yields or counterparty credit risk.  Level 3 – Inputs for asset or liability that are not based on observable market data (unobservable inputs). This level includes equity investments and debt instruments with significant unobservable components. The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position. The table does not include those short-term/on demand financial assets and financial liabilities where the carrying amounts are reasonable approximation of their fair values. Group 30 June 2019 RM’000 Financial assets Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Financing, advances and others Financial liabilities Derivative financial liabilities Recourse obligations on financing sold to Cagamas Subordinated Sukuk Murabahah Fair value of financial instruments not carried at fair value Level 3 Fair value of financial instruments carried at fair value Level 1 Level 2 Level 3 Total Total fair value Carrying amount - 1,022,055 - 1,022,055 - 1,022,055 1,022,055 - 24,346 - 24,346 - 24,346 24,346 9,295 12,279,536 37,930 12,326,761 - 12,326,761 12,326,761 - - - - 49,943,790 49,943,790 46,395,469 - 6,763 - 6,763 - 6,763 6,763 - - - - 1,542,540 1,542,540 1,501,187 - - - - 1,331,653 1,331,653 1,308,526 42
  43. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Fair value of Financial Instruments (continued) Fair value hierarchy (continued) Group 31 December 2018 RM’000 Financial assets Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Financing, advances and others Financial liabilities Derivative financial liabilities Recourse obligations on financing sold to Cagamas Subordinated Sukuk Murabahah Bank 30 June 2019 RM’000 Financial assets Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Financing, advances and others Financial liabilities Derivative financial liabilities Recourse obligations on financing sold to Cagamas Subordinated Sukuk Murabahah Fair value of financial instruments carried at fair value Level 1 Level 2 Level 3 Total Fair value of financial instruments not carried at fair value Level 3 Total fair value Carrying amount - 364,959 - 364,959 - 364,959 364,959 - 34,148 - 34,148 - 34,148 34,148 12,446 11,318,781 23,072 11,354,299 - 11,354,299 11,354,299 - - - - 46,594,025 46,594,025 45,680,680 - 19,520 - 19,520 - 19,520 19,520 - - - - 1,517,235 1,517,235 1,501,187 - - - - 1,361,535 1,361,535 1,308,634 Fair value of financial instruments not carried at fair value Level 3 Fair value of financial instruments carried at fair value Level 1 Level 2 Level 3 Total Total fair value Carrying amount - 1,016,525 - 1,016,525 - 1,016,525 1,016,525 - 24,346 - 24,346 - 24,346 24,346 9,295 12,279,536 38,720 12,327,551 - 12,327,551 12,327,551 - - - - 49,943,790 49,943,790 46,395,469 - 6,763 - - - 6,763 6,763 - - - - 1,542,540 1,542,540 1,501,187 - - - - 1,331,653 1,331,653 1,308,526 43
  44. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Fair value of Financial Instruments (continued) Fair value hierarchy (continued) Bank 31 December 2018 RM’000 Financial assets Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Financing, advances and others Financial liabilities Derivative financial liabilities Recourse obligations on financing sold to Cagamas Subordinated Sukuk Murabahah Fair value of financial instruments carried at fair value Level 1 Level 2 Level 3 Total Fair value of financial instruments not carried at fair value Level 3 Total fair value Carrying amount - 359,533 - 359,533 - 359,533 359,533 - 34,148 - 34,148 - 34,148 34,148 12,446 11,318,781 23,862 11,355,089 - 11,355,089 11,355,089 - - - - 46,594,025 46,594,025 45,680,680 - 19,520 - 19,520 - 19,520 19,520 - - - - 1,517,235 1,517,235 1,501,187 - - - - 1,361,535 1,361,535 1,308,634 44
  45. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Fair value of Financial Instruments (continued) Fair value hierarchy (continued) Unobservable inputs used in measuring fair value The following table shows the valuation technique used in the determination of fair values within Level 3, as well as the key unobservable inputs used in the valuation models. (a) Financial instruments carried at fair value Type Equity investments Valuation technique Adjusted net asset method Significant unobservable inputs Assets and liabilities of the investee company Inter-relationship between significant unobservable inputs and fair value measurement Changes on the assets and liabilities would reflect the fair value measurement (b) Financial instruments not carried at fair value The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: (i) Other financial assets at amortised cost The fair values of securities that are actively traded are determined by quoted bid prices. For non-actively traded securities that classified as other financial assets at amortised cost, the fair values are valued at cost less impairment or estimated using discounted cash flows analysis. Where discounted cash flows technique is used, the estimated future cash flows are discounted using applicable prevailing market or indicative rates of similar instruments at the reporting date. (ii) Financing, advances and others The fair values of variable rate financing are estimated to approximate their carrying values. For fixed rate financing, the fair values are estimated based on expected future cash flows of contractual instalment payments, discounted at applicable and prevailing rates at reporting date offered for similar facilities to new borrowers with similar credit profiles. In respect of impaired financing, the fair values are deemed to approximate the carrying values which are net of impairment allowances. (iii) Subordinated Sukuk Murabahah The fair values of subordinated obligations are estimated by discounting the expected future cash flows using the applicable prevailing profit rates for borrowings with similar risks profiles. 45
  46. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 34. Commitment and Contingencies The commitment and contingencies and their related counterparty credit risk for the Group and Bank are as follows: As at 30 June 2019 Credit related exposures Direct credit substitutes Transaction related contingent items Short-term self-liquidating trade related contingencies Other commitments, such as formal standby facilities and credit lines, with an original maturity exceeding one year Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness Derivative Financial Instruments Foreign exchange related contracts - less than one year Profit rate related contracts - one year to less than five years Total Principal Amount RM’000 Credit Equivalent Amount RM’000 Risk Weighted Asset RM’000 373,399 945,445 373,399 472,722 372,792 452,410 780,192 156,039 155,506 1,496,888 784,444 545,665 7,577,717 11,173,641 1,750,604 1,526,373 Principal Amount RM’000 Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 Risk Weighted Asset RM’000 5,014,504 22,573 74,520 47,972 162,952 1,773 7,928 5,321 5,177,456 24,346 82,448 53,293 16,351,097 24,346 1,833,052 1,579,666 46
  47. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Commitment and Contingencies (continued) The commitment and contingencies and their related counterparty credit risk for the Group and Bank are as follows (continued): As at 31 December 2018 Credit related exposures Direct credit substitutes Transaction related contingent items Short-term self-liquidating trade related contingencies Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year - exceeding one year Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness Total Risk Weighted Asset RM’000 487,980 1,015,198 487,980 507,599 488,189 471,867 247,008 49,402 43,608 1,627,618 813,809 630,266 7,336,717 10,714,521 1,858,790 1,633,930 Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 Risk Weighted Asset RM’000 2,869,455 30,653 65,839 50,495 400,000 178,379 3,447,834 1,708 1,787 34,148 810 10,264 76,913 162 6,419 57,076 14,162,355 34,148 1,935,703 1,691,006 Principal Amount RM’000 Derivative Financial Instruments Foreign exchange related contracts - less than one year Profit rate related contracts - less than one year - five years and above Credit Equivalent Amount RM’000 Principal Amount RM’000 47
  48. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 34. Capital adequacy Total capital and capital adequacy ratios of the Bank have been computed based on BNM’s Capital Adequacy Framework for Islamic Banks (Capital Components and Risk-Weighted Assets). The Bank has adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. The capital adequacy ratios of the Group and the Bank are set out below: CET I & Tier I capital ratio Total capital ratio Group 30.06.2019 31.12.2018 30.06.2019 31.12.2018 13.317% 17.767% 13.900% 18.379% 13.287% 17.741% 13.929% 18.403% Bank The components of CET I, Tier I and Tier II capital: Group 30.06.2019 31.12.2018 RM’000 RM’000 Bank 30.06.2019 RM’000 31.12.2018 RM’000 Paid-up share capital Retained earnings Other reserves Less: Deferred tax assets Gain on financial instruments classified as fair value through other comprehensive income Regulatory reserve Investment in subsidiaries Total CET I and Tier I Capital 3,012,368 2,444,249 57,244 3,012,368 2,362,476 (98,437) 3,012,368 2,440,034 57,419 3,012,368 2,359,060 (98,261) (28,209) (51,385) (26,703) (49,842) (87,097) (10,000) - (1,446) (10,000) - (87,097) (10,000) (15,525) (1,446) (10,000) (15,525) 5,388,555 5,213,576 5,370,496 5,196,354 Sukuk Murabahah Collective assessment allowance and regulatory reserve ^ Total Tier II Capital 1,300,000 1,300,000 1,300,000 1,300,000 431,113 1,731,113 441,938 1,741,938 430,907 1,730,907 441,788 1,741,788 Total Capital 7,119,668 6,955,514 7,101,403 6,938,142 ^ Collective assessment allowance on non-impaired financing and regulatory reserve, subject to maximum of 1.25% of total credit risk-weighted assets less credit absorbed by unrestricted investment accounts. 48
  49. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 35. Capital adequacy (continued) The breakdown of risk-weighted assets by each major risk category is as follows: Credit risk Less : Credit risk absorbed by unrestricted investment accounts Market risk Operational risk 35. Group 30.06.2019 31.12.2018 RM’000 RM’000 Bank 30.06.2019 RM’000 31.12.2018 RM’000 39,956,791 38,963,775 39,940,328 38,951,812 (5,467,762) 34,489,029 747,171 3,450,337 38,686,537 (3,608,741) 35,355,034 422,763 3,370,712 39,148,509 (5,467,762) 34,472,566 747,171 3,418,265 38,638,002 (3,608,741) 35,343,071 422,763 3,342,947 39,108,781 Performance review for the six months ended 30 June 2019 The Group reported profit before zakat and tax of RM437.4 million, an increase of 9.2% for the six months ended 30 June 2019 compared to the previous corresponding period. The improved performance was mainly attributed from higher net income of RM76.4 million, offset by higher personnel expenses and finance cost of RM28.1 million and RM16.8 million respectively. Year-on-year net financing assets grew by RM3.2 billion or 7.3% to reach RM46.4 billion as at end of 30 June 2019. Correspondingly, net fund based income from financing also increased by RM37.9 million or 4.8%. As at 30 June 2019, customer deposits and investment accounts stood at RM54.7 billion with a yearon-year increase of RM5.0 billion or 10.0 %. CASA ratio as at end of June 2019 was 30.1% against the Islamic Banking Industry CASA ratio of 26.3% as at end of May 2019. The Group’s gross impaired financing ratio was 1.2% while the net impaired financing ratio was at negative 0.4% as at end of 30 June 2019 compared to 0.92% and a negative 0.80% respectively as at 31 December 2018. The Banking System gross impaired ratio was 1.5% and the net impaired ratio was 1.0% as at end of May 2019, based on BNM’s statistical bulletin. The key performance ratios as at end of June 2019 also compared favourably against the Banking System ratios as at end of 31 March 2019. The Bank’s return on equity and return on assets based on profit before zakat and tax (“PBZT”) were 16.1% and 1.4% respectively against the Islamic Banking Industry’s 15.7% and 1.1% respectively. 36. Prospect for 2019 In BNM’s quarterly report released on 16th May 2019, overall Gross Domestic Product (“GDP”) growth was moderate at 4.5% (4Q2018: 4.7%). The economic growth is expected to continuously moderate for the year with the central bank’s GDP projection at the range of 4.3% to 4.8%. There are downside risks to growth from heightened uncertainties in the global and domestic environment, trade tensions and extended weakness in commodity-related sectors. 49
  50. Bank Islam Malaysia Berhad (98127-X) (Incorporated in Malaysia) Unaudited Interim Financial Statements 37. Prospect for 2019 (continued) In 1H2019, there was a net outflow of RM2.2 billion mainly on the account of Treasury Bills, Private Debt Securities and Government Investment Issues. BNM has been actively intervening the foreign exchange markets in order to stabilise the Malaysian Ringgit. However, outflows of funds have been quite persistent. Consequently, BNM international reserve assets fell from USD109.4 billion in May 2018 to USD102.6 billion in May 2019. On 7 May 2019, the Monetary Policy Committee (“MPC”) reduced the Overnight Policy Rate (“OPR”) by 25 basis points at 3.00%. Therefore, we can expect banking system Net Income Margin (“NIM”) will continue to be compressed with lower benchmark profit rate. While the OPR could stay low, deposit rates would rise due to competition in the banking industries. The lack of liquidity is not too alarming at the current juncture as current account in the balance of payment remains in surplus while industry financing-to-deposit ratio is well below 100%. Nevertheless, we expect competition for deposits will persist as banks brace for upcoming implementation of net stable funding ratio (“NSFR”) requirement. The banking sector is expected to brace for a challenging second half of 2019 against the backdrop of decrease in financing growth and thinning margins. Financing growth for the banking sector in Malaysia is expected to decrease at about 5% in 2019 (2018: +5.6%), as GDP growth moderates. We expect consumer and business financing growth tapering down in 2019 due to slowdown in exports. The Bank believes that it is able to maintain a stable outlook on profitability, albeit challenging economic environment. That said, overall profitability indicators are likely to remain intact, as the Bank continues to grow our financing assets, while taking certain measures in cost management. Despite small percentage of gross income contributed by non-fund based, the pursuit for digitalisation is hoped to provide a boost in the longer term. 38. Subsequent events There were no material events subsequent to the end of the reporting period that require disclosure or adjustments to the unaudited interim financial statements. 39. Credit Transactions and Exposures with Connected Parties Group and Bank 30.06.2019 31.12.2018 RM’000 RM’000 Outstanding credit exposures with connected parties % of outstanding credit exposures to connected parties as a proportion of total credit exposures % of outstanding credit exposures with connected parties which is non-performing or in default 50 1,500,100 1,538,799 3.18% 3.31% 0.0002% 0.0008%