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

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

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

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  1. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Financial Position as at 30 September 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 30.09.2019 31.12.2018 RM’000 RM’000 Bank 30.09.2019 31.12.2018 RM’000 RM’000 10 608,125 2,092,654 605,116 2,086,703 11 1,285,106 2,432,000 1,285,106 2,432,000 12 13 891,053 21,649 364,959 34,148 885,476 21,649 359,533 34,148 14 12,247,438 11,354,299 12,248,176 11,355,089 15 48,208,214 45,680,680 48,208,214 45,680,680 16 106,088 129,042 102,633 126,533 17 1,671,859 32,003 43,086 222,967 190,047 65,527,635 1,602,284 8,466 51,385 188,816 63,938,733 1,671,859 32,002 41,580 222,967 15,525 189,514 65,529,817 1,602,284 8,403 49,842 15,525 188,153 63,938,893 18 48,036,060 49,895,232 48,055,947 49,909,199 19 13 7,961,976 13,226 27,468 5,176,819 19,520 41,114 7,961,976 13,226 27,468 5,176,819 19,520 41,114 20 1,501,187 1,501,187 1,501,187 1,501,187 21 22 17 1,326,155 716,730 317,232 46,161 59,946,195 1,308,634 706,133 13,687 58,662,326 1,326,155 703,742 317,232 45,935 59,952,868 1,308,634 695,714 13,539 58,665,726 1
  2. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Financial Position as at 30 September 2019 (continued) Note Equity Share capital Reserves Total equity 23 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 35 Group 30.09.2019 31.12.2018 RM’000 RM’000 Bank 30.09.2019 31.12.2018 RM’000 RM’000 3,012,368 2,569,072 5,581,440 3,012,368 2,264,039 5,276,407 3,012,368 2,564,581 5,576,949 3,012,368 2,260,799 5,273,167 65,527,635 63,938,733 65,529,817 63,938,893 45,239 78,717 45,239 78,717 65,572,874 64,017,450 65,575,056 64,017,610 16,755,796 14,162,355 16,755,796 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the nine months ended 30 September 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 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 24 694,404 680,226 2,089,010 1,916,519 25 100,865 63,412 274,876 187,985 26 120,609 122,468 361,225 357,845 27 (34,057) (26,104) (86,875) (62,025) (156) 3 (135) 89 349 (4,317) (4,276) (3,798) (12,085) (13,332) 877,697 835,729 2,622,218 2,387,081 111 146 344 479 28 (345,635) (324,945) (1,041,449) (933,283) 29 (45,017) (23,533) (119,892) (69,253) 30 31 32 487,156 (154,521) (101,640) (22,204) 487,397 (150,273) (98,360) (13,734) 1,461,221 (460,119) (289,055) (65,855) 1,385,024 (427,791) (290,881) (40,635) Profit before zakat and tax 208,791 225,030 646,192 625,717 Zakat Tax expense (3,795) (50,421) (3,780) (53,544) (11,386) (157,574) (11,300) (158,283) Profit for the period 154,575 167,706 477,232 456,134 19.01 18.49 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the nine months ended 30 September 2019 (continued) Group 3 months ended 30.09.2019 30.09.2018 Not e Profit for the period RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 RM’000 154,575 167,706 477,232 456,134 (4,975) (9,221) (5,022) (8,389) 108,809 81,248 339,397 45,897 (156) 3 (135) 89 (35,690) (19,248) (79,079) (21,169) (17,524) (14,881) (60,723) (5,956) Items that will not be reclassified to profit or loss Movement in fair value reserve (equity investments) : Net change in fair value 1,921 - 13,628 (1,487) Other comprehensive income for the period, net of tax 52,385 37,901 208,066 8,985 Total comprehensive income for the period 206,960 205,607 685,298 465,119 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 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the nine months ended 30 September 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 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 24 694,404 680,226 2,089,010 1,916,519 25 100,865 63,412 274,876 187,985 26 113,599 110,974 338,497 330,821 27 (34,057) (26,104) (86,875) (62,025) (156) 3 (135) 89 349 (4,317) (4,276) (3,798) (12,085) (13,332) 870,687 824,235 2,599,490 2,360,057 111 146 344 479 28 (345,702) (325,024) (1,041,652) (933,490) 29 (45,017) (23,533) (119,892) (69,253) 30 31 32 480,079 (150,903) (98,660) (22,204) 475,824 (147,508) (89,934) (13,734) 1,438,290 (450,193) (277,554) (65,855) 1,357,793 (419,339) (273,532) (40,635) Profit before zakat and tax 208,312 224,648 644,688 624,287 Zakat Tax expense (3,750) (50,376) (3,750) (53,506) (11,250) (157,394) (11,250) (159,745) Profit for the period 154,186 167,392 476,044 453,292 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income for the nine months ended 30 September 2019 (continued) Bank 3 months ended 30.09.2019 30.09.2018 Not e Profit for the period RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 RM’000 154,186 167,392 476,044 453,292 (5,037) (9,235) (5,085) (8,069) 108,809 81,248 339,449 45,897 (156) 3 (135) 89 (35,690) (19,248) (79,079) (21,169) (17,524) (14,881) (60,723) (5,956) Items that will not be reclassified to profit or loss Movement in fair value reserve (equity investments) : Net change in fair value 1,921 - 13,576 (1,487) Other comprehensive income for the period, net of tax 52,323 37,887 208,003 9,305 Total comprehensive income for the period 206,509 205,279 684,047 462,597 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 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Consolidated Statement of Changes in Equity for the nine months ended 30 September 2019 Group At 1 January 2019 Effects of adoption of MFRS 16 (net of tax) Adjusted total equity at 1 January 2019 Note 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 (67,316) 2,295,160 5,276,407 (67,316) 5,209,091 3,012,368 - (5,022) 213,088 208,066 109,629 477,232 477,232 (312,949) 2,459,443 477,232 (5,022) 213,088 685,298 (312,949) 5,581,440 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 Net change in fair value reserve (net of tax) Total comprehensive income for the period Transfer from regulatory reserve to retained earnings Dividends paid on ordinary shares Issue of shares pursuant to Dividend Reinvestment Plan At 30 September 2018 142,870 3,012,368 - (8,389) 17,374 8,985 (54,645) (92,666) 456,134 456,134 54,645 (293,050) 2,224,723 456,134 (8,389) 17,374 465,119 (293,050) 142,870 5,144,425 Profit for the period Currency translation difference in respect of foreign operations Net change in fair value reserve (net of tax) Total comprehensive income for the period Dividends paid on ordinary shares At 30 September 2019 6 9 23 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statement of Changes in Equity for the nine months ended 30 September 2019 Bank At 1 January 2019 Effects of adoption of MFRS 16 (net of tax) Adjusted total equity at 1 January 2019 Profit for the period Currency translation difference in respect of foreign operations Net change in fair value reserve (net of tax) Total comprehensive income for the period Dividends paid on ordinary shares At 30 September 2019 Note 6 9 At 1 January 2018 Adjustment on adoption of MFRS 9 (net of tax) Adjusted total equity at 1 January 2018 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 3,012,368 3,012,368 - (98,261) (98,261) 2,359,060 (67,316) 2,291,744 5,273,167 (67,316) 5,205,851 3,012,368 - (5,085) 213,088 208,003 109,742 476,044 476,044 (312,949) 2,454,839 476,044 (5,085) 213,088 684,047 (312,949) 5,576,949 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 - - (8,069) 17,374 9,305 453,292 453,292 453,292 (8,069) 17,374 462,597 142,870 3,012,368 - (54,645) (92,487) 54,645 (293,050) 2,221,824 (293,050) 142,870 5,141,705 Profit for the period Currency translation difference in respect of foreign operations Net change in fair value reserve (net of tax) Total comprehensive income for the period Transfer from regulatory reserve to retained earnings Dividends paid on ordinary shares Issue of shares pursuant to Dividend Reinvestment Plan At 30 September 2018 23 Total Equity RM’000 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Condensed Statements of Cash Flow for the nine months ended 30 September 2019 Group 9 months ended 30.09.2019 30.09.2018 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 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 646,192 161,799 625,717 190,702 644,688 161,764 624,287 190,619 807,991 816,419 806,452 814,906 (2,727,604) (2,536,427) (2,726,658) (2,501,665) 916,165 1,132,814 919,516 1,088,218 (1,003,448) (192,534) 1,779 (587,194) (155,725) 60 (1,000,690) (192,350) 1,734 (598,541) (155,575) - (1,194,203) (742,859) (1,191,306) (754,116) (1,065,462) (1,889,614) (1,065,354) (1,889,789) (366,736) (177,531) (366,736) (177,531) (2,626,401) (2,810,004) (2,623,396) (2,821,436) 4,524,654 4,185,697 4,518,703 4,185,561 (5,022) (8,390) (5,085) (8,070) 1,893,231 1,367,303 1,890,222 1,356,055 608,125 1,367,303 605,116 1,356,055 1,285,106 1,893,231 1,367,303 1,285,106 1,890,222 1,356,055 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 [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Notes to the unaudited interim financial statements for the nine months ended 30 September 2019 1. Basis of preparation The unaudited interim financial statements of the Group and of the Bank for the nine months ended 30 September 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 [Registration No. 198301002944 (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 nine months ended 30 September 2019. 4. Unusual items There were no unusual items in the nine months ended 30 September 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 nine months ended 30 September 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 as operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease. On adoption of MFRS 16, leases with non-cancellable agreements or either party has an economic incentives not to terminate the lease such that it would incur significant penalty, are recognised as Right-Of-Use (“ROU”) 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 asset for a non-cancellable property lease is measured on a retrospective basis as if the new rules had always been applied. All other ROU assets are measured at the amount of the lease liability on adoption, adjusted by for any prepaid or accrued lease payments. 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.The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 for the Group and the Bank was at 5.7%. 11
  12. Bank Islam Malaysia Berhad [Registration No. 198301002944 (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. Group Deferred tax assets Right-of-use assets Lease liabilities Reserves As previously report RM’000 Effect on adoption of MFRS 16 RM’000 As restated RM’000 51,385 2,264,039 21,258 234,111 322,685 (67,316) 72,643 234,111 322,685 2,196,723 49,842 2,260,799 21,258 234,111 322,685 (67,316) 71,100 234,111 322,685 2,193,483 Bank Deferred tax assets Right-of-use assets Lease liabilities Reserves The following is a reconciliation of total operating lease commitments at 31 December 2018 (as disclosed in the financial statements to 31 December 2018) to the lease liabilities recognised at 1 January 2019: RM’000 Group and Bank Operating lease commitments disclosed at 31 December 2018 Service charges Operating lease liabilities before discounting Discounted using incremental borrowing rate Operating lease liabilities Adjustments as a result of significant penalty in the lease’s termination option Total lease liabilities recognised under MFRS 16 at 1 January 2019 381,308 137,580 518,888 (200,528) 318,360 4,325 322,685 The recognised right-of-use assets relate to the following type of assets: Property 234,111 12
  13. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 7. Sukuk and equity securities There was no issuance or repayment of Sukuk or share buy-back during the nine months ended 30 September 2019. 8. Significant events during the nine months ended 30 September 2019 There was no other significant event during the nine months ended 30 September 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. On 11 September 2019, the Bank paid an interim dividend of approximately 6.40 sen per ordinary share totalling RM160,639,000 for the financial period ended 30 June 2019. 10. Cash and short-term funds Group 30.09.2019 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 30.09.2019 31.12.2018 RM’000 RM’000 607,666 891,697 604,986 886,074 459 608,125 1,200,957 2,092,654 130 605,116 1,200,629 2,086,703 Deposits and placements with banks and other financial institutions Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Bank Negara Malaysia Development Financial Intitution 13 1,205,106 2,432,000 80,000 1,285,106 2,432,000
  14. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 12. 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 30.09.2019 31.12.2018 RM’000 RM’000 At fair value Malaysian Government Investment Issues Unit trust Bank Negara Monetary Notes Sukuk Malaysia Islamic Treasury Bills 13. Bank 30.09.2019 31.12.2018 RM’000 RM’000 361,297 234,173 165,929 10,156 30,328 219,808 114,823 - 361,297 228,596 165,929 10,156 30,328 214,382 114,823 - 119,498 891,053 364,959 119,498 885,476 359,533 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. Group and Bank 30.09.2019 Forward contracts Profit rate swaps 31.12.2018 Forward contracts Profit rate swaps Principal amount RM’000 5,608,593 155,079 5,763,672 2,869,455 578,379 3,447,834 14 Fair value Assets Liabilities RM’000 RM’000 19,787 (12,349) 1,862 (877) 21,649 (13,226) 30,653 3,495 34,148 (17,752) (1,768) (19,520)
  15. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 14. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income: (a) Debt securities (b) Equity investments Group 30.09.2019 31.12.2018 RM’000 RM’000 Bank 30.09.2019 31.12.2018 RM’000 RM’000 12,198,292 49,146 12,247,438 12,198,292 49,884 12,248,176 11,318,781 35,518 11,354,299 11,318,781 36,308 11,355,089 (a) Debt securities at fair value through other comprehensive income Group 30.09.2019 31.12.2018 RM’000 RM’000 Malaysian Government Investment Issues Sukuk Malaysia Islamic Treasury Bills Bank Negara Monetary Notes Islamic Commercial Papers Bank 30.09.2019 31.12.2018 RM’000 RM’000 2,167,478 9,852,238 2,129,754 8,493,541 2,167,478 9,852,238 2,129,754 8,493,541 178,576 - 178,576 - - 389,231 - 389,231 12,198,292 306,255 11,318,781 12,198,292 306,255 11,318,781 Movement of allowance for impairment on financial assets at fair value through other comprehensive income. Group and Bank 30.09.2019 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 September 2019/31 December 2018 15 302 135 437 345 (43) 302
  16. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 14. Financial assets at fair value through other comprehensive income (continued) (b) Equity investments at fair value through other comprehensive income Group 30.09.2019 31.12.2018 RM’000 RM’000 Quoted Shares - outside Malaysia Unquoted Shares - in Malaysia - outside Malaysia Bank 30.09.2019 31.12.2018 RM’000 RM’000 11,164 12,446 11,164 12,446 37,980 2 37,982 23,056 16 23,072 38,718 2 38,720 23,846 16 23,862 49,146 35,518 49,884 36,308 16
  17. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (a) By type and Shariah contract Group and Bank 30 September 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 - - - 1,509 1,262,499 - - - - 1,264,008 3,489,357 804,838 54,152 - 1,278,191 10,672 836,346 8,664 - 131,011 - 38,107 7,453 1,007 193 - 15,647,842 669,139 14,392,754 9,308,183 167,890 476,390 - 114,701 - 80,328 - 47,918 55,503 1,143 8,706 - 67,828 19,185,117 787,574 114,701 55,503 14,400,207 11,393,362 241,420 476,390 967,550 8,664 67,828 4,348,347 2,133,873 131,011 48,269 5,063 41,929,760 114,701 80,328 113,270 67,828 5,063 48,967,387 Allowance for impairment on financing, advances and others :- collective assessment allowance - 12 months ECL - collective assessment allowance - lifetime ECL - individual assessment allowance- lifetime ECL (424,184) (245,923) (89,066) Net financing, advances and others 48,208,214 17
  18. Bank Islam Malaysia Berhad [Registration No. 198301002944 (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 4,924,148 2,080,256 144,827 60,030 9,599 38,864,121 106,520 89,575 127,798 73,110 9,599 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 18
  19. Bank Islam Malaysia Berhad [Registration No. 198301002944 (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 30.09.2019 31.12.2018 RM’000 RM’000 House financing Unrestricted Investment Accounts Sold to Cagamas with recourse 19 20 5,531,207 1,501,187 7,032,394 3,886,107 1,501,187 5,387,294 Personal financing Unrestricted Investment Accounts 19 2,430,769 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 30.09.2019 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 1,421,567 7,981,498 2,026,332 696,523 36,566,879 66,305 208,283 48,967,387 19 1,637,318 6,924,836 2,092,024 601,285 35,069,160 18,947 126,815 46,470,385
  20. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (c) By profit rate sensitivity Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Fixed rate House financing Others Floating rate House financing Others 998,807 2,916,215 1,073,575 3,102,294 18,801,348 26,251,017 48,967,387 17,636,273 24,658,243 46,470,385 (d) By remaining contractual maturity Group and Bank 30.09.2019 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 4,408,097 2,919,069 1,306,860 40,333,361 48,967,387 4,774,098 1,299,229 2,921,287 37,475,771 46,470,385 (e) By geographical distribution Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Central Region Eastern Region Northern Region Southern Region East Malaysia Region 23,247,899 7,953,669 6,690,659 7,513,384 3,561,776 48,967,387 20 22,125,064 7,646,307 6,640,816 6,723,490 3,334,708 46,470,385
  21. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (f) By sector Group and Bank 30.09.2019 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 993,988 6,756 770,651 1,872,193 970,524 2,315,224 1,316,798 880,474 2,151,407 1,127,580 36,561,792 48,967,387 754,835 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 46,470,385 (g) Movement in impaired financing and advances (“impaired financing”) are as follows: Group and Bank 30.09.2019 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 September 2019/31 December 2018 Gross impaired financing as a percentage of gross financing, advances and others 425,937 398,277 579,121 (202,914) (70,218) (190,511) 621,974 (321,635) (117,477) (155,202) 541,415 425,937 1.11% 0.92% The contractual amount outstanding on financing and advances that were written off during the period are still subject to enforcement activity. 21
  22. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 15. Financing, advances and others (continued) (h) Impaired financing by geographical distribution Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Central Region Eastern Region Northern Region Southern Region East Malaysia Region 237,912 106,947 123,224 48,533 24,799 541,415 245,531 101,868 25,349 31,320 21,869 425,937 (i) Impaired financing by sector Group and Bank 30.09.2019 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 22 40,098 110,558 29,463 24,143 10,265 77,857 4,420 244,611 541,415 21,426 56,665 121,506 1,501 10,936 3,066 4,642 206,195 425,937
  23. Bank Islam Malaysia Berhad [Registration No. 198301002944 (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 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 September 2019 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 12-month ECL RM’000 416,450 1,252 (6,552) (439) (46,437) 93,135 (30,944) (2,171) 424,294 390,478 6,841 (4,419) (523) (22,326) 88,675 (39,166) (3,110) 416,450 23 Collective Lifetime ECL Lifetime not creditECL creditimpaired impaired RM’000 RM’000 129,402 (1,116) 9,375 (9,445) 47,046 2,256 (24,533) 152,985 139,501 (6,525) 8,639 (8,454) 1,175 7,437 (12,371) 129,402 Total collective RM’000 Individual RM’000 Total RM’000 87,162 (136) (2,823) 9,884 87,781 2,349 (3,966) (87,423) 92,828 633,014 88,390 97,740 (59,443) (87,423) (2,171) 670,107 156,691 35,463 (103,088) - 789,705 123,853 97,740 (59,443) (190,511) (2,171) 89,066 759,173 103,494 (316) (4,220) 8,977 101,690 5,090 (2,603) (124,950) 87,162 446,069 187,404 633,473 80,539 101,202 (54,140) (124,950) (3,110) 633,014 126,447 1,695 128,142 58,801 (30,252) - 572,516 189,099 761,615 139,340 101,202 (54,140) (155,202) (3,110) 156,691 789,705
  24. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 16. Other financial assets at amortised cost Group 30.09.2019 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 30.09.2019 31.12.2018 RM’000 RM’000 5,685 71,500 39,089 974 117,248 6,887 97,473 31,458 586 136,404 5,685 68,772 38,089 1,247 113,793 6,887 95,680 30,434 894 133,895 (5,685) (5,475) 106,088 (6,887) (475) 129,042 (5,685) (5,475) 102,633 (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 Cost At 1 January 2019 Effects of adoption of MFRS 16 At 30 September 2019 234,111 234,111 Accumulated depreciation At 1 January 2019 Depreciation for the period At 30 September 2019 (11,144) (11,144) 222,967 The Group and the Bank have entered into a 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 arrangements. 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. The Group and the Bank have also entered into cancellable operating lease agreements with significant penalty in the leases’ termination option for a period of 3 years. 24
  25. Bank Islam Malaysia Berhad [Registration No. 198301002944 (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 Current Lease liabilities 8,266 Non-current Lease liabilities 308,966 Total lease liabilities 317,232 The movement of lease liabilities during the financial year is as follows: Group and Bank RM’000 At 1 January 2019 - Effects of adoption of MFRS 16 Profit expense on leases Lease payments 322,685 13,544 (18,997) At 30 September 2019 317,232 25
  26. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 18. Deposits from customers (a) By type and Shariah contract Group 30.09.2019 31.12.2018 RM’000 RM’000 Saving Deposit Qard 4,751,889 4,410,537 4,751,889 4,410,537 Demand Deposit Qard 9,622,032 10,663,456 9,635,152 10,670,826 33,556,990 34,727,635 33,563,757 34,734,232 3,915 6,252 3,915 6,252 222,169 287,013 222,169 287,013 32,252,426 30,751,990 32,259,193 30,758,587 1,078,480 3,682,380 1,078,480 3,682,380 105,149 93,604 105,149 93,604 48,036,060 49,895,232 48,055,947 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) Bank 30.09.2019 31.12.2018 RM’000 RM’000 Maturity structure of term deposits are as follows: Group 30.09.2019 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 30.09.2019 31.12.2018 RM’000 RM’000 RM’000 RM’000 13,297,204 16,428,971 13,299,635 16,429,087 9,422,267 9,685,966 9,422,267 9,691,736 8,237,644 6,484,593 8,241,980 6,485,304 2,599,875 33,556,990 2,128,105 34,727,635 2,599,875 33,563,757 2,128,105 34,734,232 26
  27. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 18. Deposits from customers (continued) (c) By type of customers Group 30.09.2019 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 30.09.2019 31.12.2018 RM’000 RM’000 8,645,181 19,665,158 12,385,381 16,725,704 8,665,068 19,665,158 12,399,348 16,725,704 10,458,503 6,815,250 12,049,184 5,199,550 10,458,503 6,815,250 12,049,184 5,199,550 185,602 2,266,366 48,036,060 1,634,224 1,901,189 49,895,232 185,602 2,266,366 48,055,947 1,634,224 1,901,189 49,909,199 Investment accounts of customers (a) By type and Shariah contract Note Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Unrestricted investment accounts Without maturity : Mudharabah - Saving - Demand 3,099,874 2,740,904 358,970 2,594,846 2,413,645 181,201 With maturity : Wakalah 4,862,102 2,581,973 7,961,976 5,176,819 5,531,207 2,430,769 7,961,976 3,886,107 1,290,712 5,176,819 Restricted investment accounts (“RIA”) managed by the Bank^ With maturity : Wakalah 45,239 78,717 Investment portfolio : Other term financing 45,239 78,717 Investment portfolio : House financing Personal financing 15 15 27
  28. Bank Islam Malaysia Berhad [Registration No. 198301002944 (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 RM45,118,000 (2018: RM78,285,000). (b) By type of customers Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Individuals Government and statutory bodies Business enterprises Non-bank financial institutions Islamic Bank International Islamic Bank Others 20. 3,069,284 2,490,462 516,274 1,643,925 4,002 238,029 7,961,976 2,674,428 767,996 507,160 1,175,273 2,400 49,562 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. 28
  29. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 21. Subordinated Sukuk Murabahah Note Group and Bank 30.09.2019 31.12.2018 RM’000 RM’000 Issued under the RM1.0 billion Subordinated Sukuk Murabahah Programme First tranche Second tranche Third tranche (a) (b) (c) 307,656 406,389 305,887 1,019,932 303,450 400,851 302,005 1,006,306 Issued under the RM10.0 billion Sukuk Murabahah Programme First tranche (d) 306,223 302,328 1,326,155 1,308,634 Maturity Date Profit rate (% p.a.)# The details of the issued subordinated Sukuk are as follows: Note Nominal value RM’000 (a) 300,000 (b) 400,000 (c) (d) First call date* Issue date 22 April 2015 22 April 2020 22 April 2025 5.75 15 December 2015 15 December 2020 15 December 2025 5.50 300,000 13 November 2017 12 December 2022 12 November 2027 5.08 300,000 7 November 2018 7 November 2028 5.15 7 December 2023 * 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. 29
  30. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 22. Other liabilities Other payables Accruals 23. Group 30.09.2019 31.12.2018 RM’000 RM’000 30.09.2019 RM’000 31.12.2018 RM’000 564,632 141,501 706,133 594,675 109,067 703,742 556,880 138,834 695,714 605,429 111,301 716,730 Bank Share capital Group and Bank Issued and fully paid Ordinary shares At 1 January Allotment of new ordinary shares At 30 September Number of shares 30.09.2019 30.09.2018 RM’000 RM’000 Amount 30.09.2019 30.09.2018 RM’000 RM’000 2,509,982 2,466,022 3,012,368 2,869,498 2,509,982 43,960 2,509,982 3,012,368 142,870 3,012,368 The Bank increased its share capital on 20 September 2018 by RM142,870,000 via the issuance of 43,960,000 new ordinary shares at a consideration of RM3.25 each arising from the Dividend Reinvestment Plan of one hundred percent of the interim dividend of approximately 5.79 sen in respect of financial year ending 31 December 2018. 24. 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 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 204,744 208,273 618,265 594,714 4,336 469,416 15,908 694,404 4,942 423,839 43,172 680,226 12,773 1,386,946 71,026 2,089,010 14,478 1,152,373 154,954 1,916,519 30
  31. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 24. Income derived from investment of depositors’ funds (continued) (i) 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 Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net (loss)/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 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 166,819 179,481 506,280 519,759 1,042 1,507 3,504 4,021 21,320 16,752 62,448 49,333 - - 84 87 2,723 191,904 3,205 200,945 14,866 587,182 13,217 586,417 3,384 1,209 7,458 1,469 (998) 2,386 244 1,453 337 7,795 351 1,820 10,454 5,875 23,288 6,477 204,744 208,273 618,265 594,714 2,937 2,853 8,154 8,580 31
  32. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 24. Income derived from investment of depositors’ funds (continued) (ii) 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 Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net (loss)/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 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 3,622 4,304 10,697 12,782 20 33 64 89 392 362 1,137 1,091 - - 2 2 64 4,098 84 4,783 309 12,209 334 14,298 63 26 136 32 (19) 44 6 32 6 142 8 40 194 127 422 140 4,336 4,942 12,773 14,478 54 62 149 191 32
  33. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 24. Income derived from investment of depositors’ funds (continued) (iii) 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 Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net (loss)/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 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 382,170 365,234 1,135,069 1,006,891 2,387 3,078 7,839 7,816 48,847 34,037 139,997 95,387 - - 181 164 6,249 439,653 6,544 408,893 33,454 1,316,540 25,381 1,135,639 7,812 2,455 16,852 2,943 (2,295) 5,517 450 2,905 614 17,466 630 3,573 24,246 12,041 52,940 13,161 469,416 423,839 1,386,946 1,152,373 6,728 5,872 18,288 16,588 33
  34. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 24. Income derived from investment of depositors’ funds (continued) (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 Other dealing income Net gain from sale of financial assets at fair value through profit or loss Net (loss)/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 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 12,970 37,213 58,309 135,624 81 312 403 1,037 1,658 3,477 7,163 12,880 - - 10 22 212 14,921 661 41,663 1,825 67,710 3,620 153,183 270 248 787 339 (79) 191 56 304 100 887 41 380 796 1,205 2,429 1,391 15,908 43,172 71,026 154,954 224 591 942 2,265 34
  35. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 25. Income derived from investment account funds Group and Bank Finance income Unrestricted investment accounts - Mudharabah - Wakalah 26. 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 29,905 33,507 63,412 37,709 63,156 100,865 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 109,153 165,723 274,876 89,826 98,159 187,985 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 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 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 1,586 1,859 5,005 5,463 49,224 46,452 141,794 133,556 50,810 2 48,313 3 146,802 4 139,023 11,213 18,698 40,215 45,491 3,423 12 14,648 (29) 18,669 8,865 (43) 49,037 (1) 48 45,538 53 27 4,736 894 53 27 259 4,995 894 35
  36. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 26. Income derived from investment of shareholders’ funds (continued) 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 Fees and commission Fees Commission Others Other income Net gain on disposal of property and equipment Rental income Other income 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 46,614 3,775 3,594 53,983 44,592 3,309 6,781 54,682 131,454 11,418 14,898 157,770 130,477 14,918 24,847 170,242 423 610 82 1,115 104 621 52 777 421 1,832 368 2,621 374 1,672 102 2,148 120,609 122,468 361,225 357,845 1,586 1,859 5,005 5,463 49,224 46,452 141,794 133,556 1 50,811 1 48,312 3 146,802 3 139,022 11,212 18,701 40,214 45,511 3,420 12 14,644 (29) 18,672 8,861 (43) 49,032 48 45,559 10 9 4,600 787 10 9 259 4,859 787 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 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 36
  37. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 26. Income derived from investment of shareholders’ funds (continued) 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 Fees and commission Fees Commission Others Other income Net gain on disposal of property and equipment Rental income Other income 27. 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 37,554 4,858 4,555 46,967 33,644 5,065 4,459 43,168 105,218 15,848 13,927 134,993 108,220 19,896 15,003 143,119 423 702 42 1,167 104 702 7 813 421 2,105 285 2,811 374 1,937 23 2,334 113,599 110,974 338,497 330,821 Net allowance for impairment on financing and advances Group and Bank Net allowance for impairment on financing, advances and others: - Collective assessment 12 months ECL - Collective assessment Lifetime ECL - Individual assessment Lifetime ECL Bad debts and financing recovered 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 15,761 13,508 15,754 10,475 35,250 20,695 110,933 74,145 12,629 63,640 19,144 53,347 35,463 162,150 57,819 142,439 (29,583) (27,243) (75,275) (80,414) 34,057 26,104 86,875 62,025 37
  38. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 28. Income attributable to depositors Group Deposits from customers: - Mudharabah fund - Non-Mudharabah fund Deposits and placements of banks and other financial institutions: - Non-Mudharabah fund Recourse obligation on financing sold to Cagamas 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 2,080 325,676 2,351 304,781 6,190 981,445 7,356 900,580 81 - 402 409 17,798 345,635 17,813 324,945 53,412 1,041,449 24,938 933,283 2,080 325,743 2,351 304,860 6,190 981,648 7,356 900,787 81 - 402 409 17,798 345,702 17,813 325,024 53,412 1,041,652 24,938 933,490 Bank Deposits from customers: - Mudharabah fund - Non-Mudharabah fund Deposits and placements of banks and other financial institutions: - Non-Mudharabah fund Recourse obligation on financing sold to Cagamas 29. Income attributable to investment account holders Group and Bank Unrestricted investment accounts: - Mudharabah - Wakalah 3 months ended 30.09.2019 30.09.2019 RM’000 RM’000 1,268 22,265 23,533 2,350 42,667 45,017 38 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 7,649 112,243 119,892 4,163 65,090 69,253
  39. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 30. Personnel expenses Group Salaries, allowances and bonuses Employees’ Provident Fund Other staff related costs 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 119,768 16,702 18,051 154,521 119,695 14,397 16,181 150,273 359,030 48,600 52,489 460,119 341,724 43,380 42,687 427,791 116,966 16,313 17,624 150,903 117,562 14,100 15,846 147,508 351,289 47,526 51,378 450,193 335,119 42,462 41,758 419,339 Bank Salaries, allowances and bonuses Employees’ Provident Fund Other staff related costs 31. 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 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 9,955 4,933 5,350 20,238 7,755 2,310 10,237 20,302 25,853 8,612 17,761 52,226 23,533 6,748 24,624 54,905 6,218 13,868 22,047 40,424 13,546 4,548 13,091 2,352 4,068 3,317 1,407 2,308 39 50,894 12,152 12,145 1,580 3,630 2,582 1,232 2,002 40 49,231 38,242 11,144 35,310 6,972 11,016 8,248 3,899 6,819 320 144,017 35,741 34,438 7,634 10,445 8,562 3,545 6,336 320 147,445 39
  40. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 31. Other overhead expenses (continued) 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 General expenses Outsourcing fees Office supplies Subscription fees Travelling and transportation Security services - cash in transit Professional fees Others 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 3,793 2,428 758 2,240 1,932 2,590 16,767 30,508 4,746 2,039 1,209 2,013 1,900 1,340 15,580 28,827 12,611 6,931 3,241 5,782 5,353 7,577 51,317 92,812 12,222 6,001 2,914 6,011 4,673 6,329 50,381 88,531 101,640 98,360 289,055 290,881 9,955 4,840 2,207 17,002 7,755 2,222 1,954 11,931 25,853 8,262 6,589 40,704 23,533 6,482 7,030 37,045 6,205 13,837 22,006 40,365 13,491 4,548 13,091 2.352 4,049 3,261 1,385 2,306 39 50,727 12,090 12,145 1,580 3,609 2,525 1,213 2,001 40 49,040 38,071 11,144 35,310 6,972 10,962 8,077 3,831 6,814 320 143,507 35,556 34,438 7,634 10,392 8,403 3,485 6,330 320 146,923 Bank 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 40
  41. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 31. Other overhead expenses (continued) 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 General expenses Outsourcing fees Office supplies Subscription fees Travelling and transportation Security services - cash in transit Professional fees Others 32. 9 months ended 30.09.2019 30.09.2018 RM’000 RM’000 3,793 2,393 758 2,186 1,932 2,551 17,318 30,931 4,746 2,004 1,209 1,971 1,900 1,268 15,865 28,963 12,611 6,825 3,241 5,641 5,353 7,392 52,280 93,343 12,222 5,908 2,914 5,895 4,673 6,191 51,761 89,564 98,660 89,934 277,554 273,532 Finance cost Group and Bank Finance cost: - Subordinated Sukuk Murabahah - Profit expense on leases Notes 17 3 months ended 30.09.2019 30.09.2018 RM’000 RM’000 13,734 13,734 17,628 4,576 22,204 41 6 months ended 30.09.2019 30.09.2018 RM’000 RM’000 52,311 13,544 65,855 40,635 40,635
  42. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Segmental Reporting on Revenue, Profit and Assets Consumer Banking RM’000 Corporate and Commercial Banking RM’000 Treasury RM’000 Shareholders unit RM’000 Elimination RM’000 Total RM’000 1,637,156 481,452 569,793 48,195 (11,141) 2,725,455 731,415 108,499 839,914 (57,885) 782,029 289,984 25,121 315,105 (33,991) 281,114 77,332 154,711 232,043 1,068 233,111 145,247 42,743 187,990 187,990 (10,938) (10,938) (10,938) 1,243,978 320,136 1,564,114 (90,808) 1,473,306 (827,114) 646,192 1,543,665 462,365 420,830 46,296 (10,328) 2,462,828 722,195 116,266 838,461 (33,437) 805,024 288,178 26,666 314,844 (28,588) 286,256 (13,641) 72,847 59,206 89 59,295 217,277 40,625 257,902 257,902 (10,121) (10,121) (10,121) 1,214,009 246,283 1,460,292 (61,936) 1,398,356 (772,639) 625,717 9 months ended 30 September 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 9 months ended 30 September 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. 42
  43. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 33. Segmental Reporting on Revenue, Profit and Assets (continued) At 30 September 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 36,180,472 12,027,741 14,440,536 52,247 (36,979) 62,664,017 2,863,618 65,527,635 15,381,399 46,194 (30,829) 61,077,445 2,861,288 63,938,733 34,711,553 10,969,128 43
  44. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 34. 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 September 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 - 891,053 - 891,053 - 891,053 891,053 - 21,649 - 21,649 - 21,649 21,649 11,164 12,198,292 37,982 12,247,438 - 12,247,438 12,247,438 - - - - 48,356,828 48,356,828 48,208,214 - 13,226 - 13,226 - 13,226 13,226 - - - - 1,548,690 1,548,690 1,501,187 - - - - 1,339,460 1,339,460 1,326,155 44
  45. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 34. 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 September 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 - 885,476 - 885,476 - 885,476 885,476 - 21,649 - 21,649 - 21,649 21,649 11,164 12,198,292 38,720 12,248,176 - 12,248,176 12,248,176 - - - - 48,356,828 48,356,828 48,208,214 - 13,226 - - - 13,226 13,226 - - - - 1,548,690 1,548,690 1,501,187 - - - - 1,339,460 1,339,460 1,326,155 45
  46. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 34. 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 46
  47. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 34. 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. 47
  48. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 35. Commitment and Contingencies The commitment and contingencies and their related counterparty credit risk for the Group and Bank are as follows: As at 30 September 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’000 400,549 887,993 400,549 443,996 398,877 420,771 647,941 129,588 129,555 1,153,212 576,606 479,961 7,902,429 10,992,124 1,550,739 1,429,164 Principal Amount RM’000 Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 Risk Weighted Asset RM’000 5,608,593 19,787 75,133 51,443 155,079 5,763,672 1,862 21,649 7,719 82,852 5,238 56,681 16,755,796 21,649 1,633,591 1,485,845 48
  49. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 35. 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 49
  50. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 36. 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 30.09.2019 31.12.2018 30.09.2019 31.12.2018 13.317% 17.767% 13.107% 17.479% 13.287% 17.741% 13.137% 17.503% Bank The components of CET I, Tier I and Tier II capital: Group 30.09.2019 31.12.2018 RM’000 RM’000 Bank 30.09.2019 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 2,304,868 109,629 3,012,368 2,362,476 (98,437) 3,012,368 2,300,653 109,742 3,012,368 2,359,060 (98,261) (43,086) (51,385) (41,580) (49,842) (118,645) (10,000) - (1,446) (10,000) - (118,645) (10,000) (15,525) (1,446) (10,000) (15,525) 5,255,134 5,213,576 5,237,013 5,196,354 Sukuk Murabahah Collective assessment allowance and regulatory reserve ^ Total Tier II Capital 1,300,000 1,300,000 1,300,000 1,300,000 446,839 1,746,839 441,938 1,741,938 446,656 1,746,656 441,788 1,741,788 Total Capital 7,001,973 6,955,514 6,983,669 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. 50
  51. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 36. 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 37. Group 30.09.2019 31.12.2018 RM’000 RM’000 Bank 30.09.2019 RM’000 31.12.2018 RM’000 41,534,839 38,963,775 41,520,185 38,951,812 (5,787,689) 35,747,150 756,009 3,500,338 40,003,497 (3,608,741) 35,355,034 422,763 3,370,712 39,148,509 (5,787,689) 35,732,496 756,009 3,465,872 39,954,377 (3,608,741) 35,343,071 422,763 3,342,947 39,108,781 Performance review for the nine months ended 30 September 2019 The Group reported profit before zakat and tax of RM646.2 million, an increase of 3.3% for the nine months ended 30 September 2019 compared to the previous corresponding period. The improved performance was mainly attributed from higher net income of RM1,461.2 million, offset by higher personnel expenses and finance cost of RM460.1 million and RM65.8 million respectively. Year-on-year net financing assets grew by RM4.0 billion or 8.9% to reach RM48.2 billion as at end of 30 September 2019. Correspondingly, net fund based income from financing also increased by RM30.0 million or 2.5%. As at 30 September 2019, customer deposits and investment accounts stood at RM56.0 billion with a year-on-year increase of RM5.7 billion or 11.3%. Current Account, Saving Account and Transactional Investment Account (“CASATIA”) ratio as at end of September 2019 was 31.2% against previous corresponding period of 32.3%. The Group’s gross impaired financing ratio was 1.11% while the net impaired financing ratio was at negative 0.45% as at end of 30 September 2019 compared to 0.92% and a negative 0.80% respectively as at 31 December 2018. The Banking System gross impaired ratio was 1.61% and the net impaired ratio was 0.16% as at end of August 2019, based on BNM’s statistical bulletin. The key performance ratios as at end of September 2019 also compared favourably against the Banking System ratios as at end of 31 August 2019. The Bank’s return on equity and return on assets based on profit before zakat and tax (“PBZT”) were 16.0% and 1.40% respectively against the Islamic Banking Industry’s 15.7% and 1.10% respectively. 51
  52. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 38. Prospect for 2019 In BNM’s quarterly report released on 16 August 2019, overall Gross Domestic Product (“GDP”) growth was higher at 4.9% in Q2 2019. Strong G'DP growth was attributable by continued expansion in domestic demand. Average headline inflation for Year-to-Date (“YTD”) is 0.3% and is expected to remain low. This is underpinned by the lapse in the impact of consumption tax policy changes, the muted outlook on global oil prices, and policy measures in containing food prices. On 12 September 2019, the Monetary Policy Committee (“MPC”) of BNM has decided to maintain the Overnight Policy Rate (“OPR”) at 3.00%. The decision indicates on the slower pace in global activity in most major advanced and emerging economies. This is likely due to escalating trade tension, uncertainties in the global and domestic environment as well as weak commodity-related sectors. While the OPR remains at 3.00%, deposit rates would rise due to continuous competition in the banking industries as banks brace for upcoming implementation of net stable funding ratio (“NSFR”) requirements. Nonetheless, 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%. Net Income Margin (“NIM”) is likely to be compressed further should deposit rates go higher despite OPR remains at 3.00%. The banking sector is expected to brace for a tougher second half against the backdrop of decrease in financing growth and thinning margins. Financing growth for the industry is expected to decrease to about 5% in 2019 (2018: +5.6%), as GDP growth moderates. We expect consumer and business financing growth to taper down in 2019 due to slowdown in exports. This will continue to compress the NIM. Nevertheless, the Bank believes that it is able to maintain a stable outlook on profitability, albeit a challenging economic environment. Overall profitability indicators are likely to remain intact, as the Bank continues expanding while containing costs. The pursuit for digitalisation will help to increase transactions used by the customers and is hoped to provide a boost for non-fund based income in the longer term. 39. 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. 52