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Bank Islam Malaysia Berhad: Unaudited Interim Financial Statements - 30 June 2022

IM Insights
By IM Insights
2 years ago
Bank Islam Malaysia Berhad: Unaudited Interim Financial Statements - 30 June 2022

Amanah, Hibah, Islam, Islamic banking, Murabahah, Shariah, Sukuk, Takaful, Wakalah, Zakat, Credit Risk, Net Assets, Provision, 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 June 2022 Note Assets Cash and short-term funds Financial assets at fair value through profit or loss (“FVTPL”) Derivative financial assets Financial assets at fair value through other comprehensive income (“FVOCI”) Financial assets at amortised cost (“AC”) Financing, advances and others Other assets 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 Deposits and placements of banks and other financial institutions 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 30.06.2022 31.12.2021 RM’000 RM’000 Bank 30.06.2022 RM’000 31.12.2021 RM’000 8 7,185,062 5,222,848 7,168,047 5,204,364 9 10 1,304,573 77,743 1,582,494 26,037 1,272,566 77,743 1,550,700 26,037 11 11,144,826 12,604,204 11,145,713 12,605,067 12 13 14 2,384,007 59,678,494 313,760 1,348,844 58,153,769 312,954 2,384,007 59,678,494 262,481 1,348,844 58,153,769 257,080 15 253,211 7,107 226,050 187,684 267,504 83,030,021 264,050 7,047 193,214 196,000 244,753 80,156,214 253,211 6,662 225,078 187,529 100,905 265,028 83,027,464 264,050 6,662 191,773 195,614 100,905 241,952 80,146,817 16 17 54,890,738 15,417,522 57,338,834 10,452,902 54,905,269 15,532,102 57,363,926 10,561,601 10 120,219 65,405 23,933 20,421 20,112 120,219 65,405 23,933 20,421 20,112 2,001,721 2,014,780 1,494,169 296,808 35,862 76,361,157 2,001,720 2,014,849 1,570,602 303,448 33,388 73,756,276 2,001,721 2,014,780 1,470,423 296,620 35,800 76,466,272 2,001,720 2,014,849 1,538,375 302,984 33,256 73,857,244 B8(a) B8(b) 18 15 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 June 2022 (continued) Note Equity Share capital Reserves Total equity Total liabilities and equity Restricted investment accounts managed by the Bank 17 Total Islamic banking asset owned and managed by the Bank Commitments and Contingencies Net assets per share attributable to equity holders of the Bank (RM) 30 Group 30.06.2022 31.12.2021 RM’000 RM’000 Bank 30.06.2022 31.12.2021 RM’000 RM’000 3,645,043 3,023,821 6,668,864 3,445,757 2,954,181 6,399,938 3,645,043 2,916,149 6,561,192 3,445,757 2,843,816 6,289,573 83,030,021 80,156,214 83,027,464 80,146,817 523 849 523 849 83,030,544 80,157,063 83,027,987 80,147,666 19,276,285 18,764,994 19,276,285 18,764,994 3.09 3.08 3.04 3.03 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 2021. 2
  3. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss for the six months ended 30 June 2022 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 other financial assets Direct expenses Total distributable income 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 19 589,626 583,356 1,177,260 1,136,112 20 147,985 122,983 251,036 241,948 21 85,389 127,901 168,648 227,095 22 (33,822) (33,719) (77,131) (45,559) 4,614 (3,018) 790,774 21 (2,441) 798,101 2,549 (5,563) 1,516,799 246 (6,042) 1,553,800 21 (226,470) 100 (203,399) 49 (450,289) 107 (403,612) 24 (48,951) 515,374 (39,940) 554,862 (75,993) 990,566 (78,171) 1,072,124 Personnel expenses Other overhead expenses 25 26 Finance cost Profit before zakat and tax 27 (187,394) (121,843) 206,137 (24,941) 181,196 (164,159) (108,195) 282,508 (22,008) 260,500 (365,938) (234,410) 390,218 (49,698) 340,520 (332,580) (220,721) 518,823 (43,848) 474,975 (3,732) (60,307) 117,157 (3,756) (62,418) 194,326 (7,481) (109,965) 223,074 (7,507) (114,431) 353,037 10.39 13.54 Wakalah fees from restricted investment accounts Income attributable to depositors Income attributable to investment account holders Total net income 23 Zakat Tax expense Profit for the period B5 Earnings per share (sen) B11 3
  4. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Other Comprehensive Income for the six months ended 30 June 2022 Group Profit for the period Other comprehensive income, net of tax: Items that are or may be reclassified subsequently to profit or loss Currency translation differences in respect of Labuan operations Movement in fair value reserve (debt instruments): Net change in fair value Changes in expected credit loss Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income Items that will not be reclassified to profit or loss Movement in fair value reserve (equity instruments): Net change in fair value Other comprehensive income for the period, net of tax Total comprehensive income for the period 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 117,157 194,326 223,074 353,037 247 (574) 8,693 (12,779) (149,348) (675) - 72,426 21 (30,804) (209,161) (2,385) (634) (192,112) 62 (59,466) 36,731 (113,045) (9,993) 31,076 51,649 (151,838) 60,365 (203,930) 8,425 (740) (1,596) (1,620) (104,620) 30,336 (153,434) (205,550) 12,537 224,662 69,640 147,487 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 2021. 4
  5. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Profit or Loss for the six months ended 30 June 2022 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 other financial assets Direct expenses Total distributable income 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 19 589,626 583,356 1,177,260 1,136,112 20 147,985 122,983 251,036 241,948 21 79,060 120,736 153,599 214,968 22 (33,822) (33,719) (77,131) (45,559) 4,614 (3,018) 784,445 21 (2,441) 790,936 2,549 (5,563) 1,501,750 246 (6,042) 1,541,673 21 (226,516) 100 (203,450) 49 (450,386) 107 (403,712) 24 (49,555) 508,395 (39,940) 547,646 (77,130) 974,283 (78,171) 1,059,897 Personnel expenses Other overhead expenses 25 26 Finance cost Profit before zakat and tax 27 (178,890) (122,333) 207,172 (24,937) 182,235 (159,717) (105,963) 281,966 (22,008) 259,958 (350,344) (232,013) 391,926 (49,689) 342,237 (323,804) (218,148) 517,945 (43,848) 474,097 (3,750) (60,058) 118,427 (3,750) (62,380) 193,828 (7,500) (108,923) 225,814 (7,500) (114,262) 352,335 Wakalah fees from restricted investment accounts Income attributable to depositors Income attributable to investment account holders Total net income Zakat Tax expense Profit for the period 23 5
  6. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Statements of Other Comprehensive Income for the six months ended 30 June 2022 Bank Profit for the period Other comprehensive income, net of tax: Items that are or may be reclassified subsequently to profit or loss Currency translation differences in respect of Labuan operations Movement in fair value reserve (debt instruments): Net change in fair value Changes in expected credit loss Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income Items that will not be reclassified to profit or loss Movement in fair value reserve (equity instruments): Net change in fair value Other comprehensive income for the period, net of tax Total comprehensive income for the period 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 118,427 193,828 225,814 352,335 208 (577) 8,646 (12,809) (149,372) (675) - 72,426 21 (30,804) (209,185) (2,385) (634) (192,112) 62 (59,466) 36,731 (113,108) (9,993) 31,073 51,649 (151,909) 60,365 (203,960) 8,449 (740) (1,572) (1,620) (104,659) 30,333 (153,481) (205,580) 13,768 224,161 72,333 146,755 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 2021. 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 six months ended 30 June 2022 Attributable to equity holders Non-distributable Distributable Share Other Retained capital Reserves earnings RM’000 RM’000 RM’000 3,445,757 (10,899) 2,965,080 223,074 8,693 - Group At 1 January 2022 Profit for the period Currency translation difference in respect of Labuan operations Fair value reserve (debt instruments): Net change in fair value Changes in expected credit loss Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income Fair value reserve (equity instruments): Net change in fair value Total comprehensive income for the period Transfer to regulatory reserve Issue of shares pursuant to Dividend Reinvestment Plan At 30 June 2022 At 1 January 2021 Profit for the period Currency translation difference in respect of Labuan operations Fair value reserve (debt instruments): Net change in fair value Changes in expected credit loss Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income Fair value reserve (equity instruments): Net change in fair value Total comprehensive income for the period Issue of shares pursuant to Dividend Reinvestment Plan At 30 June 2021 Total Equity RM’000 6,399,938 223,074 8,693 - (209,161) (2,385) (634) 51,649 - (209,161) (2,385) (634) 51,649 199,286 3,645,043 (1,596) (153,434) 40,000 (124,333) 223,074 (40,000) 3,148,154 (1,596) 69,640 199,286 6,668,864 3,306,118 - 182,274 (12,779) 2,797,307 353,037 - 6,285,699 353,037 (12,779) - (192,112) 62 (59,466) 60,365 - (192,112) 62 (59,466) 60,365 139,639 3,445,757 (1,620) (205,550) (23,276) 353,037 3,150,344 (1,620) 147,487 139,639 6,572,825 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 2021. 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 six months ended 30 June 2022 Attributable to equity holders of the Bank Non-distributable Distributable Share Other Retained Capital Reserves earnings RM’000 RM’000 RM’000 3,445,757 (121,843) 2,965,659 225,814 8,646 - Bank At 1 January 2022 Profit for the period Currency translation difference in respect of Labuan operations Fair value reserve (debt instruments): Net change in fair value Changes in expected credit loss Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income Fair value reserve (equity instruments): Net change in fair value Total comprehensive income for the period Transfer to regulatory reserve Issue of shares pursuant to Dividend Reinvestment Plan At 30 June 2022 At 1 January 2021 Profit for the period Currency translation difference in respect of Labuan operations Fair value reserve (debt instruments): Net change in fair value Changes in expected credit loss Net amount transferred to profit or loss Income tax effect relating to components of other comprehensive income Fair value reserve (equity instruments): Net change in fair value Total comprehensive income for the period Issue of shares pursuant to Dividend Reinvestment Plan At 30 June 2021 Total Equity RM’000 6,289,573 225,814 8,646 - (209,185) (2,385) (634) 51,649 - (209,185) (2,385) (634) 51,649 199,286 3,645,043 (1,572) (153,481) 40,000 (235,324) 225,814 (40,000) 3,151,473 (1,572) 72,333 199,286 6,561,192 3,306,118 - 182,423 (12,809) 2,791,044 352,335 - 6,279,585 352,335 (12,809) - (192,112) 62 (59,466) 60,365 - (192,112) 62 (59,466) 60,365 139,639 3,445,757 (1,620) (205,580) (23,157) 352,335 3,143,379 (1,620) 146,755 139,639 6,565,979 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 2021. 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 financial year ended 30 June 2022 Group 30.06.2022 30.06.2022 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 generated from/ (used in) operations Zakat and tax paid Net cash generated from/ (used in) operating activities Net cash generated from/ (used in) investing activities Net cash generated from/ (used in) financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Exchange difference on translation Cash and cash equivalents at end of the period Bank 30.06.2022 30.06.2022 RM’000 RM’000 340,520 223,252 474,975 98,898 342,237 222,617 474,097 98,860 563,772 573,873 564,854 572,957 (1,579,872) 2,488,898 (636,628) (1,255,560) (1,584,428) 2,492,699 (639,890) (1,253,040) 1,472,798 (96,196) (1,318,315) (98,567) 1,473,125 (95,551) (1,319,973) (98,482) 1,376,602 (1,416,882) 1,377,574 (1,418,455) 434,053 (282,934) 434,304 (282,870) 142,869 (50,719) 143,154 (50,719) 1,953,524 (1,750,535) 1,955,032 (1,752,044) 5,222,848 8,690 5,216,737 (12,780) 5,204,364 8,651 5,216,280 (12,809) 7,185,062 3,453,422 7,168,047 3,451,427 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 2021. 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 six months ended 30 June 2022 1. Basis of preparation The unaudited interim financial statements of the Group and of the Bank for the six months ended 30 June 2022 have been prepared in accordance with the applicable requirements of MFRS 134: Interim Financial Reporting in Malaysia issued by Malaysian Accounting Standards Board (“MASB”), paragraph 9.22 of Bursa Malaysia Securities Berhad’s Listing Requirements, 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 2021. 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 2021. 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 2021, except for the adoption of the following amendments to Malaysian Financial Reporting Standards (“MFRS”): • • • • Annual improvements to MFRS Standards 2018-2020 Amendments to MFRS 3, Business Combinations – Reference to the Conceptual Framework Amendments to MFRS 116, Property, Plant and Equipment – Proceeds before Intended Use Amendments to MFRS 137, Provisions, Contingent Liabilities and Contingent Assets ‘Onerous Contract – Cost of Fulfilling a Contract’ The adoption of the above amendments to MFRSs do not have any significant impact to the financial results of the Group and the Bank. 2. Auditors’ report on preceding financial statements The auditors’ report on the audited financial statements for the financial year ended 31 December 2021 was not qualified. 3. Seasonal or cyclical factors The operations of the Group and the Bank were not materially affected by any seasonal or cyclical factors during the six months ended 30 June 2022. 4. Unusual items There were no unusual items in the six months ended 30 June 2022. 10
  11. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 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 2022. 6. Sukuk and equity securities On 21 January 2022, the Group and the Bank increased its issued and paid-up capital from 2,075,872,514 to 2,155,269,114 via the issuance of 79,396,600 new ordinary shares for a consideration of RM2.51 each arising from Dividend Reinvestment Plan. There was no sukuk or share buy-back during the six months ended 30 June 2022. 7. Subsequent events during the six months ended 30 June 2022 There was no subsequent event during the six months ended 30 June 2022 8. Cash and short-term funds Cash and balances with banks and other financial institutions Money at call and interbank placements with remaining maturity not exceeding three months 9. 30.06.2022 RM’000 Group 31.12.2021 RM’000 30.06.2022 RM’000 Bank 31.12.2021 RM’000 712,949 754,313 711,513 751,187 6,472,113 7,185,062 4,468,535 5,222,848 6,456,534 7,168,047 4,453,177 5,204,364 Financial assets at fair value through profit and loss (“FVTPL”) Group 30.06.2022 31.12.2021 RM’000 RM’000 Malaysian Government Investment Issue Unit trust Malaysian Islamic Treasury Bills Islamic Commercial Paper Corporate Sukuk 60,756 259,567 948,992 35,258 1,304,573 295,395 1,131,574 145,300 10,225 1,582,494 11 Bank 30.06.2022 31.12.2021 RM’000 RM’000 60,756 227,569 948,992 35,249 1,272,566 263,611 1,131,574 145,300 10,215 1,550,700
  12. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 10. 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. 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 the unrealised gains or losses are reflected as derivative financial assets and liabilities respectively. Group and Bank Forward contracts Profit rate swaps Notional amount RM’000 8,021,176 60,972 8,082,148 30.06.2022 Fair value Assets Liabilities RM’000 RM’000 77,349 (65,158) 394 (247) 77,743 (65,405) Notional amount RM’000 7,505,850 79,153 7,585,003 31.12.2021 Fair value Assets Liabilities RM’000 RM’000 25,120 (19,753) 917 (668) 26,037 (20,421) 11. Financial assets at fair value through other comprehensive income (“FVOCI”) Financial assets at FVOCI: (a) Debt instruments (b) Equity instruments Group 30.06.2022 31.12.2021 RM’000 RM’000 Bank 30.06.2022 31.12.2021 RM’000 RM’000 11,068,888 75,938 11,144,826 11,068,888 76,825 11,145,713 12,526,670 77,534 12,604,204 12,526,670 78,397 12,605,067 (a) Debt instrument at FVOCI Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Corporate Sukuk Malaysian Government Investment Issues Malaysian Islamic Treasury Bills Islamic Commercial Papers 6,783,846 3,571,394 217,733 495,915 11,068,888 12 7,143,163 3,497,806 962,313 923,388 12,526,670
  13. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 11. Financial assets at fair value through other comprehensive income (“FVOCI”) (continued) (a) Debt instrument at FVOCI (continued) Movement of allowance for impairment on financial assets at FVOCI: Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 At 1 January 2022/ 2021 Net allowance for impairment made during the period/ year At 30 June 2022/ 31 December 2021 7,237 2,385 9,622 403 6,834 7,237 (b) Equity instrument at FVOCI Group 30.06.2022 31.12.2021 RM’000 RM’000 Quoted Shares - outside Malaysia Unquoted Shares - in Malaysia - outside Malaysia 12. Bank 30.06.2022 RM’000 31.12.2021 RM’000 6,900 17,004 6,900 17,004 69,023 15 69,038 60,515 15 60,530 69,910 15 69,925 61,378 15 61,393 75,938 77,534 76,825 78,397 Financial assets at amortised cost (“AC”) Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Debt instrument at amortised cost: Malaysian Government Investment Issues Corporate sukuk Malaysian Islamic Treasury Bills Less: Allowance for impairment Stage 3 - Corporate sukuk 13 1,531,765 562,291 289,951 2,384,007 802,446 551,687 1,354,133 2,384,007 (5,289) 1,348,844
  14. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. Financing, advances and others (a) By type and Shariah contract Group and Bank 30.06.2022 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 Bai’ Bithaman Ajil Murabahah RM’000 RM’000 Bai’ Al-Dayn RM’000 Bai’ Al-Inah RM’000 AtTawarruq RM’000 ^Ijarah Muntahiah Bit-Tamleek RM’000 Istisna’ RM’000 Total RM’000 - - - 329 1,094,959 - - 1,095,288 2,834,155 228,042 37,306 3,099,503 1,342,918 18,763 587,786 4,300 105,427 2,059,194 131,412 131,412 3,055 3,384 21,800,744 1,404,885 19,032,363 10,977,011 437,902 460,282 20,473 55,228,619 93,377 93,377 40,597 36,704 920 6,141 84,362 24,675,496 1,404,885 93,377 36,704 19,035,418 12,548,891 500,112 460,282 739,671 4,300 105,427 60,699,851 Allowance for impairment on financing, advances and others - Stage 1 - Stage 2 - Stage 3 Net financing, advances and others (420,315) (240,851) (360,191) 59,678,494 14
  15. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. Financing, advances and others (continued) (a) By type and Shariah contract (continued) Group and Bank 31.12.2021 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 Bai’ Bithaman Ajil Murabahah RM’000 RM’000 Bai’ Al-Dayn RM’000 Bai’ Al-Inah RM’000 AtTawarruq RM’000 ^Ijarah Muntahiah Bit-Tamleek RM’000 Istisna’ RM’000 Total RM’000 - - - 484 1,429,002 - - 1,429,486 2,977,908 295,209 40,459 3,313,576 1,383,579 18,789 622,908 4,415 95,124 2,124,815 107,820 107,820 3,734 4,218 20,513,876 1,454,811 18,071,544 11,080,781 398,071 445,839 87,051 53,480,975 96,020 96,020 42,469 40,328 961 6,553 90,311 23,534,253 1,454,811 96,020 40,328 18,075,278 12,760,530 463,872 445,839 817,779 4,415 95,124 59,217,735 Allowance for impairment on financing, advances and others - Stage 1 - Stage 2 - Stage 3 Net financing, advances and others (487,308) (303,998) (272,660) 58,153,769 15
  16. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. 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 (“URIA”) and financing sold to Cagamas with recourse to the Group and the Bank. The details are as follows: Note Group 30.06.2022 31.12.2021 RM’000 RM’000 30.06.2022 RM’000 31.12.2021 RM’000 Bank House financing Unrestricted Investment Accounts Sold to Cagamas with recourse 17 11,207,263 8,554,270 11,264,553 8,608,619 B8(a) 2,001,721 13,208,984 2,001,720 10,555,990 2,001,721 13,266,274 2,001,720 10,610,339 Personal financing Unrestricted Investment Accounts 17 4,210,259 1,898,632 4,267,549 1,952,982 ^ 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 30.06.2022 31.12.2021 RM’000 RM’000 Domestic banking institutions Domestic non-bank financial institutions Domestic business enterprise Small and medium industries Government and statutory bodies Individuals Other domestic entities Foreign entities 40 1,031,045 9,904,252 2,193,311 854,768 46,508,156 12,391 195,888 60,699,851 16 200,018 1,089,617 10,137,127 2,169,436 919,583 44,451,160 21,676 229,118 59,217,735
  17. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. Financing, advances and others (continued) (c) By profit rate sensitivity Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Fixed rate House financing Others Floating rate House financing Others 972,061 4,109,200 983,468 4,645,157 24,405,107 31,213,483 60,699,851 23,238,913 30,350,197 59,217,735 (d) By remaining contractual maturity Group and Bank 30.06.2022 31.12.2021 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 3,980,844 2,091,864 3,341,042 51,286,101 60,699,851 4,117,569 1,731,612 3,136,006 50,232,548 59,217,735 (e) By geographical distribution Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Central Region Eastern Region Northern Region Southern Region East Malaysia Region 27,067,346 9,619,418 8,411,386 10,873,613 4,728,088 60,699,851 17 26,946,146 9,368,591 8,066,342 10,247,330 4,589,326 59,217,735
  18. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. Financing, advances and others (continued) (f) By sector Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Primary agriculture Mining and quarrying Manufacturing (including agro-based) Electricity, gas and water Wholesale & retail trade, and hotels & restaurants Construction Transport, storage and communications Finance, insurance, real estate and business activities Education, health and others Household sectors 944,088 63,926 769,989 2,072,780 1,124,062 2,879,469 747,204 4,258,537 1,327,126 46,512,670 60,699,851 960,757 67,474 1,008,846 2,054,242 956,449 2,864,869 726,341 4,735,590 1,387,814 44,455,353 59,217,735 (g) Movement in impaired financing and advances (“impaired financing”) are as follows: Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 At 1 January 2022/ 2021 Classified as impaired during the period/ year Reclassified as not impaired during the period/ year Amount recovered Amount written-off At 30 June 2022/ 31 December 2021 Gross impaired financing as a percentage of gross financing, advances and others 568,383 373,234 443,585 (115,002) (43,988) (160,767) 692,211 597,779 (212,296) (62,386) (127,948) 568,383 1.14% 0.96% The contractual amount outstanding on financing and advances that were written-off during the year are still subject to enforcement activity. (h) Impaired financing by geographical distribution Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Central Region Eastern Region Northern Region Southern Region East Malaysia Region 466,023 82,557 83,679 39,705 20,247 692,211 18 395,781 68,146 74,751 17,458 12,247 568,383
  19. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 13. Financing, advances and others (continued) (i) Impaired financing by sector Group and Bank 30.06.2022 31.12.2021 RM’000 RM’000 Manufacturing (including agro-based) Wholesale & retail trade, and hotels & restaurants Construction Transport, storage and communications Finance, insurance, real estate and business activities Education, health and others Household sectors (j) 23,750 78,230 282,813 21,431 5,892 621 279,474 692,211 10,307 76,992 285,246 15,311 5,932 1,391 173,204 568,383 Movement of allowance for impairment on financing, advances and others Group and Bank Stage 1 RM’000 At 1 January 2021 Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Net allowance made during the year New financial assets originated or purchased Financial assets that have been derecognised Write-offs Exchange differences 653,983 2,461 (7,311) (167) (189,876) 98,862 (68,660) (1,984) At 31 December 2021/1 January 2022 Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 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 2022 487,308 1,135 (5,816) (302) (81,146) 35,933 (16,010) (787) 420,315 19 Stage 2 RM’000 Stage 3 RM’000 Total RM’000 151,446 (2,416) 8,826 (5,036) 164,283 8,326 (21,431) - 122,532 (45) (1,515) 5,203 277,396 2,029 (4,992) (127,948) - 927,961 251,803 109,217 (95,083) (127,948) (1,984) 303,998 (1,069) 6,674 (10,327) (46,571) 3,080 (14,934) 240,851 272,660 (66) (858) 10,629 240,833 1,171 (3,411) (160,767) 360,191 1,063,966 113,116 40,184 (34,355) (160,767) (787) 1,021,357
  20. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 14. Other assets Other receivables Deposit and prepayments Related companies* Less: Allowance for impairment Stage 3 - Other receivables 30.06.2022 RM’000 Group 31.12.2021 RM’000 30.06.2022 RM’000 Bank 31.12.2021 RM’000 255,273 60,843 1,375 317,491 265,271 50,343 1,071 316,685 210,957 53,781 1,474 266,212 214,908 43,730 2,173 260,811 (3,731) 313,760 (3,731) 312,954 (3,731) 262,481 (3,731) 257,080 * This relates to amounts due from holding and related companies that are unsecured, not subject to compensation charges for late payment and repayment is neither fixed nor expected. 15. Right-of-use assets and lease liabilities The statement of financial position shows the following amounts relating to leases: Group 30.06.2022 31.12.2021 RM’000 RM’000 Right-of-use assets (Buildings) As at 1 January 2022/ 2021 Addition Depreciation Effects of movement in exchange rates As at 30 June 2022/ 31 December 2021 Lease liabilities As at 1 January 2022/ 2021 Addition Payment of lease liabilities Finance cost Effects of movement in exchange rates As at 30 June 2022/ 31 December 2021 30.06.2022 RM’000 Bank 31.12.2021 RM’000 196,000 (8,328) 209,736 4,461 (18,197) 195,614 (8,096) 209,736 3,920 (18,042) 12 - 11 - 187,684 196,000 187,529 195,614 303,448 (15,095) 8,445 312,429 4,512 (30,818) 17,312 302,984 (14,810) 8,436 312,429 3,915 (30,676) 17,303 10 13 10 13 296,808 303,448 296,620 302,984 20
  21. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 16. Deposits from customers a) By type and Shariah contract 30.06.2022 RM’000 Group 31.12.2021 RM’000 30.06.2022 RM’000 Bank 31.12.2021 RM’000 7,460,174 7,221,380 7,460,174 7,221,380 Demand Deposit Qard 12,135,009 12,954,014 12,141,804 12,968,663 Term Deposit 35,173,888 37,044,548 35,181,624 37,054,991 134,437 149,833 134,437 149,833 34,566,008 35,721,908 34,573,744 35,732,351 Negotiable Islamic Debt Certificates (NIDC) 473,443 1,172,807 473,443 1,172,807 Others 121,667 118,892 121,667 118,892 54,890,738 57,338,834 54,905,269 57,363,926 30.06.2022 RM’000 Group 31.12.2021 RM’000 30.06.2022 RM’000 Bank 31.12.2021 RM’000 20,323,878 11,486,884 1,291,152 22,267,682 11,193,457 1,252,439 20,325,289 11,487,635 1,296,726 22,268,464 11,196,267 1,259,290 2,071,974 35,173,888 2,330,970 37,044,548 2,071,974 35,181,624 2,330,970 37,054,991 Saving Deposit Qard General Investment Deposit Mudharabah Term Deposit – i Tawarruq Total Deposits b) Maturity structure of term deposits are as follows: 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 21
  22. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 16. Deposits from customers (continued) c) By type of customers Domestic non-bank financial institutions Business enterprises Government and statutory bodies Individuals Domestic banking institutions Others 17. Group 30.06.2022 31.12.2021 RM’000 RM’000 Bank 30.06.2022 31.12.2021 RM’000 RM’000 7,609,621 20,784,737 6,059,847 22,935,511 7,624,152 20,784,737 6,084,939 22,935,511 14,764,939 8,056,250 503,596 3,171,595 54,890,738 16,414,063 7,864,062 976,873 3,088,478 57,338,834 14,764,939 8,056,250 503,596 3,171,595 54,905,269 16,414,063 7,864,062 976,873 3,088,478 57,363,926 Group 31.12.2021 RM’000 30.06.2022 RM’000 Investment accounts of customers (a) By type and Shariah contract 30.06.2022 RM’000 Unrestricted investment accounts Without maturity Mudharabah 6,997,003 - Saving 5,533,942 - Demand 1,463,061 Bank 31.12.2021 RM’000 6,655,637 5,343,189 1,312,448 6,997,003 5,533,942 1,463,061 6,655,637 5,343,189 1,312,448 3,797,265 10,452,902 8,535,099 15,532,102 3,905,964 10,561,601 11,264,553 4,267,549 15,532,102 8,608,619 1,952,982 10,561,601 Restricted investment accounts (“RIA”) managed by the Bank^ With maturity Wakalah 523 849 523 849 Investment portfolio: - Other term financing 523 849 With maturity Wakalah Investment portfolio: - House financing - Personal financing 8,420,519 15,417,522 11,207,263 4,210,259 15,417,522 8,554,270 1,898,632 10,452,902 523 849 ^ The Bank has an arrangement with Lembaga Tabung Haji where the Bank acts as an investment agent to manage and administer the RIA. 22
  23. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 17. Investment accounts of customers (continued) (b) By type of customers Group 30.06.2022 31.12.2021 RM’000 RM’000 Individuals Government and statutory bodies Business enterprises Non-bank financial institutions International Islamic Bank Others 18. Bank 30.06.2022 RM’000 31.12.2021 RM’000 5,921,780 5,745,138 5,921,780 5,745,138 5,439,110 2,971,862 916,233 1,800 166,737 15,417,522 2,437,046 1,267,853 835,758 167,107 10,452,902 5,439,110 2,971,862 1,030,813 1,800 166,737 15,532,102 2,437,046 1,267,853 944,457 167,107 10,561,601 Group 30.06.2022 31.12.2021 RM’000 RM’000 30.06.2022 RM’000 Other liabilities Other payables Advance payment Accruals 852,825 578,260 63,084 1,494,169 877,901 575,288 117,413 1,570,602 23 Bank 831,079 578,103 61,241 1,470,423 31.12.2021 RM’000 848,589 575,288 114,498 1,538,375
  24. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 19. 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 deposit-i (iv) Other deposits (i) 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 213,498 1,880 364,608 9,640 589,626 209,330 2,374 360,155 11,497 583,356 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 418,979 3,642 734,307 20,332 1,177,260 407,101 4,737 697,663 26,611 1,136,112 Income derived from investment of saving and demand deposits Group and Bank Finance income and hibah Financing, advances and others Financial assets: - at FVTPL - at FVOCI - at AC Money at call and deposit with financial institutions Other dealing income Net (loss)/ gain from sale of financial assets at FVTPL Net gain on revaluation of financial assets at FVTPL Other operating income Net gain from sale of financial assets at FVOCI Other operating income Net gain from sale of financial assets at FVOCI of which Financing income earned on impaired financing Unwinding of modification loss 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 183,237 171,922 363,853 338,387 174 15,449 3,833 1,268 17,176 84 369 30,765 6,469 3,020 35,765 84 10,055 212,748 6,030 196,480 14,841 416,297 10,081 387,337 (488) 72 239 (2,467) 1,238 750 1,851 1,923 2,222 2,461 1,172 (1,295) - 10,926 221 21,058 213,498 1 209,330 418,979 1 407,101 5,040 3,480 7,899 6,820 2,031 2,497 5,466 2,724 24
  25. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 19. 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: - at FVTPL - at FVOCI - at AC Money at call and deposits with financial institutions Other dealing income Net (loss)/ gain from sale of financial assets at FVTPL Net gain on revaluation of financial assets at FVTPL Other operating income Net gain from sale of financial assets at FVOCI of which Financing income earned on impaired financing Unwinding of modification loss 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 1,666 2,021 3,245 4,071 2 108 27 12 161 1 3 220 46 29 344 1 73 1,876 58 2,253 109 3,623 100 4,545 (4) - 1 (24) 8 4 18 18 16 17 11 (13) 1,880 103 2,374 2 3,642 205 4,737 35 33 56 66 14 24 39 26 (iii) Income derived from investment of term deposit-i Group and Bank Finance income and hibah Financing, advances and others Financial assets: - at FVTPL - at FVOCI - at AC Money at call and deposits with financial institutions 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 312,824 295,387 637,791 578,985 308 26,338 6,592 2,186 29,508 150 658 53,895 11,334 5,175 61,244 150 17,256 363,318 10,382 337,613 25,863 729,541 17,311 662,865 25
  26. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 19. Income derived from investment of depositors’ funds (continued) (iii) Income derived from investment of term deposits (continued) Group and Bank Other dealing income Net (loss)/ gain from sale of financial assets at FVTPL Net gain on revaluation of financial assets at FVTPL Other operating income Net gain from sale of financial assets at FVOCI Other income Gain on disposal assets of which Financing income earned on impaired financing Unwinding of modification loss 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 (846) 39 474 (4,197) 2,136 1,290 3,272 3,311 3,894 4,368 2,131 (2,066) - 19,230 398 36,863 364,608 1 360,155 734,307 1 697,663 8,729 3,544 5,960 4,263 13,883 9,721 11,728 4,637 (iv) Income derived from investment of other deposits Group and Bank Finance income and hibah Financing, advances and others Financial assets: - at FVTPL - at FVOCI - at AC Money at call and deposits with financial institutions 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 31.03.2022 31.03.2021 RM’000 RM’000 8,283 9,502 17,686 22,204 7 700 169 69 948 3 17 1,498 305 204 2,371 3 444 9,603 326 10,848 688 20,194 635 25,417 26
  27. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 19. Income derived from investment of depositors’ funds (continued) (iv) Income derived from investment of other deposits (continued) Group and Bank Other dealing income Net (loss)/ gain from sale of financial assets at FVTPL Net gain on revaluation of financial assets at FVTPL Other operating income Net gain from sale of financial assets at FVOCI of which Financing income earned on impaired financing Unwinding of modification loss 20. 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 (20) 11 22 (175) 57 37 93 104 103 125 29 (146) 9,640 545 11,497 13 20,332 1,340 26,611 219 88 196 144 362 254 450 157 Income derived from investment account funds Group and Bank Finance income Unrestricted investment accounts - Mudharabah - Wakalah Unwinding of modification loss 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 63,265 82,884 1,836 147,985 49,337 71,805 1,841 122,983 27 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 121,267 126,067 3,702 251,036 97,636 141,348 2,964 241,948
  28. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 21. Income derived from investment of shareholders’ funds Group Finance income and hibah Financing, advances and others Financial assets at FVOCI Money at call and deposits with financial institutions Other dealing income Net (loss)/ gain from foreign exchange transactions Net (loss)/ gain on revaluation of financial assets at FVTPL Net derivatives gain Other operating income Gross dividend income from: - Quoted in Malaysia - Unit trust in Malaysia - Income from rebate on investment in unit trust Fees and commission Fees Commission Others Other income Net gain on disposal of property and equipment Rental income Other income 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 3,425 41,304 2,414 45,687 6,417 81,720 4,589 90,400 71 44,800 (4) 48,097 140 88,277 (1) 94,988 (8,602) 10,775 (12,227) 21,733 (12,438) 1 (21,039) 7,605 3 18,383 (36,013) 2 (48,238) 268 4 22,005 146 8,467 6 7,939 8,493 519 665 506 8,973 1,080 9,025 1,000 9,493 43,289 9,859 7,381 60,529 43,070 3,273 5,615 51,958 88,986 15,745 14,154 118,885 83,319 5,814 9,624 98,757 187 247 434 2 451 37 490 387 312 699 577 1,154 121 1,852 85,389 127,901 168,648 227,095 28
  29. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 21. Income derived from investment of shareholders’ funds (continued) Bank Finance income and hibah Financing, advances and others Financial assets at FVOCI Money at call and deposits with financial institutions Other dealing income Net (loss)/ gain from foreign exchange transactions Net (loss)/ gain on revaluation of financial assets at FVTPL Net derivatives gain Other operating income Gross dividend income from: - Unit trust in Malaysia - Income from rebate on investment in unit trust Fees and commission Fees Commission Others Other income Net gain on disposal of property and equipment Rental income Other income 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 3,425 41,304 2,414 45,687 6,417 81,720 4,589 90,400 44,729 (2) 48,099 1 88,138 (1) 94,988 (8,596) 10,779 (12,221) 21,755 (12,400) 1 (20,995) 7,605 3 18,387 (36,042) 2 (48,261) 268 4 22,027 27 8,440 7,759 8,440 519 546 506 8,946 1,080 8,839 1,000 9,440 38,448 11,198 4,364 54,010 35,014 5,038 4,694 44,746 76,312 18,770 8,459 103,541 68,812 8,844 8,909 86,565 538 232 770 1 549 8 558 1,091 251 1,342 576 1,351 21 1,948 79,060 120,736 153,599 214,968 29
  30. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 22. Net allowance for impairment on financing and advances Group and Bank Net allowance for impairment on financing, advances and others - Stage 1 - Stage 2 - Stage 3 Bad debts and financing recovered 23. 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 (32,772) (116,662) 205,706 56,272 (22,450) 33,822 20,279 (5,929) 35,920 50,270 (16,551) 33,719 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 (61,223) (58,425) 238,593 118,945 (41,814) 77,131 17,959 7,084 57,816 82,859 (37,300) 45,559 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 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 319 204,599 718 183,172 674 406,689 1,510 364,849 219 26 240 36 21,333 226,470 19,483 203,399 42,686 450,289 37,217 403,612 319 204,645 718 183,223 674 406,786 1,510 364,949 219 26 240 36 21,333 226,516 19,483 203,450 42,686 450,386 37,217 403,712 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 30
  31. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 24. Income attributable to investment account holders Group Unrestricted investment accounts - Mudharabah - Wakalah 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 5,306 43,645 48,951 2,841 37,099 39,940 10,338 65,655 75,993 5,980 72,191 78,171 5,306 44,249 49,555 2,841 37,099 39,940 10,338 66,792 77,130 5,980 72,191 78,171 Bank Unrestricted investment accounts - Mudharabah - Wakalah 25. Personnel expenses Group Salaries, allowances and bonuses Employees’ Provident Fund Other staff related costs 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 141,966 21,923 23,505 187,394 127,302 19,936 16,921 164,159 276,204 44,020 45,714 365,938 257,351 40,278 34,951 332,580 135,058 20,958 22,874 178,890 123,747 19,449 16,521 159,717 263,622 42,214 44,508 350,344 250,234 39,308 34,262 323,804 Bank Salaries, allowances and bonuses Employees’ Provident Fund Other staff related costs 31
  32. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 26. 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 and management fees Office supplies Subscription fees SMS service charges Security services – cash in transit Professional fees Others 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 13,054 3,109 2,968 19,131 11,097 2,629 5,345 19,071 25,840 4,945 7,460 38,245 21,882 6,535 8,681 37,098 6,430 14,683 4,164 19,625 2,206 2,574 2,699 1,383 3,870 57,634 7,436 14,663 4,614 17,571 2,155 2,827 2,312 1,742 981 54,301 14,167 29,266 8,328 40,377 4,603 5,702 4,897 2,984 5,866 281 116,471 14,557 29,498 9,215 36,201 4,484 6,088 4,965 3,019 1,910 281 110,218 4,542 2,184 3,445 6,663 1,456 3,348 23,440 45,078 3,652 1,484 3,381 4,347 1,753 317 19,889 34,823 8,157 3,892 6,960 11,155 2,026 5,282 42,222 79,694 7,011 3,885 6,656 8,596 2,828 3,864 40,565 73,405 121,843 108,195 234,410 220,721 32
  33. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 26. Other overhead expenses (continued) 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 General expenses Outsourcing fees and management fees Office supplies Subscription fees SMS service charges Security services – cash in transit Professional fees Others 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 13,054 3,074 2,027 18,155 11,097 2,585 2,125 15,807 25,840 4,867 3,742 34,449 21,882 6,474 4,082 32,438 6,393 14,470 4,048 19,625 2,206 2,507 2,624 1,312 3,856 57,041 7,527 14,619 4,614 17,571 2,155 2,810 2,261 1,726 979 54,262 14,092 28,838 8,096 40,377 4,603 5,567 4,746 2,837 5,837 281 115,274 14,733 29,407 9,215 36,201 4,484 6,050 4,866 2,988 1,907 281 110,132 9,339 2,163 3,445 6,663 1,456 3,198 20,873 47,137 7,499 1,454 3,382 4,347 1,753 166 17,293 35,894 17,216 3,845 6,960 11,155 2,026 4,968 36,120 82,290 13,900 3,839 6,656 8,596 2,828 3,658 36,101 75,578 122,333 105,963 232,013 218,148 33
  34. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 27. Finance cost Group Finance cost: - Subordinated Sukuk Murabahah - Profit expense on leases 3 months ended 30.06.2022 30.06.2021 Note RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 15 20,740 4,201 24,941 17,674 4,334 22,008 41,253 8,445 49,698 35,154 8,694 43,848 15 20,740 4,197 24,937 17,674 4,334 22,008 41,253 8,436 49,689 35,154 8,694 43,848 Bank Finance cost: - Subordinated Sukuk Murabahah - Profit expense on leases 34
  35. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 28. 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 Total Revenue 554,547 156,760 104,001 14,407 (6,694) 823,021 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 308,906 46,568 355,474 (10,745) 344,729 124,442 7,320 131,762 (23,095) 108,667 15,630 (18,840) (3,210) 4,615 1,405 55,932 13,686 69,618 17 69,635 (6,044) (6,044) (6,044) 504,910 42,690 547,600 (29,208) 518,392 (337,196) 181,196 Total Revenue 496,721 149,176 169,159 23,953 (4,669) 834,340 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 292,554 37,845 330,399 (13,727) 316,672 89,546 6,409 95,955 (19,992) 75,963 28,841 55,109 83,950 21 83,971 63,996 21,319 85,315 85,315 (4,618) (4,618) (4,618) 474,937 116,064 591,001 (33,698) 557,303 (296,803) 260,500 Group 3 months ended 30 June 2022 3 months ended 30 June 2021 35
  36. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 28. Segmental Reporting on Revenue, Profit and Assets (continued) Consumer Banking RM’000 Corporate and Commercial Banking RM’000 Treasury RM’000 Shareholders unit RM’000 Elimination RM’000 Total RM’000 1,074,961 308,347 188,262 38,412 (12,989) 1,596,993 605,744 88,015 693,759 (32,150) 661,609 237,796 15,266 253,062 (45,000) 208,062 34,118 (40,540) (6,422) 2,904 (3,518) 105,028 37,039 142,067 (336) 141,731 (11,755) (11,755) (11,755) 982,686 88,025 1,070,711 (74,582) 996,129 (655,609) 340,520 Total Revenue 970,436 300,956 305,413 38,122 (9,665) 1,605,262 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 562,947 73,611 636,558 (30,832) 605,726 184,051 12,487 196,538 (14,543) 181,995 62,630 78,496 141,126 62 141,188 125,690 33,132 158,822 158,822 (9,565) (9,565) (9,565) 935,318 188,161 1,123,479 (45,313) 1,078,166 (603,191) 474,975 Group 6 months ended 30 June 2022 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 2021 36
  37. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 28. Segmental Reporting on Revenue, Profit and Assets (continued) At 30 June 2022 Segment assets Unallocated assets Total assets At 30 June 2021 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 46,052,901 13,625,592 20,385,679 372,502 (269,040) 80,167,634 2,862,387 83,030,021 41,630,712 13,588,221 16,548,173 51,613 (34,529) 71,784,190 1,787,862 73,572,052 37
  38. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 29. Fair value of Financial Instruments Fair value hierarchy MFRS 13 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 quoted equity securities. • 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 debt instruments, 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 instruments 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. 38
  39. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 29. Fair value of Financial Instruments (continued) Fair value hierarchy (continued) Group 30 June 2022 RM’000 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 Financial assets Financial assets at FVTPL - 1,304,573 - - 1,304,573 1,304,573 Derivative financial assets - 77,743 - 77,743 - 77,743 77,743 Financial assets at FVOCI - 11,144,826 11,144,826 6,900 11,068,888 69,038 11,144,826 Financial assets at AC - - - - 2,343,121 2,343,121 2,384,007 Financing, advances and others - - - - 62,800,637 62,800,637 59,678,494 Derivative financial liabilities Recourse obligations on financing sold to Cagamas - 65,405 - 65,405 - 65,405 65,405 - - - - 2,009,835 2,009,835 2,001,721 Subordinated Sukuk Murabahah - - - - 1,978,552 1,978,552 2,014,780 31 December 2021 RM’000 Financial assets Financial assets at FVTPL - 1,582,494 - 1,582,494 - 1,582,494 1,582,494 Derivative financial assets - 26,037 - 26,037 - 26,037 26,037 Financial assets at FVOCI - 12,604,204 12,604,204 Financial liabilities 17,004 12,526,670 60,530 12,604,204 Financial assets at AC - - - - 1,330,502 1,330,502 1,348,844 Financing, advances and others - - - - 61,303,303 61,303,303 58,153,769 - 20,421 - 20,421 - 20,421 20,421 - - - - 2,044,330 2,044,330 2,001,720 - - - - 2,009,745 2,009,745 2,014,849 Financial liabilities Derivative financial liabilities Recourse obligations on financing sold to Cagamas Subordinated Sukuk Murabahah 39
  40. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 29. Fair value of Financial Instruments (continued) Fair value hierarchy (continued) Bank 30 June 2022 RM’000 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 Financial assets Financial assets at FVTPL - 1,272,566 - 1,272,566 - 1,272,566 1,272,566 Derivative financial assets - 77,743 - 77,743 - 77,743 77,743 Financial assets at FVOCI - 11,145,713 11,145,713 6,900 11,068,888 69,925 11,145,713 Financial assets at AC - - - - 2,343,121 2,343,121 2,384,007 Financing, advances and others - - - - 62,800,637 62,800,637 59,678,494 Derivative financial liabilities Recourse obligations on financing sold to Cagamas - 65,405 - 65,405 - 65,405 65,405 - - - - 2,009,835 2,009,835 2,001,721 Subordinated Sukuk Murabahah - - - - 1,978,552 1,978,552 2,014,780 Financial assets Financial assets at FVTPL - 1,550,700 - 1,550,700 - 1,550,700 1,550,700 Derivative financial assets - 26,037 - 26,037 - 26,037 26,037 Financial assets at FVOCI - 12,605,067 12,605,067 Financial liabilities 31 December 2021 RM’000 17,004 12,526,670 61,393 12,605,067 Financial assets at AC - - - - 1,330,502 1,330,502 1,348,844 Financing, advances and others - - - - 61,303,303 61,303,303 58,153,769 Derivative financial liabilities Recourse obligations on financing sold to Cagamas - 20,421 - 20,421 - 20,421 20,421 - - - - 2,044,330 2,044,330 2,001,720 Subordinated Sukuk Murabahah - - - - 2,009,745 2,009,745 2,014,849 Financial liabilities 40
  41. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 29. Fair value of Financial Instruments (continued) Unobservable inputs used in measuring fair value The following tables show the valuation techniques 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 Financial assets measured at FVOCI Valuation technique Net tangible assets Significant unobservable inputs Net tangible assets Inter-relationship between significant unobservable inputs and fair value measurement Higher net tangible assets results in higher fair value (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 is determined by quoted mid prices. For non-actively traded securities, the fair values are estimated using valuation techniques such as 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 and recourse obligations on financing sold to Cagamas 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 risk profiles. 41
  42. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 30. Commitment and Contingencies a) The commitment and contingencies and their related counterparty credit risk for the Group and Bank are as follows: As at 30 June 2022 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: - 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’000 396,613 962,208 396,613 481,104 391,431 464,938 444,691 88,938 88,402 1,274,012 637,005 525,290 8,116,613 11,194,137 1,603,660 1,470,061 Principal Amount RM’000 Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 Risk Weighted Asset RM’000 8,021,176 77,349 157,323 124,599 60,972 8,082,148 394 77,743 900 158,223 656 125,255 19,276,285 77,743 1,761,883 1,595,316 42
  43. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 30. Commitment and Contingencies (continued) a) The commitment and contingencies and their related counterparty credit risk for the Group and Bank are as follows (continued): As at 31 December 2021 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: - 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’000 501,511 903,458 501,511 451,729 503,088 438,976 417,940 83,588 83,012 1,246,592 623,295 503,494 8,110,490 11,179,991 1,660,123 1,528,570 Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 Risk Weighted Asset RM’000 7,505,850 25,120 114,431 66,277 79,153 7,585,003 917 26,037 2,368 116,799 1,735 68,012 18,764,994 26,037 1,776,922 1,596,582 Principal Amount RM’000 Derivative Financial Instruments Foreign exchange related contracts - less than one year Profit rate related contracts - one year to less than five years Credit Equivalent Amount RM’000 Principal Amount RM’000 b) Contingent liabilities The Group and the Bank has no disclosure on contingent liabilities other than as disclosed in Note B9(c). The possible obligation to settle the litigation claim are subject to decision by the court and as the case are still preliminary, the settlement to the litigation claim may not be probable at this juncture and therefore no provision is recognised in the interim financial statements. 43
  44. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 31. 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: Group 30.06.2022 31.12.2021 CET I & Tier I capital ratio Total capital ratio 13.788% 19.377% Bank 30.06.2022 13.179% 18.561% 31.12.2021 13.391% 19.006% 12.799% 18.203% The components of CET I, Tier I and Tier II capital: Group 30.06.2022 31.12.2021 RM’000 RM’000 Bank 30.06.2022 RM’000 31.12.2021 RM’000 Paid-up share capital Retained earnings Other reserves Less: Deferred tax assets Investment in subsidiaries Regulatory reserves Total CET I and Tier I Capital 3,645,043 2,925,080 (124,333) 3,445,757 2,965,080 (10,899) 3,645,043 2,925,659 (235,324) 3,445,757 2,965,659 (121,843) (226,050) (40,000) 6,179,740 (193,214) 6,206,724 (225,078) (100,905) (40,000) 5,969,395 (191,773) (100,905) 5,996,895 Sukuk Murabahah Loss provision ^ Total Tier II Capital 2,000,000 505,016 2,505,016 2,000,000 534,465 2,534,465 2,000,000 502,668 2,502,668 2,000,000 532,094 2,532,094 Total Capital 8,684,756 8,741,189 8,472,063 8,528,989 ^ Impairment allowances 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. The breakdown of risk-weighted assets by each major risk category is as follows: Group 30.06.2022 31.12.2021 RM’000 RM’000 Credit risk Less : Credit risk absorbed by unrestricted investment accounts Market risk Operational risk Bank 30.06.2022 RM’000 31.12.2021 RM’000 51,876,836 50,180,739 51,783,724 50,080,971 (11,475,594) 40,401,242 556,650 3,862,640 44,820,532 (7,423,579) 42,757,160 489,559 3,847,886 47,094,605 (11,570,315) 40,213,409 556,650 3,806,378 44,576,437 (7,513,437) 42,567,534 489,559 3,797,811 46,854,904 44
  45. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements 32. Credit Transactions and Exposures with Connected Parties Group and Bank 30.06.2022 31.12.2021 Outstanding credit exposures with connected parties 2,392,949 2,132,777 % of outstanding credit exposures to connected parties as a proportion of total credit exposures 3.56% 3.24% % of outstanding credit exposures to connected parties which is nonperforming or in default 0.00% 0.00% 45
  46. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements Explanatory notes pursuant to Appendix 9B of the listing requirements of Bursa Malaysia Securities Berhad B1. Performance review for the six months ended 30 June 2022 Current Year-to-date vs. Previous Year-to-date Key Profit or Loss Items: Revenue Net Income Profit Before Zakat and Taxation Profit After Zakat and Taxation Group 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 1,596,993 1,605,262 1,070,711 1,123,479 340,520 474,975 223,074 353,037 Variance RM’000 % (8,269) -0.5 (52,768) -4.7 (134,455) -28.3 (129,963) -36.8 Bank Islam Group (“Bank Islam” or “the Group”) recorded a Profit Before Zakat and Taxation (“PBZT”) of RM340.5 million for the six-month ended 30 June 2022, lower by 28.3% over the corresponding period in 2021. The decrease in PBZT was mainly due to lower net income compounded by higher total overheads and net allowance for impairment on financing and advances. The performance translates to Group’s earnings per share of 10.39 sen and annualised Return on Equity (“ROE”) of 7.2% (after tax and zakat). The Group’s net income decreased by RM52.8 million or 4.7% mainly due to lower non-fund based income. The non-fund based income decreased by RM100.1 million for the six-month ended 30 June 2022 as compared to corresponding period, which was due to lower net gain from sale of financial assets at FVOCI and higher net loss on revaluation of financial assets at FVTPL. The decrease was, however, mitigated by higher net fund based income which increased by RM41.5 million or 4.7% mainly driven by year-on-year financing growth and lower funding costs. The Group's overhead expenses for the six-month financial period ended 30 June 2022 recorded an increase of RM46.6 million or 8.3% to RM605.9 million as compared to the previous corresponding six-month financial period ended 30 June 2021. The increase in overhead expenses was mainly due to higher staff costs and general expenses by RM33.4 million and RM6.3 million respectively. The Group's net allowance for impairment on financing and advances increased by RM31.6 million or 69.3% to RM77.1 million as compared to the previous corresponding six-month financial period ended 30 June 2021. Overall, the Group’s total assets grew year-on-year by 12.9% to RM83.0 billion as of 30 June 2022. Net assets per share was at RM3.09. Gross financing (excluding modification loss) grew by 8.0% year-on-year to RM60.7 billion, while customer deposits and investment accounts stood at RM70.3 billion with a year-on-year increase by RM8.4 billion or 13.6%. Total current and saving accounts and transactional investment accounts (“CASATIA”) composition is at healthy level of 37.8% of total customer deposits and investment accounts. As at 30 June 2022, the gross impaired financing ratio was 1.14% compared to 0.96% at end December 2021. The Group’s Total Capital Ratio remained strong at 19.4% as at 30 June 2022. 46
  47. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B1. Performance review for the six-month ended 30 June 2022 (continued) Current Year-to-date vs. Previous Year-to-date (continued) Operating Segment Consumer Banking’s reported net income of RM693.8 million for the financial period ended 30 June 2022, 9.0% higher than the corresponding period, attributed mainly from higher net fund-based income. Segment assets for Consumer Banking as at end June 2022 stood at RM46.1 billion, a year-on-year growth of 10.6%, mainly driven by growth in house financing and personal financing. Corporate and Commercial Banking recorded net income of RM253.1 million, higher by 28.8% from the corresponding period mainly due to higher net fund-based income. Total segment assets stood at RM13.6 billion. Treasury registered a net loss of RM6.4 million for the period, lower by 104.6% compared to the corresponding period due to lower net gain from sale of financial assets at FVOCI and higher net loss on revaluation of financial assets at FVTPL. Treasury assets stood at RM20.4 billion. Current Quarter vs. Previous Year Corresponding Quarter Key Profit or Loss Items: Revenue Net Income Profit Before Zakat and Taxation Profit After Zakat and Taxation Group 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 823,021 834,340 547,600 591,001 181,196 260,500 117,157 194,326 Variance RM’000 % (11,319) -1.4 (43,401) -7.3 (79,304) -30.4 (77,169) -39.7 For the second quarter ended 30 June 2022 (“2Q2022”), Bank Islam Group achieved a profit before zakat and tax (“PBZT”) of RM181.2 million, a decrease of RM79.3 million or 30.4% over the PBZT of the corresponding quarter last year (“2Q2021”) of RM260.5 million. The decrease in PBZT was mainly due to lower net income and higher total overheads. The decrease in the Group’s net income by RM43.4 million or 7.3%, was due to lower non fund based income, however mitigated by higher net fund based income during the quarter. The net fund based income increased by RM27.0 million or 6.0% mainly driven by financing growth. The decrease in non-fund based income by RM73.4 million or 63.2% was mainly due to lower investment income, particularly lower net gain from sale of financial assets at FVOCI and revaluation of financial assets at FVTPL Total overheads were higher by RM37.5 million or 13.6% over 2Q2021 overheads mainly due to higher staff costs and general expenses by RM23.2 million and RM10.3 million respectively. The Group's net allowance for impairment on financing and advances, financing increased by RM0.1 million or 0.3% to RM33.8 million as compared to the previous period corresponding quarter ended 30 June 2020. 47
  48. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B2. Comparison with the preceding quarter’s results for the three months performance (Second Quarter 2022 vs. First Quarter 2022) Key Profit or Loss Items: Revenue Net Income Profit Before Zakat and Taxation Profit After Zakat and Taxation Group 3 months ended 31.03.2022 30.06.2022 RM’000 RM’000 823,021 773,972 547,600 523,111 181,196 159,324 117,157 105,917 Variance RM’000 % 49,049 6.3 24,489 4.7 21,872 13.7 11,240 10.6 Bank Islam Group’s PBZT for the second quarter ended 30 June 2022 (“2Q2022”) improved by RM21.9 million (13.7%) to RM181.2 million against the preceding quarter ended 31 March 2022 (“1Q2022”). The increase was due to higher net fund based income and lower net allowance for financing and advances. The increase was however offset by higher overheads and lower non fund based income. Net fund based income increased by RM26.9 million or 5.9% mainly driven by higher financing income during the quarter. Non-fund based income fell 5.8% to RM42.7 million from RM45.3 million, amid net loss on revaluation of financial assets at FVTPL due to unfavourable market condition. Net allowance for impairment on financing and other financial assets was lower by RM16.2 million to RM29.2 million for 2Q2022 while total overheads for 2Q2022 increased by RM18.6 million or 6.3% to RM312.3 million over 1Q2022 mainly due to higher personnel and other overhead expenses. B3. Prospects for 2022 Bank Negara Malaysia in its Economic and Monetary Review Report 2021 issued on 30 March 2022 projected a GDP growth of 5.3% - 6.3% for 2022. Despite hampered growth from supply chain disruptions, rising prices of commodities and domestic inflation, GDP is expected to remain in positive territory. The Group foresees the Overnight Policy Rate to reach 2.75% at the end of 2022 in view of positive growth prospect. The industry’s financing rose by 5.6% y-o-y as at June 2022. The Group anticipates slower household financing numbers but expect total industry growth to be lifted by higher business activities following border reopening and positive economic environment. However, the rising inflationary pressure can potentially threaten the Group’s provision on financing as it affects the debt servicing capability of consumers and businesses. The Group remains committed in pursuing its business drivers under the 5-year aspiration LEAP25 while ensuring cost management and optimisation, continuous Group’s synergy strategy implementation, and advancing digitalisation. On that front, the Group has launched its digital banking proposition, “Be U” in mid-July 2022. This is aimed at the younger population, hoping to attract between 350,000 and 400,000 downloads and users within the first 12 months. Be U is the country’s first digital bank that is built natively on cloud. B4. Variance from profit forecast and profit guarantee The Group neither made any profit forecast nor issued any profit guarantee. 48
  49. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B5. Tax expense Major components of tax expense Group Malaysia income tax: Current year Under/ (Over) provision in prior years Deferred tax expense relating to origination and reversal of temporary differences arising from: Current year Under/ (Over) provision in prior years 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 54,314 16,558 91,162 106,446 - 163,330 (10) 163,336 5,983 45,860 18,344 7,899 10 60,307 (163,330) 62,418 469 109,965 (163,250) 114,431 A reconciliation of effective tax expense for the Group is as follows: Group Profit before tax Income tax calculated using Malaysian tax rate of 24% Effect of changes in tax rate Income not subject to tax Non-deductible expenses Zakat Under provision in prior years Tax expense 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 181,196 260,500 340,520 474,975 43,487 15,897 (207) 2,171 (1,051) 10 60,307 62,520 (93) 892 (901) 62,418 81,725 26,414 (233) 3,372 (1,772) 459 109,965 113,994 (132) 2,285 (1,802) 86 114,431 As per Finance Act 2021 gazetted on 31 December 2021, effective for Year of Assessment (“YA”) 2022, a special one-off tax (“Cukai Makmur”) will be introduced on companies with chargeable income in excess of RM100.0 million. The excess will be taxed at a rate of 33% (first RM100.0 million of chargeable income will be taxed at 24%). Tax expenses for YA 2022 above have been computed based on tax rates as described accordingly. B6. Status of corporate proposals There has been no new corporate proposal since the date of last quarterly report. B7. Status of utilisation of proceeds raised from corporate proposals The proceeds raised from the issuances of all debt securities in prior years have been used for working capital, general banking and other corporate purposes, as intended. 49
  50. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B8. Debt securities and borrowings As at 30.06.2022 RM’000 Long term Secured - Recourse obligations on financing sold to Cagamas Unsecured - Subordinated Sukuk Murabahah Short term Total borrowings 2,000,000 1,720 2,001,720 2,000,000 14,780 2,014,780 As at 31.12.2021 RM’000 Long term Secured - Recourse obligations on financing sold to Cagamas Unsecured - Subordinated Sukuk Murabahah Short term Total borrowings 2,000,000 1,720 2,001,720 2,000,000 14,849 2,014,849 As at 30.06.2021 RM’000 Long term Secured - Recourse obligations on financing sold to Cagamas Unsecured - Subordinated Sukuk Murabahah Short term Total borrowings 2,000,000 1,720 2,001,720 1,700,000 13,095 1,713,095 The borrowings comprise the following: a) 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 pre-determined 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 13(a). The details are as follows: Nominal value RM’000 Maturity Date Issue date Profit rate (% p.a.) (i) 1,500,000 25 May 2018 25 May 2023 4.75 (ii) 500,000 15 May 2021 15 May 2024 2.95 50
  51. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B8. Debt securities and borrowings (continued) The borrowings comprise the following: (continued) b) Subordinated Sukuk Murabahah Nominal value RM’000 Issue date First call date* Maturity Date Profit rate (% p.a.)# (i) 300,000 13 November 2017 12 December 2022 12 November 2027 5.08 (ii) 300,000 7 November 2018 7 December 2023 7 November 2028 5.15 (iii) 400,000 26 March 2020 26 March 2025 26 March 2030 3.75 (iv) 700,000 21 October 2020 21 October 2025 21 October 2030 3.60 (v) 300,000 12 November 2021 12 November 2026 12 November 2031 4.10 * Optional redemption date or any periodic payment date thereafter. # Accrued and payable semi-annually in arrears. B9. Material litigation (a) On 16 April 2019, 5 Star Room Hotel Sdn Bhd ("Plaintiff") filed a civil suit against Bank Islam and claimed damages for a breach of promise to grant a financing facility to Pan Asian Resorts Sdn Bhd (Plaintiff's parent company). The Plaintiff claimed for an amount of RM400,000,000.00. Bank Islam had filed the Defence on 21 May 2019. On 4 June 2019, the Plaintiff had filed the application to amend Writ of Summons and Statement of Claim ("the Application"). On 7 August 2019, the High Court ("HC") had directed parties to file respective submissions in regards to the Application by 28 August 2019. On 1 October 2019, the HC allowed the Application with no order as to cost. On 20 December 2019, Bank Islam had filed an application for striking out Order 18 ("O.18"). On 6 July 2020, the HC had fixed the hearing for Bank Islam’s preliminary objection ("PO") against the Plaintiff’s Further Affidavit in Reply due to the said affidavit was filed beyond 14 days and in contrary with service of affidavit (Order 32 ("O.32")) and Application FS. The HC had fixed 13 July 2020 for decision on the PO and O.18. On 13 July 2020, the HC had allowed O.18 with cost of RM7,500.00 and Bank Islam’s PO was dismissed. On 29 July 2020, the Plaintiff had filed an appeal to the Court of Appeal ("COA") against the HC’s decision. On 15 December 2020, the COA had fixed for case management on 22 February 2021 for Plaintiff/Appellant to update the Court on the status of the Written Grounds of Judgment from Alor Setar, High Court. 51
  52. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B9. Material litigation (continued) (a) On 22 February 2021, the COA had fixed the next case management date on 14 April 2021 pending Written Grounds of Judgment from Alor Setar, High Court. The hearing date will only be fixed once the Written Grounds of Judgment is ready from Alor Setar, High Court. On 14 April 2021, COA was informed that the Plaintiff/Appellant had received Written Grounds of Judgment from Alor Setar, High Court. Hence, the COA had fixed the Hearing of the Appeal on 30 August 2021. On 17 August 2021, the Plaintiff/Appellant’s Solicitor had filed the Motion to withdraw from representing the Appellants in the Appeal. The Court had fixed the Motion for hearing on 30 August 2021 and the Hearing of the Appeal would be adjourned pending the disposal of the said Motion. On 30 August 2021, the COA had allowed the Plaintiff/Appellant’s Solicitor Motion to withdraw themselves from representing Plaintiff/Appellant in this Appeal. The COA had fixed the next case management date on 30 September 2021 for the Plaintiff/Appellant to appoint a new Solicitor. On 30 September 2021, the COA had fixed the Hearing of the Plaintiff/Appellant’s Appeal on 15 February 2022. On 15 February 2022, COA unanimously dismissed the Plaintiff/Appellant’s Appeal with costs of RM10,000.00 to be paid by the Plaintiff/Appellants to Bank Islam. The Plaintiff/Appellant filed Motion for Leave to appeal to the Federal Court (“FC”) on 14 March 2022 and the FC fixed for hearing of the Motion on 27 May 2022. On 27 May 2022, the FC decided that there is no merit in the Motion for leave and there is no novel issue for leave to be granted. The Motion was dismissed with costs of RM30,000.00. Therefore, the suit is fully concluded and there is no appeal is allowed. (b) On 20 August 2019, Bank Islam filed a civil suit against 5 Star Room Hotel Sdn Bhd ("Customer") and the guarantors, namely Tang Wooi Chon, Chunsi Kudkumkong, Tang Woan Rou and Tang Woanren (collectively be referred to as "the Defendants") claiming for an amount of RM120,738,812.69 being the outstanding financing facilities granted by Bank Islam to the Customer whose accounts had been defaulted. On 8 November 2019, Bank Islam had filed an application for summary judgment (Order 14 ("O.14")). On 18 November 2019, Bank Islam had filed an application for striking out against the Defendants’ Counter Claim (Order 18 ("O.18")). On 4 December 2019, the Defendants had filed an application to transfer and consolidate the Kuala Lumpur case with the Alor Setar case ("the Application"). The High Court (“HC”) had fixed 1 July 2020 for decision on O.14, O.18 and the Application. The HC had allowed Bank Islam’s application on O.14, O.18 and the Defendants’ application to transfer this case to Alor Setar High Court was dismissed. The HC also ordered the Defendants to pay costs of RM8,000.00 to Bank Islam. 52
  53. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B9. Material litigation (continued) (b) Hence, the Summary Judgment was recorded against the Defendants and the Defendants’ Counter Claim was struck out. On 9 July 2020, the Defendants had filed an appeal to Court of Appeal ("COA") against the HC’s decision. On 19 August 2020, the Defendants had filed the application for stay of execution against the HC’s decision. On 1 October 2020, the HC had allowed the application with costs to be borne by Defendants. On 27 October 2020, the COA had fixed for hearing (on the appeal) on 7 July 2021 and instructed the parties to file common bundle, written submissions and bundle of authorities by 16 June 2021. On 7 July 2021, the COA had allowed Bank Islam's application to record summary judgment against the Appellants. Further the COA had allowed the Bank's application to strike out the Appellants' counterclaim and dismissed the Appellants' application to transfer and consolidate this case with the Alor Setar Suit. The COA had unanimously dismissed the appeal with costs of RMI0,000.00, subject to allocator. On 24 August 2021, the Defendants had filed the motion for leave to appeal to Federal Court (“FC”). The FC had fixed the case management on 23 September 2021. On 23 September 2021, the case management has been postponed to 29 September 2021. On 29 September 2021, the FC had instructed the Defendants to file Notice of Motion for leave at Federal Court and the case management is fixed on 14 October 2021. On 14 October 2021, the Defendants requested time to file Notice of Motion for leave to appeal at FC. The FC had fixed the case management on 29 October 2021. On 29 October 2021, the FC had instructed parties to file Affidavit in reply to the Notice of Motion and fixed the case management on 24 November 2021. On 24 November 2021, the FC had directed parties to file Written Submissions and Bundle of Authorities by 3 March 2022. Hearing of Motion for Extension of Time to File Leave to Appeal to FC and Motion for Leave to Appeal to FC fixed on 21 March 2022. The Court fixed another hearing date on 27 May 2022. There were 3 issues brought to the FC which were as follows:(a) Allowing Bank Islam’s application to record Summary Judgment under (O.14) against the Appellants; (b) Allowing Bank Islam’s application to strike out the Appellants’ counterclaim (O.18); and (c) Dismissing the Appellants’ application to transfer and consolidate this case with the Alor Setar suit. After hearing both parties, the FC was of the opinion that there is a novel issue in relation to whether there is a need to state the Ibra clause in the certificate of indebtedness. This relates to the above item (a) allowing Summary Judgment under O.14 and not relevant to the other 2 applications under (b) and (c). 53
  54. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B9. Material litigation (continued) (b) The Motion was allowed only for limited issues related to Ibra clause with costs in the cause. A Notice of Appeal is required to be filed by the Customer within 14 days time. The Order in relation to item (b) and (c) above were fully concluded. Item (a) will proceed with full appeal at the FC on the issue as stated above. The Appellant filed appeal to FC, the 1st Case Management of the appeal was fixed on 29 July 2022. The next Case Management fixed on 12 August 2022 for the Appellants to file record of appeal. Meanwhile, the Appellants filed a Motion to stay of execution of judgment dated 1 July 2020 and all foreclosure proceedings initiated by the Bank. The FC instructed the parties to file submission on 20 September 2022. Hearing of the stay application by the Appellants was fixed on 4 October 2022. (c) On 18 October 2021, Perbadanan Harta Intelek Malaysia (“Plaintiff”) filed a civil suit against BIMB Investment Management Berhad (“First Defendant”), a wholly owned subsidiary of the Bank and Ahmad Azwan Bin Aboo Mansor (“Second Defendant”). Plaintiff pleaded that the Defendants are liable for loss and damage caused by the Defendants fraudulent misrepresentation, negligent misrepresentation, negligence and breach of statutory duty on the placement of deposit in the sum of RM85,530,000.00 by Plaintiff to First Defendant upon representation made by Second Defendant to Plaintiff. The sealed Writ and Statement of Claim dated 18 October 2021 was served to Messrs Ganesan & Irmohizam (“First Defendant’s Solicitors”) on 25 October 2021. The Plaintiff claimed for the following: 1) RM43,958,509.29 being the difference between the balance sum and total principal sum deposited; 2) RM15,910,619.62 for lost of profit on deposit sum; 3) Alternatively RM11,443,914.00 for lost of profit on deposit sum; 4) General damages; 5) Exemplary damages; and 6) Interest The First Defendants Solicitors had entered Appearance on 8 November 2021 and has requested for an extension of two weeks from 24 November 2021 to file Defence. The Court fixed for next Case Management on 24 November 2021. On 24 November 2021, the Court directed First Defendant to file Defence on 8 December 2021 and Plaintiff to file Reply to Defence by 5 January 2022. During the case management held on 18 July 2022, the Court made the following directions in relation to Enclosure 32 (First Defendant's Notice of Application seeking original documents for forensic examination: 1) Plaintiff shall file and serve its Affidavit in Reply on or before 29 July 2022; 2) First Defendant shall file and serve its Affidavit in Reply on or before 12 August 2022; 3) Both Parties shall file respective written submissions simultaneously on or before 23 August 2022; 4) Both Parties shall file respective written submissions in reply simultaneously on or before 30 August 2022. Hearing of Enclosure 32 and Case Management for Writ was fixed on 12 September 2022. 54
  55. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B9. Material litigation (continued) (d) On 26 April 2022 a group of syndicated financiers including Bank Islam Malaysia Berhad, HSBC Amanah Malaysia Berhad, Ambank Islamic Berhad, MIDF Amanah Investment Bank Berhad, Standard Chartered Saadiq Berhad and United Overseas Bank (Malaysia) Berhad filed a winding up petition against Serba Dinamik Holdings Berhad (“Customer”) and Serba Dinamik Group Berhad, Serba Dinamik Sdn Bhd, Serba Dinamik Development Sdn Bhd, Serba Dinamik Controls Sdn Bhd (“Guarantors”). The Customer defaulted on payment of Syndicated Term Financing which involved RM1.2 billion (Bank Islam exposure RM245 million). The Customer made an application to Court for an appointment of Interim Judicial Managers (“IJM”). However, the application on IJM was withdrawn by the Customer citing majority of the financiers were opposing on the appointment of the Customer’s choice of IJM and further indicated to Court that they will apply for Scheme of Arrangement under Section 366 instead. Meanwhile, the syndicated financiers had proceeded with a winding up petition and appointment of an Interim Liquidator from PricewaterhouseCoopers Advisory Services Sdn Bhd (“PwC”) which were filed in April 2022. The matters contested by the Customer by filing stay, striking out and cross examination applications. The Court fixed hearing of the applications on 8 June 2022. At the same time, the Customer had filed for the preliminary draft of Scheme of Arrangement (“SOA”) in the Commercial Court indicating the SOA proposal among others that payment will be made in tranches with full recovery expected by year 2025. There would be further discussions in respect to the detailed SOA proposal. The SOA and other matters were fixed at the Creditors Meeting on 25 July 2022. The Court Convened Meeting (“CCM”) was concluded and majority of the scheme creditors attended have voted and supported the proposed SOA. As the Customer had breached the terms of the Scheme, the solicitor for the Syndicated Financiers issued a letter to the Court to advise that there has been a breach of the Scheme or the Consent Order which entitling the Syndicated Financiers to move for the Interim Liquidator (“IL”). On 23 August 2022, the Court allowed for the application of the IL. (e) Bank Islam filed a civil suit against Burwood Group Limited ("Customer") and 8 others, namely Robert Kokshoorn, Anthony Richard Witham, George Mavrogenis, Ooi Joo Fong, Dato’ Mohd, Salleh Bin Yeop Abdul Rahman, Stephen Keith Lavender, BPA Group Limited & Dominic Andrla (collectively be referred to as “the Defendants”) claiming for an amount of RM85,456,573.79 being the outstanding financing facilities granted by the Bank to the Customer whose accounts had been defaulted. On 28 January 2022 the Bank filed civil suit against the Customer and all Guarantors. The latest summary updates of the suit are as follows: (i) On 25 August 2022, Judgement in Default (JID) has been obtained for 2nd and 3rd Defendants. (ii) Case Management has been fixed on 27 September 2022 for 1st,4th, 5th and 6th Defendants. (iii) In the midst to serve Writ Summons against 7th, 8th and 9th Defendants. (f) Bank Islam filed a civil suit against Sawit Raya Oil (Kelantan) Sdn Bhd, Tan See Meng, Tan See Nong, Sawit Raya Sdn Bhd (“the Defendants”) to recover the outstanding amount of RM234,621,328.53 for the financing granted to the first Defendant. The Writ Summons and the Statement of Claim were filed on 1 July 2022. The court has directed the Defendants to file Statement of Defence on or before 23 August 2022 and Reply to Defence on or before 6 September 2022. The next Case Management fixed on 12 September 2022. 55
  56. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B10. Dividend On 20 January 2022, the Bank paid an interim dividend of 10.93 sen per ordinary share amounting RM226.9 million for the financial year ended 31 December 2021. From the total dividend amount, approximately 12% or RM27.6 million was distributed as cash dividend whilst the remaining 88% amounting to RM199.3 million was reinvested to subscribe for 79,396,600 new ordinary shares at RM2.51 each via the Dividend Reinvestment Plan. The new ordinary shares were listed on 21 January 2022. B11. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the number of average ordinary shares in issue during the period. Group Net profit for the period under review attributable to equity holders of the parent Number of ordinary shares Number of average ordinary shares Earnings per share (sen) 3 months ended 30.06.2022 30.06.2021 RM’000 RM’000 117,157 2,155,269 2,155,269 5.44 194,326 2,643,332 2,612,642 7.44 6 months ended 30.06.2022 30.06.2021 RM’000 RM’000 223,074 2,155,269 2,146,496 10.39 353,037 2,643,332 2,606,538 13.54 Diluted earnings per share The Group has no dilution in its earnings per share in the current and the preceding financial period as there are no dilutive potential ordinary shares. B12. Foreign exchange exposure/hedging policy The breakdown of Group’s net foreign exchange exposure in RM equivalent is as follows: As at 30.06.2022 31.12.2021 RM’000 RM’000 RM equivalent USD EURO Others 80,454 (82,921) 15,450 102,934 (97,001) 26,717 The Bank’s exposure on USD and other currencies are mainly related to its Labuan branch operations and maintenance of foreign current accounts ("FCA"). 56
  57. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B13. Material impairment of assets The breakdown of the assets’ carrying value in the book before impairment, impairment losses and carrying value in the book after impairment against its market value are as follows: As at 30 June 2022 Group Financing, advances and others Carrying value before impairment RM’000 60,699,851 Impairment losses RM’000 (1,021,357) Carrying value after impairment RM’000 59,678,494 Market value RM’000 62,800,637 As at 31 December 2021 Group Financing, advances and others Carrying value before impairment RM’000 59,217,735 Impairment losses RM’000 (1,063,966) Carrying value after impairment RM’000 58,153,769 Market value RM’000 61,303,303 At each reporting date, the Group first assesses individually whether objective evidence of impairment exists for significant financial assets and collectively for financial assets that are not individually significant. If it is determined that objective evidence of impairment exists, i.e. credit impaired, for an individually assessed financial assets measured at amortised cost and FVOCI, a lifetime ECL will be recognised for impairment loss which has been incurred. The Group has considered the impact of the pandemic and has taken into account the economic and financial measures announced by the Government in estimating the ECL on the financial assets. Under collective assessment, the Group applies a three-stage approach to measuring ECL on financial assets measured at amortised cost and FVOCI. Financial assets migrate through the following three stages based on the change in credit quality since initial recognition: i) Stage 1: 12-months ECL (“Stage 1”) For exposures where there has not been a significant increase in credit risk since initial recognition and that are not credit impaired upon recognition, the portion of lifetime ECL associated with the probability of default events occurring within the next 12 months is recognised. ii) Stage 2: Lifetime ECL - not credit impaired (“Stage 2”) For exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised. iii) Stage 3: Lifetime ECL - credit impaired (“Stage 3”) Financial assets are assessed as credit impaired when one or more events that have a negative impact on the estimated future cash flows of that asset have occurred. For financial assets that have become credit impaired, a lifetime ECL is recognised. The Group considers the economic and financial measures announced by the Government, i.e. automatic moratorium as well as rescheduling and restructuring for eligible customers are granted as part of an unprecedented government effort to support the economy amid the pandemic, rather than in response to the financial circumstances of individual customers. Judgement is exercised in determining the significant increase in credit risk for customers receiving relief assistance and do not automatically result in a stage transfer. 57
  58. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B13. Material impairment of assets (continued) When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience, informed credit assessment and including forward-looking information. The Group assumes that the credit risk on a financial asset has increased significantly when it is more than 30 days past due. The Group also uses its internal credit risk grading system and external risk rating to assess deterioration in credit quality of a financial asset. The Group assesses whether the credit risk on a financial asset has increased significantly on an individual or collective basis. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar risk characteristics, taking into account the asset type, industry, geographical location, collateral type, past-due status and other relevant factors. These characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the counterparty’s ability to pay all amounts due according to the contractual terms of the assets being evaluated. B14. Derivatives The Group holds derivative financial instruments to hedge its foreign currency and profit rate exposures. Notional amount 30.06.2022 RM’000 Trading derivatives Foreign exchange related contracts - Less than one year Profit rate related contracts - One year to 3 years Fair value 30.06.2022 RM’000 Notional amount 31.12.2021 RM’000 Fair value 31.12.2021 RM’000 8,021,176 12,191 7,505,850 5,367 60,972 8,082,148 147 12,338 79,153 7,585,003 249 5,616 Market risk Market risk on derivatives is the potential loss to the value of these contracts due to changes in prices of the underlying item such as equities, interest rates, foreign exchange rates, credit spreads, commodities or other indices. The notional or contractual amounts provide only the volume of transactions outstanding at the reporting date and not the amount of risk. Exposure to market risk may be reduced through offsetting items from on and off-balance sheet positions. As at 30 June 2022, the amount of contracts which were not hedged and, hence, exposed to market risk was RM556.7 million (31 December 2021: RM489.6 million). Credit risk Credit risk arises from the possibility that a counter–party may be unable to meet the terms of a contract in which the Bank has a gain position. This amount will increase or decrease over the life of the contracts, mainly as a function of maturity dates and market rates or prices. As at 30 June 2022, the credit risk measured in terms of the cost to replace the profitable contracts, was RM158.2 million (31 December 2021: RM116.8 million). 58
  59. Bank Islam Malaysia Berhad [Registration No. 198301002944 (98127-X)] (Incorporated in Malaysia) Unaudited Interim Financial Statements B14. Derivatives (continued) Liquidity risk Liquidity risk on derivatives is the risk that the derivatives position cannot be closed out promptly. Exposure to liquidity risk is reduced through contracting derivatives where the underlying items are widely traded. Cash Requirements of the Derivatives Cash requirement of the derivatives may arise from margin requirements to post cash collateral with counterparties as the fair value moves beyond the agreed upon threshold limits in the counterparties’ favour, or upon downgrade in the Bank’s credit rating. There have been no changes since the end of the previous financial year in respect of the following: a) The types of derivative financial contracts entered into and the rationale for entering into such contracts, as well as the expected benefits accruing from these contracts; b) The risk management policies in place for mitigating and control in the risk associated with these financial derivative contracts; and c) The related accounting policies. B15. The amount of gains/losses arising from fair value changes of its financial liabilities for the current quarter and financial year to date Derivative financial assets and liabilities are measured at fair value. Gain or loss arising from fair value changes of these instruments are as follows: 3 months ended 30.06.2022 RM’000 Trading derivatives Net loss arising from fair value changes from derivatives assets and liabilities (47) 6 months ended 30.06.2022 RM’000 (99) The Group holds derivative financial instruments to hedge its foreign currency and profit rate exposures. However, the Group elects not to apply hedge accounting. Hence, foreign exchange trading positions, including spot and forward contracts, are revalued at prevailing market rates at statement of financial position date and the resultant gains and losses for the financial year are recognised in the profit or loss. 59