Islamic banking has demonstrated stellar performance, outperforming conventional banking with a ten-year compound annual growth rate of 10.9%. Islamic banking’s financing growth surged by 12.4%, powered by the global economy reopening, economic recovery, and higher digitalisation of financial services. While the banking sector experienced low margin compression amid a record low overnight policy rate (OPR) of 1.75% in 2021, Bank Negara Malaysia’s (BNM) decision to increase the rate by 100bps in 2022 to 2.75% is a positive development. Higher interest rates are generally a boost for banks’ margins. However, the increased cost of funds could offset the positive impact due to heightened deposit competition. Amidst the headwinds, Islamic banking has demonstrated stellar performance, outperforming conventional banking with a ten-year compound annual growth rate of 10.9%. Islamic banking’s financing growth surged by 12.4%, powered by the global economy reopening, economic recovery, and higher digitalisation of financial services. STRENGTHENING OUR INTEGRITY & GOVERNANCE Good governance is a fundamental part of our organisational culture and is integral to our business sustainability. Our Board of Directors and leadership team are fully committed to ensuring that we have a robust governance framework that protects all our stakeholders’ best interests. In 2022, we launched an Organisational Anti-Corruption Plan, which serves as our guiding principle for reinforcing good governance practices across the organisation. This plan aims to promote transparency, accountability, and responsibility in all our business dealings. It outlines our commitment to compliance with regulatory requirements, ethical conduct, and risk management. The Integrity Plan sets clear expectations for our employees and reinforces the importance of adhering to our core values of integrity, respect, and professionalism. Through the Integrity Plan, we have imposed measures that ensure a robust risk and compliance culture through persistent and focused efforts towards achieving a sustainable mindset change. We have launched awareness initiatives that aim to instil a risk and compliance culture mindset and provide quick refresher programmes to our first line of defence. We have also implemented a continuous tracking and monitoring mechanism and empowered our people to drive the embedment of the risk and compliance culture. Our network of Business Risk and Compliance Officers is key to this effort, as they retrain our first line of defence and lead them by example, becoming the first point of contact to support our employees in embedding risk and compliance culture. In 2023, we will delve deeper into our employees’ behavioural patterns to better understand the underlying cause and implement an effective behaviour change intervention programme. This will ensure a sustainable mindset change effort and solidify our commitment to a culture of integrity and compliance. INTEGRATING SUSTAINABILITY INTO BIMB Integrating environmental, social, and governance (ESG) principles in the Islamic banking sector is not new. Islamic banking has always been centred on ethical finance and sustainability principles, focusing on social responsibility and community development. As the world shifts towards a more sustainable future, BIMB has taken a leading role in promoting ESG principles within the industry. BIMB’s commitment to ESG is reflected in its strong performance and outpacing its competitors in sustainable finance. Over the past year, we have made remarkable progress in integrating sustainability into our operations, with the strong execution of BIMB’s Sustainability Plan. We have launched five sustainability commitments, endorsed governance oversight on sustainability, and established a dedicated Sustainability Project Working Team (SPWT). Leadership Insights Bank Islam Malaysia Berhad 17 01 05 03 07 02 06 09 04 08
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