Given the importance of maintaining a healthy margin, we adopted a cautious approach to financing growth in 2023. This strategy was essential for ensuring long-term profitability, even though it led to a moderated pace of financing expansion. The focus was on recalibrating our funding strategies to enhance margins while continuing to support sustainable growth. Credit quality also remained a key focus, especially in the uneven economic recovery post-COVID. We observed an improvement in our credit metrics, including a better pass-due-notimpaired (PDNI) ratio, indicating a positive shift in our asset quality and the effectiveness of our credit management. PERFORMANCE HIGHLIGHTS 2023 was a year of robust financial stewardship and strategic agility for Bank Islam, as evidenced by our key performance metrics. Our net income rose 7.2% to RM2.5 billion compared to RM2.3 billion last year. This increase and improvements in operating income and fees demonstrate a strong revenue generation capability. We registered a Group net profit of RM553.1 million for the financial year ended 31 December 2023 (FY2023), an improvement of 12.5% over the previous year. Accordingly, EPS and net Return on Equity (ROE) for the Group have improved to 24.57 sen and 7.8%, respectively, for FY2023. Our Return on Assets (ROA) maintained a stable trend at 0.6%, aligning with forecasts and marking a slight increase from the prior year. These figures underscore our ability to generate value for our shareholders and maintain asset efficiency. The Net Income Margin (NIM) was slightly higher at 2.1% compared to the forecast for 2023, yet there was a decrease from the previous year’s 2.3%. We managed the slight dip in NIM efficiently, reflecting our proactive measures to align finance costs with the static OPR environment. We also saw a higher Non-Fund-Based Income (NFBI) Ratio of 9.0%, which was higher than the forecast, and the previous year, driven by capital gains from the disposal of investment securities, gains from unit trusts, and foreign exchange gains. This diversification of income streams played a critical role in bolstering our profitability. Cost management was a key priority. The combination of lower NIM and higher operating cost has led to a slight deterioration in our Cost-Income Ratio (CIR), as seen in our CIR at both the Bank level (58.2%) and Group level (60.9%). We are committed to further driving efficiency and prudent expense management despite higher staff costs and administrative expenses. Overall, Bank Islam marked its performance in 2023 with strategic decisions that balanced growth with profitability. We exercised discretion in financing activities, particularly NonRetail, to preserve profitability margins. Our deliberate focus on managing margins and a commitment to asset quality positioned us well to face the anticipated challenges of 2024 with confidence. Our team’s ability to respond effectively to market conditions has been a testament to our resilience and positions us for continued success. STRATEGIC PROGRESS Throughout the past year, we have steadfastly advanced along our LEAP25 Roadmap. A notable highlight has been the development of our sustainable and green portfolio. Initially, we aimed to cultivate a portfolio worth RM4 billion by 2025. Our proactive and strategic efforts are yielding results ahead of target and schedule, underscoring our effective strategy and implementation. Nevertheless, we faced external headwinds that have affected our profitability goals, particularly the repercussions of the Ukraine-Russia conflict. Despite these challenges, our strategic initiatives have continued progressing, demonstrating solid execution. We are adapting our strategies to meet the demands of the changing economic landscape. We adopted a cautious approach to financing growth in 2023. This strategy was essential for ensuring long-term profitability, even though it led to a moderated pace of financing expansion. 21 1 2 3 4 5 6 7 8 9 www.bankislam.com KEY MESSAGES
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