STRATEGIC MANAGEMENT Bank Islam’s strategy in 2023 centred on proactive balance sheet management, which is crucial for managing our NIM and liquidity requirements effectively. The year’s strategic financial manoeuvres were underpinned by several key initiatives aimed at optimising our financial stability and growth: • Segment Composition and Funding Profile Rebalancing: Our primary focus was on recalibrating our segment composition and funding profile mix. We aimed to enhance our current, savings and transactional investment accounts (CASATIA) ratio and operational accounts, particularly in the Retail sector, while consciously reducing our reliance on non-retail short-term deposits. • Deposit Drive Campaigns and Acquisition Strategies: We actively pursued deposit drive campaigns and acquisition strategies, emphasising the Retail and SME segments. Additionally, leveraging our digital channels became an important component of our approach to support and align with our financing growth objectives. • Financing Portfolio Rebalancing: An integral part of our strategy involved reviewing and rebalancing our financing portfolio. This effort was geared towards improving and optimising the asset yield across our various business pillars, ensuring a more profitable and sustainable asset allocation. HEALTHY FINANCIAL POSITION In 2023, Bank Islam’s strategic financial management significantly strengthened our balance sheet. We achieved an increase in total assets and made a strategic shift in deposit composition, culminating in a more robust financial framework. Our asset quality saw a marked improvement, with the gross impaired financing ratio declining to 0.9% by the end of December, well below the industry average of 1.7%. Our total assets grew by 1.2% to reach RM91.0 billion, fuelled by notable advancements in financing and investment securities, despite a downtrend in cash and short-term funds. Specifically, financing activities witnessed a 3.0% year-on-year increase to RM66.8 billion, largely driven by our Retail segment, particularly in House and Personal Financing. We also experienced a constructive shift in our deposit composition over the year, with customer deposits and investment accounts growing by 1.2% to RM76.1 billion. This expansion was significantly bolstered by a 9.8% increase in CASATIA, which reached RM30.4 billion and represented a healthy 39.9% of our total customer deposits and investment accounts. Moreover, Bank Islam maintained a robust Total Capital Ratio of 19.9%, emblematic of our strong capital base and adept liquidity management. Through these concerted efforts, we have solidified our financial position, ensuring sustained growth and stability in a challenging economic landscape. DELIVERING SHAREHOLDER VALUE In 2023, we maintained our practice of delivering value to shareholders through steady and substantial dividend payouts, reflecting our solid financial health and recognising the importance of sharing success with our investors. Under our dividend policy initiated in 2022, the Bank allocated 60% of its Profit After Zakat and Tax (PAZT) to dividends, upholding our belief in fair compensation and appreciation for our shareholders’ continued support. For the fiscal year 2023, we announced a second interim cash dividend of 4.22 sen per share in the final quarter, leading to an annual total of 16.81 sen per share. This distribution is a testament to our strong profitability and our intention to maintain a transparent and rewarding relationship with our shareholders, thereby enhancing investor trust. Additionally, the upward trend in our share prices throughout the year reflects growing investor confidence. With a Total Capital Ratio that consistently exceeds the 18% to 19% range, reaching 19.9%, our financial stability is evident and compares favourably with our industry peers. Looking ahead to 2024, we aim to uphold these rewarding financial results for our shareholders, supported by our robust capital base and dedication to financial prudence. 27 1 2 3 4 5 6 7 8 9 www.bankislam.com KEY MESSAGES
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