Академический Документы
Профессиональный Документы
Культура Документы
Access to this document was granted through an Emerald subscription provided by emerald-srm:375684 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service
information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of
more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online
products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication
Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
Rabia Rasheed is a
Student, both at Universiti very early in the morning) was waiting outside the cabin of Dato’ Sri Zukri Samat, Managing
Utara Malaysia, Malaysia. Director (MD), on the afternoon of January 28, 2014. Earlier that morning, AM had completed
all the formalities related to joining Bank Islam Malaysia Berhad (BIMB) as Marketing Manager
– Islamic Retail Banking Products, and he was asked to report to General Manager, Consumer
Banking (GMCB) in Kuala Lumpur at the bank’s headquarters at Menara Bank Islam, Jalan
Perak. The HR manager had informed him that his induction was to start with a briefing from the
MD. AM was very nervous because he had also been told that the MD had been awarded the
International Banker Awards 2014, with the bank receiving triple honors, and that the MD
himself was awarded the prestigious Banking CEO of the Year (Asia) award and the bank
received Best Customer Service Provider (Asia) and Best Islamic Bank (Malaysia) awards.
Exactly at 3 p.m., the MD’s secretary gestured for him to go into the cabin. The cabin was
huge. AM was impressed when the MD got up from his chair and invited him to sit on the
exclusive sofa set. The MD welcomed him to the bank and gave him a nice folder.
MD: “I will tell you in a brief because all the achievements of our bank are in this folder. You
must read it carefully. We have lot of expectations from you. The bank wants you to take
over from here”.
AM: “Thank you, sir”.
MD: “Do you know the history of our bank?”
AM: “A little bit, sir. But I would like to know more”.
MD: “When you have finished reading this file, you must read the history of our bank. You
will be reporting to MAR. We are used to lot of abbreviations. You can call him GMCB. He
This case study is published is waiting for you and he has all the material on our bank”.
in partnership with the
Universiti Utara Malaysia AM understood that MD was referring to Mujibburahman Abd Rashid (MAR), who was
(UUM) Institute for Business
Management and Research General Manager, Consumer Banking (GMCB). The meeting had lasted barely 2 minutes
(IMBRe) as part of the before the MD got up and shook hands. AM left the cabin feeling very happy that the MD
Emerald – UUM Case Writing
Competition. now knew him personally. Outside the cabin, the secretary guided him toward GMCB’s
cabin. GMCB was not around, so AM went to his own cabin on the 24th floor, which had a
Disclaimer. This case is written
solely for educational nice view of Kuala Lumpur. He sat down and opened the folder. In it was the interview MD
purposes and is not intended had given at the International Bankers Awards Ceremony.
to represent successful or
unsuccessful managerial
decision making. The author/s MD’s interview at the awards ceremony
may have disguised names;
financial and other
recognizable information to
AM wanted to read anything about Bank Islam and Islamic banking (IB) as his background
protect confidentiality. was conventional banking (CB) and this was the first time that he had returned to his own
DOI 10.1108/EEMCS-10-2014-0236 VOL. 5 NO. 8 2015, pp. 1-26, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
country. He received his degree in Bank Financial Management from City University,
London in 1998, and had been working with Standard Chartered Bank (SCB) in Indonesia.
He had felt very lucky when SCB selected him while he was at City University for a posting
in Jakarta. Indonesia was not very far from Malaysia, and the locals spoke a dialect very
similar to his own language, Bahasa. However, recently, his family was putting pressure on
him to take an assignment in peninsular Malaysia because his children had started school
and his wife wanted them to be educated in their country. He applied for jobs in various
banks in Malaysia. Most vacancies were in Islamic banks and AM had no knowledge of IB
but luckily he got a job in BIMB due to his good business development experience in
high-end retail customers.
Even though he had seen the same interview on the Bank Islam Web site (see References),
he started reading the copy in the folder again.
He read,“Global Islamic Finance Awards (GIFA) “Islamic Banker of the Year 2013’ Dato” Sri
Zukri Samat sheds light on how he took on the mammoth task of changing the mindset and
culture of Bank Islam Malaysia Berhad (Bank Islam) to transform Malaysia’s maiden Islamic
bank from being at the brink of financial collapse to become one of the country’s top players”.
Downloaded by UNIVERSITY OF HONG KONG At 11:04 01 February 2016 (PT)
He further read, “Living up to its pioneering heritage, Bank Islam today offers a comprehensive
list of more than 70 innovative and sophisticated IB products and services. It has expanded its
network with 133 branches and more than 1,200 self-service terminals nationwide and is ready
to make further inroads in the region”.
When I came on board, Bank Islam’s losses amounting to approximately RM1.8 billion (RM500
million and RM1.3 billion in 2005 and 2006, respectively) due to non-performing financing posed
a threat not only to IB system but the banking system in general.
AM was aware of the background of the MD. Dato’ Sri Zukri Samat had become the
Managing Director of BIMB on June 9, 2006. Prior to this appointment, he was the
Executive Director of Investment in Khazanah Nasional Berhad, an investment arm of
the Government of Malaysia. Before that, he was the Managing Director of Pengurusan
Danaharta Nasional Berhad (Danaharta), a national asset management company set up
by the government during the 1997-1998 financial crisis. He knew that the first thing that
the MD did after coming to BIMB was to infuse new capital in the bank with the help of
Khazanah Nasional Berhad. Lembaga Tabung Haji (TH) and Dubai Investment Group
LLC (DIG) invested RM1.01 billion taking 9 and 40 per cent shares, respectively. BIMB
Holdins Berhad owned 51 per cent shares. Later, some more shares were acquired by
TH from DIG, to make their share 18.5 per cent. DIG shareholding decreased to 30.5
per cent (Exhibit 1).
AM was aware that TH-related transactions could be carried out in all the BIMB ATMs. His
impression was that TH not only brought investment, but also benefitted BIMB by its vast
databases of Malaysian Muslim citizens. He was counting on utilizing this network in his
future assignments. He was not sure but guessed that integrating with TH must have
increased the BIMB income from millions of TH deposits.
He had also had read that another thing that MD did after joining was to introduce a
three-year Turnaround Plan (3TP). It was a five-point program:
infrastructure and support systems. A risk awareness culture was introduced so that
everyone could become aware of the different types of risks and their likely impact.
The MD then embarked upon a new strategic plan called Sustainable Growth Plan (SGP),
which started in 2010 and lasted till 2012 and said, “The target was organic growth in retail
banking business with focus on broad-based retail customers and secured or
collateralized financings”. The SGP ended with healthy results, and during 2012, the growth
exceeded the targets. For example, asset growth was 16.2 per cent compare to target of
15 per cent; financing growth was 37.8 per cent compared to target of 25 per cent; and
profits grew by 21.8 per cent compared to target of 15 per cent.
The latest strategic plan was Hijrah to Excellence plan (H2E), covering the period 2013 to
2015. AM jotted down the features of each plan and made a chart of transformation plans
(Exhibit 2). He was aware that any day discussion could focus on these plans and he
should know them by heart.
AM also read about the MD’s leadership style: “I believe in putting the right people in the
right jobs, nurturing their talents, motivating them to want to perform rather than by force
and eventually leading to ‘leaders creating leaders’”. The MD formed committees at senior
level (Exhibit 3) and believed in having the right person for the right job. Perhaps this was
the reason AM had been given a fairly good salary by Malaysian standards for what was a
new position. The MD also inducted non-Muslims in senior positions in the bank, for
example Malkit Singh Maan as Chief Financial Officer, Jeroen P.M.M. Thijs as Chief Risk
Officer and Ryan Liew Choon Ching as Chief Technology Officer (Exhibit 4). The other
measures included launching of fast-track Young Leaders Program (YLP) in 2012 to attract
high-caliber graduates to the bank.
AM later went to GMCB’s cabin, but he was still not there but his secretary gave him a file
containing much required information on the history of Bank Islam. AM started reading and
making notes.
Bank Islam received tremendous support from the Government of Malaysia. It operated for
10 years without competition, which allowed it to expand and secure growth. The
Government Funding Act 1983 was passed to allow the issuance of Government
Investment Issue (GII), government securities issued based on Shariah principles. This
helped provide for the liquidity needs of the first Islamic bank as it is not allowed to buy and
sell conventional interest-bearing instruments. In November 29, 1984, Bank Islam set up
Syarikat Takaful Malaysia Sdn. Bhd., the first Islamic insurance company, to complement its
banking operations. On January 17, 1992, Bank Islam was listed on the Main Board of the
Kuala Lumpur Stock Exchange proving its viability to operate alongside with the
conventional banking system in the country. In 1997, Bank Islam was delisted and its listing
status was taken by its newly formed holding company, BIMB Holdings Berhad.
AM called for the latest balance sheet for the year ending December, 2013. The first thing
he noticed was that as on December 19, 2013 BIMB Holdings acquired all the other shares
so as to make BIMB its wholly owned subsidiary (Exhibit 1).
The three transformation plans, the 3TP, the SGP and the H2E, seemed to have proved
fruitful. The total assets have grown three times from RM14.6 billion in 2006 to RM42.84
billion. The same was true for net financing, which has increased from RM8.6 billion to
RM23.74 billion. The profit before zakat and tax (PBZT) was RM1.24 billion in 2006. The
PBZT was healthy (RM 683 billion) (approximately, US$211 billion) in 2013 (Exhibits 7
and 8).
Bank Islam has a network of 136 branches employing a huge staff of 4,200 and nationwide
has more than 1,200 self-service terminals. Bank Islam offers more than 70 Islamic
products and services in the market (Exhibit 6) and is primarily a retail bank, with 74 per
cent of the bank’s financing driven by consumer banking, with the balance 26 per cent
divided between commercial banking and corporate banking. So AM was happy to be
associated with the consumer banking sector. AM noticed that consumer banking was
undergoing tremendous changes with more emphasis on personal financing, which
comprised substantial 34 per cent out of total consumer financing. Comparatively, house
financing decreased from 43 to 26 per cent (Exhibit 5).
AM finished reading at 8 p.m., and he realized that everybody in the office had already left.
The next day when he arrived in office, he had a surprising encounter with GMCB in the lift.
AM: “Selamat pagi (Good morning), MAR”.
GMCB: “So! You are our new Marketing Manager! We have to deal lot with each other. Let
us start with a breakfast”.
complete the report. By the time this meeting finished, AM could see people entering in
canteen for lunch.
products. There were studies which showed that while 80 per cent of the banking
customers in Malaysia are aware of IB, they were not aware of IB products. AM had read
the same thing in the MD’s interview statement, where he had recommended that, “First of
all, I think the lack of public understanding of IB must seriously be addressed”.
In spite of the marketing strategies adopted by the Islamic banks, some of the studies
showed apprehensions about the sustainability of growth. It was speculated that the
leading role of BIMB in the initial years has been diminishing. Therefore, it was felt that the
growth of IB has been saturated, and it is becoming increasingly difficult and challenging
to compete with commercial banks.
AM was able to finish meeting a sufficient number of customers by June. There were many
types of opinions from different segments of the customers. The response of one Malay
customer (translated) was: “I do not understand the names, which are all in foreign
language. For example, I have put in some money in a unit trust product but that is because
the manager insisted very much. I do not know what it is called but it is Islamic”.
An Tamil customer mentioned (translated) that:
“I have taken loan from Bank Islam for my car. I don’t know it is Islamic or non-Islamic. I pay
monthly installments and it is very conveninet. But, if I had taken loan from Maybank the
installments are lower. May be next time. This time I had to follow my dealer”.
He had also met a big time Chinese investor who was also able to talk in English. His
opinion was:
“I have to be careful. Therefore, I invest in many type of avenues. The investment in Bank
Islam is only a little. Service is bad. Therefore, I put most of my money in either in Maybank
or CIMB bank. I don’t care what is Islamic or non-Islamic. I just look at my returns at the end
of the year”.
By this time, AM could not conclusively write a report and asked for one more month which
was allowed by GMCB. He had identified some of the challenges of marketing IB products:
The conventional banking had the lead of a century over IB, which was less than 30
years old in Malaysia.
Conventional banks were better organized and now they have IB windows. Therefore,
they have become the strong competitors even in Muslim segments.
The customers wanted comparable returns on their investments.
Islamic banks had to operate in an economy which is interest based. Therefore, some
Additional readings
RAM Rating Services Berhad (2013), “RAM Credit Rating Rationale: Bank Islam”, available at: www.
bankislam.com.my/home/assets/uploads/2013-RAM-Rating-Rationale.pdf (accessed 27 September
2014).
Bank Islam Malaysia Berhad (2013), “Bank Islam products and services”, available at: www.bankislam.
com.my/en/Documents/cinfo/ABAS_AFGHAN_Presentation_edABAS-250213.pdf (accessed 28
September 2014).
Bank Islam Malaysia Berhad (2013), “Managing director’s operational review”, available at: www.
bankislam.com.my/home/corporate-info/about-us/managing-directors-operational-review/ (accessed
Downloaded by UNIVERSITY OF HONG KONG At 11:04 01 February 2016 (PT)
28 September 2014).
Keywords: Bank Islam Malaysia Berhad (2013), “GIFR 2013 interview feature – Zukri Samat of Bank Islam
Marketing, Malaysia Berhad”, available at: www.bankislam.com.my/home/corporate-info/about-us/managing-
Islamic banking, directors-operational-review/gifr-2013-interview/ (accessed 28 September 2014).
Strategic management, Maybank, I.B. (2013), “BIMB Holdings – Hijrah (Journey) to Excellence”, available at: www.bankislam.
Islamic finance com.my/en/Documents/cinfo/MIB/BIMB-20130416-MIB.pdf (accessed 28 September 2014).
Figure E1
Downloaded by UNIVERSITY OF HONG KONG At 11:04 01 February 2016 (PT)
Table EI
Phase 1 Phase 2 Phase 3
Year 2006 to 2009 Year 2010 to 2012 Year 2013 to 2015
Turnaround plan (3TP) Sustainability growth plan (SGP) Hijra 2 excellence plan (H2E)
Recovery and stability Sustainability and growth Growth, excellence and innovation
1. Moving out of the crisis and Aiming for operational excellence and market Aiming to become the employer of
returning to profitability leadership choice and extend the reach of
2. Building a solid foundation bank beyond the boundaries of
for a sustainable growth Malaysia
Recapitalization and balance Business innovation Robust organic growth
sheet restructuring Robust risk management Excellence in service delivery
Information technology Strengthening of supporting infrastructure Innovation in products and
infrastructure revamp Building capacity and capabilities services
Organizational transformation Franchise development Optimization of resources
program Inorganic growth and corporate expansion Being a preferred employer
Cost rationalization exercise Regional expansion
Human capital development
Table EII
Committees Functions
Asset and liability Oversees and manages the bank’s liquidity and profit-rate gaps.
Reviews liquidity and capital management, market risk as well as
asset and liability management
Operational risk control Deliberates operational risk issues and recommends
improvements. Also reviews compliance risk operating policies
and the enhancement of control mechanisms
Credit risk control Reviews and deliberates on credit-related risks, including
counterparty credit reviews and potential defaults. Also monitors
and sets credit limits and portfolio credit risks
Recovery management Oversee performance of restructured assets and assesses
effectiveness of recovery strategies
Shariah compliance Oversee Shariah compliance on a day-to-day basis
Figure E2
Table EIII
Sectors 2013 (%) 2010 (%)
Figure E3
Figure E4
Downloaded by UNIVERSITY OF HONG KONG At 11:04 01 February 2016 (PT)
Table EIV
Item Year 2012 Year 2013 Improvement (%) Islamic industry
Profit before zakat and tax (PBZT) RM600.3 million RM683 million 13.8 –
Return on equity (ROE) (%) 20.4 21.2 0.8 17.3
Return on assets (ROA) (%) 1.7 1.7 – 1.3
Risk weighted capital ratio (RWCR) (%) 13.9 14 0.1 –
Net financing RM19.5 billion RM23.7b 21.7 –
Customer deposits RM32.6 billion RM37.3 billion 14.4 –
Financing to deposit ratio (FDR) (%) 61.2 65 3.8 81.4
Impaired financing RM308.7 million RM285.3 million 7.6 –
Financing loss coverage ratio (%) 142.6 175.8 33.2 121
Non-funded income (NFI) RM267.5 million RM283.8 million 6.1 –
Non-funded income (NFI) (%) 13.5 12.6 ⫺0.9 11
Table EV
Financial summary
Bank Islam Malaysia Berhad – Group
Unaudited
Statement of financial position 30-June- 31-December- 31-December- 31-December- 30-June-
(RM million) 2009 2010 2011 2012 2013
Table EVI
Financial summary
Bank Islam Malaysia Berhad – Group
Unaudited
31-December- 30-June-
Statement of comprehensive income 30-June- 2010 18 31-December- 31-December- 2013 6
(RM million) 2009 months 2011 2012 months
Table EVII
Financial ratios
Bank Islam Malaysia Berhad – Group
Unaudited
30-June- 31-December- 31-December- 31-December- 30-June-
Key ratios 2009 2010 2011 2012 2013
Profitability (%)
Net financing Margin 2.82 3.08* 3.13 3.37 3.12*
Non-financing income to gross income 16.34 15.70 19.89 19.32 18.89
Cost to income 56.72 53.36 54.12 51.88 55.05
Return on assets 0.92 1.15* 1.57 1.72 1.66*
Return on risk-weighted assets 2.06 2.51* 3.10 3.03 2.79*
Return on equity 16.55 16.38* 18.44 20.21 20.28*
Asset quality (%)
Gross impaired financing ratio 12.70 4.50 2.61 1.55 1.36
Net newly classified impaired financing ratio (0.82) (2.08)* 0.10 0.47 0.37*
Financing credit cost ratio 1.16 1.22* 0.16 0.38 0.02*
Downloaded by UNIVERSITY OF HONG KONG At 11:04 01 February 2016 (PT)
Corresponding author
Ajay Chauhan can be contacted at: ajay@uum.edu.my