Академический Документы
Профессиональный Документы
Культура Документы
products
Ajay Chauhan and Rabia Rasheed
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”.
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:
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
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
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
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*
Impairment charge ratio 0.76 0.65* 0.13 0.21 0.01*
Gross impaired financing coverage ratio 77.12 77.17 106.23 142.63 163.77
Liquidity and funding (%)
Liquid asset ratio 67.38 65.30 56.90 47.93 47.13
Interbank deposits to total profit bearing funds 0.03 1.38 1.33 2.55 3.63
Customer deposits to total profit bearing funds 98.47 98.02 97.77 96.31 95.79
CASA deposits to total deposits 35.95 39.69 43.42 41.23 36.53
Financing to deposits ratio 38.33 44.14 50.08 59.93 61.36
Capitalisation (%)
Internal rate of capital generation 11.36 12.73 9.36 9.50 NA
Tier 1 capital ratio 12.25 15.71 15.55 12.94 12.29
Total capital ratio 13.87 16.92 16.72 13.99 13.37
Common equity Tier 1 capital ratio NA NA NA NA 12.29
Source: RAM Rating Services Berhad (2013)
Corresponding author
Ajay Chauhan can be contacted at: ajay@uum.edu.my