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AmBank
Islamic
“Given the challenging global economic outlook in 2020, AmBank
Islamic Berhad (AmBank Islamic) is cautiously optimistic with the
business outlook in FY2021. In FY2020, we accelerated selected
businesses such as Amanah Saham Bumiputera (ASB) and home
financing, wealth management and bancatakaful. We consistently
nurture our relationship with our middle corporate (Mid-Corp)
customers, which resulted in a 22% growth in financing to this
segment. AmBank Islamic also provided several capacity-building
platforms for small and medium-sized enterprises (SMEs) to grow
via networking and knowledge-building events. In addition, the
access to financing for start-up businesses was provided through
our SME Biz Start-up-i Programme. The Best Islamic Finance SME
Bank Malaysia 2019 Award won is a testament to our role in
supporting the growth of Malaysia’s SMEs. The trading in fixed
income securities bolstered our non-funded income (NOFI) by
34.6% in FY2020.”
EQHWAN MOKHZANEE BIN MUHAMMAD
Chief Executive Officer
AmBank Islamic Berhad
ABOUT US
AmBank Islamic is the primary Islamic banking arm of AmBank Group, which offers a comprehensive range of Shariah-
Compliant retail and non-retail banking products and services that include investment, treasury, and trade solutions. Our
primary role as a credit intermediary is complemented by an investment intermediary role, both of which are anchored by
our Value-Based Intermediation (VBI) aspiration. This is an integral strategy to catalyse our journey towards becoming a
purpose-based organisation, whilst being mindful of financial returns to our shareholders.
OUR PERFORMANCE
The growth of our net funded income (NFI) was driven by the improvement in the net funded margin (NFM) to 1.93% and the growth of our total financing book by 10%, primarily
from ASB and home financing, as well as financing to SME, corporate and institutional customers. Meanwhile, the recalibrated strategies for fixed-income securities, ancillary income
from non-retail customers, wealth management and bancatakaful yielded positive results, with a 34.6% increase in total NOFI for AmBank Islamic.
Financing to SMEs grew by 10.4% in FY2020 and constitute approximately 20% of our financing book. Our focus on the Mid-Corp segment and provision of trade finance facilities had
strengthened our income base, with our trade finance portfolio increasing from RM2.2 billion in FY2019 to RM2.4 billion in FY2020.
AmBank Islamic recorded a further improvement in our financial performance where the total income grew by 7.8% to RM883.8 million. Profit after zakat and tax (PAZT) was 7.1%
higher at RM333.8 million due to a higher total income and better cost management, as evidenced by a better cost-to-income ratio of 34.8%. However, the stellar performance in our
underlying business in FY2020 was dampened by the anticipatory forward-looking expected credit loss of RM58.3 million, due to the uncertainty arising from the COVID-19 pandemic
and depressed oil prices.
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OUR PERFORMANCE
Total Financing Income NFI NOFI
RM32.3 RM883.8 RM767.5 RM116.3
Billion in FY2020 Million in FY2020 Million in FY2020 Million in FY2020
RM29.3 Billion in FY2019 RM820.1 Million in FY2019 RM733.7 Million in FY2019 RM86.4 Million in FY2019
Cost-to-Income Ratio CASA Credit Card Outstanding SME
34.8% in FY2020 RM10,577.5 Balance RM6,408.3
Million in FY2020 RM504.5 Million in FY2020
38.7% in FY2019 Million in FY2020
RM8,968.6 Million in FY2019 RM5,802.0 Million in FY2019
RM533.1 Million in FY2019
Profit After Tax and Zakat (PATZ) (RM Million) Mortgage (RM Million) Deposits (RM Billion)
333.8 8,062.3
311.8
6,840.2
34.7
31.1
FY2020 FY2020 FY2020
FY2019 FY2019 FY2019
AmBank Islamic AmBank Islamic AmBank Islamic
AWARDS & RECOGNITION
Global Banking & Finance Awards (GBAF)
• Most Promising Islamic Bank Malaysia 2019 – AmBank Islamic Berhad
• Best Islamic Banking CEO Malaysia 2019 – Eqhwan Mokhzanee
Alpha Southeast Asia
• Best Islamic Finance SME Bank Malaysia – AmBank Islamic Berhad
Global Islamic Finance Awards (GIFA)
• Most Improved Islamic Bank 2019 – AmBank Islamic Berhad
• Islamic Banker of the Year 2019 – Eqhwan Mokhzanee
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KEY INITIATIVES & OUTCOMES
Key Initiatives Outcomes
VBI & Sustainability Agenda
• Spearheaded AmBank Group’s sustainability agenda, the details of which are • The CEO of AmBank Islamic is the Chairman of the industry-level VBI Working Group
elaborated in the Sustainability Report on pages 135 to 205. on Sectoral Guide Development for palm oil, renewable energy and energy efficiency.
• SMEs and Start-up Businesses: • RM600 million or 10.4% growth in financing to SMEs.
– AmBiz Series: Provided platforms for SMEs to network and build their business
capacity. This included the AmBank Biz Conference – Halal Chapter, which • RM44.0 million of financing disbursed by AmBank Islamic to start-up businesses.
provided insights to SMEs in relation to the Halal sector.
– SME Biz Start Up-i: A programme for start-up businesses with financing of up to
• RM26.0 million of loans/financing disbursed by AmBank Group for green-related
RM300,000.
businesses.
– Collaborated with CGC and SJPP to widen access to financing to SMEs.
Accelerating Growth Drivers
• Enhanced wealth management services, including will writing in collaboration with • Fee income from Wealth Management.
Amanah Raya Berhad.
• Investments and trading of fixed-income securities to diversify and grow our income. • Income from Group Treasury and Markets (GTM).
• Continue to engage with Mid-Corp customers to expand wallet share from deposits
• RM3.0 billion or 10% growth in total financing.
and ancillary income.
Funding Diversification
• Launched the AmJutawan campaign to garner savings accounts from individual • 17.9% growth in CASA, resulting in CASA ratio of 30.5%.
customers. The campaign leverages the AmWafeeq savings account and offers
prizes totalling up to RM2.5 million.
• Offered JomPAY and Virtual Account solutions to manage collections for our
• 11.3% growth in total deposits.
customers and grow non-retail deposits.
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CHALLENGES & RISKS
Challenges/Risks Mitigation Strategies Results
• Manage and monitor the onboarding of
customers vis-à-vis strategies and risk appetite.
Credit Risk in View of the Economic Outlook • Implement prudent credit underwriting standards
In light of the COVID-19 pandemic, the banking and proactive collection strategies. • Stable GIF ratio of 1.9%.
sector could face deteriorating asset quality. • Monitor asset portfolio and composition.
• Proactively engage major underperforming
customers to avoid impairment.
• Implement the Cyber Resilience Policy to
enhance cyber security through a multi-layered
Cyber Security Risks approach that builds our ability to prevent and
Potential malware attacks and data breaches disrupt recover from cyber-attacks and events that
disrupt business operations and services. • No successful cyber-attack cases.
business operations and expose the bank to financial
and non-financial implications. • Establish a Security Incident Response Team to
identify, protect, detect, respond and recover
from cyber risk incidents.
• In line with BNM Shariah Governance Framework
(SGF), establish the Shariah Research & Advisory,
Shariah Risk Management, and Shariah Review
Shariah Risks functions to act as the second line of defence
Shariah non-compliances (SNC) result in the against SNCs, with the Shariah Audit function • Four Shariah Non-Compliant Incidents
purification of income and could impact our business acting as the third line of defence. (Transactional in Nature).
if remain unabated.
• Implement the necessary governance, policies,
guidance and control measures to mitigate SNC
risks.
PROSPECTS & OUTLOOK
The COVID-19 pandemic has exacerbated existing economic and geopolitical challenges. Customers are expected to face cash flow challenges due to a slowing demand and supply
chain disruptions, which will impact growth and asset quality. As part of our VBI journey, AmBank Islamic is committed to supporting our people and customers during these challenging
times. Hence, we have institutionalised our own initiatives and are participating in various government-led initiatives, including BNM’s 6-month payment deferment initiative. Despite the
uncertainties, our dedicated people, loyal customers, and capital and liquidity buffers will stand us in good stead to weather the storm, and we look forward to seeking further
opportunities upon an economic upturn.
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