KUALA LUMPUR (April 17): Bank Islam Malaysia Bhd managed to mitigate the impact of the static overnight policy rate (OPR), leading to an improved net income margin (NIM) over the course of last year. 

Group chief executive officer Datuk Mohd Muazzam Mohamed said there was a sequential improvement in its NIM from 2.06% in the first quarter of 2023 (1Q2023), to 2.11% in 2Q2023 and 2.17% in 3Q2023.

He said the bank further sustained the momentum to achieve a 2.13% NIM in 4Q2023, resulting in an overall NIM of 2.12% for 2023.

“The OPR remained unchanged in the early months of 2023, leading to an increased cost of deposits and consequently, a reduction in our NIM in 1Q2023, from 2.28% in 2022.

“This unexpected development required a strategic and prompt response to align our funding costs with the prevailing rates, thereby protecting our profitability,” he said in Bank Islam's annual report 2023 filed with Bursa Malaysia on Tuesday (April 16).

Mohd Muazzam said the bank “managed the slight dip in NIM efficiently, reflecting its proactive measures to align finance costs with the static OPR environment”.

Meanwhile, the group registered a net profit of RM553.1 million for the financial year ended Dec 31, 2023 (FY2023), an improvement of 12.5% over the previous year. 

For outlook, Bank Islam intends to align its strategies with the nation’s economic and environmental goals, mainly focusing on sectors identified for growth and sustainability.

“We will emphasise adapting our products and services to meet the demands of a changing market, enhancing our digital capabilities, and investing in the skills and technologies necessary for the future.

“This approach aims to capture strategic opportunities presented by Malaysia’s economic policies and green initiatives,” it said.

The focus in 2024 will be on growth, asset quality, liquidity and funding management, as well as profitability, to lead Malaysia’s Islamic banking sector, it added.