INTEGRATED ANNUAL REPORT 2024 Driving a Sustainable Future
How to navigate our report We proudly present our Integrated Annual Report 2024 (IAR2024 or the Report), providing an in-depth review of our performance over the last financial year and our outlook for 2025. Centred on the theme “Driving a Sustainable Future”, the Report illustrates Bank Islam Malaysia Berhad’s (Bank Islam or the Group) commitment to driving sustainable, purpose-led progress beyond profit through responsible Islamic banking and strategic stakeholder value creation. CAPITALS FC Financial IN Intellectual HU Human SR Social and Relationship MF Manufactured NT Natural STRATEGIC FOCUS AREAS SP Sustainable Prosperity VBC Values-based Culture CE Community Empowerment RE Real Economy CC Customer-centricity D Digitalisation REPORTING SCOPE AND BOUNDARY This Report employs an integrated approach, covering: • Material aspects such as strategy, business model, risks, and opportunities, financial performance, key initiatives, and governance; and • Non-financial factors, including non-financial performance, environmental, social, and governance (ESG) considerations, and the use of our capitals. Our IARs are published annually, with this edition covering our performance from 1 January to 31 December 2024 (FY2024 or the year), unless otherwise stated. REPORTING FRAMEWORK Our integrated reporting process, as well as the content of this Report, has been prepared in accordance with the International Integrated Reporting Framework (IIRF) 2021 by IFRS Foundation. In addition, the following frameworks and standards were consulted: • Value Reporting Foundation’s International Integrated Reporting Framework (January 2021) • Bursa Malaysia Securities Berhad’s (Bursa Malaysia) Main Market Listing Requirements on Sustainability Reporting • Securities Commission Malaysia’s Malaysian Code on Corporate Governance (MCCG) 2021 • Malaysia’s Companies Act 2016 • Malaysian Financial Reporting Standards (MFRS) • Bank Negara Malaysia’s (BNM) Corporate Governance Policy • Bursa Malaysia’s Sustainability Reporting Guide • Global Reporting Initiative’s (GRI) Sustainability Reporting Standards • Task Force on Climate-related Financial Disclosures (TCFD) • United Nations Sustainable Development Goals (UNSDGs) • International Financial Reporting Standards (IFRS) Foundation’s International Integrated Reporting Framework (IIRF) (2021) • Bursa Malaysia’s Corporate Governance Guide (4th edition) • BNM’s Policy Documents and Guidelines • Malaysia’s Financial Services Act 2013 • Malaysia’s Islamic Financial Services Act 2013 • FTSE4Good Bursa Malaysia Index’s Environmental, Social and Governance (ESG) Indicators • BNM’s Climate Risk Management and Scenario Analysis (CRMSA) • Sustainability Accounting Standards Board’s (SASB) Sector Specific Disclosures • World Business Council for Sustainable Development (WBCSD) and World Resources Institute’s (WRI) Greenhouse Gas (GHG) Protocol: Corporate Accounting and Reporting Standard • Partnership for Carbon Accounting Financials’ (PCAF) Global GHG Accounting and Reporting Standard for the Financial Industry • International Sustainability Standards Board’s (ISSB) S1 General Requirements for Disclosure of Sustainability-related Financial Information and S2 Climate-related Disclosures • International Federations of Accounts for International Standard on Assurance Engagements (ISAE) 3000 KEY RISKS CR Credit Risk NFR Non-Financial Risk MR Market Risk TCR Technology and Cyber Risk RORBB Rate of Return Risk in Banking Book (RORBB) SNC Shariah NonCompliance Risk LR Liquidity Risk RCR Regulatory/Compliance Risk SR Strategic Risk CRR Climate-related Risk STAKEHOLDERS EM Employees GR Governments and Regulators CU Customers IV Investors LC Local Communities About Our Report
MATERIAL MATTERS SRF Sustainable and Responsible Finance CESF Community Empowerment and Social Finance CX Customer Experience SSC Sustainable Supply Chain EEI Emissions and Environmental Impact GGC Good Governance and Conduct EHS Employee Well-Being, Health and Safety DPS Data Privacy and Security TD Talent and Development CRO Climate Risks and Opportunities DEI Diversity, Equity and Inclusion UNSDGs We have aligned our strategy with the following United Nations Sustainable Development Goals (UNSDGs), ensuring a meaningful contribution to global sustainability efforts while delivering lasting value to all stakeholders. MATERIALITY We have adopted the materiality principle in our reporting to ensure that critical topics influencing the Group’s strategy for value creation – across the short, medium, and long-term – are transparently disclosed and effectively addressed. Identifying our material matters considers factors such as our value creation process, external influences, stakeholder interests, and key risks facing the Group. Following our initial assessment of material issues in 2022 and refinements in 2023, a materiality validation process was conducted during the year, which confirmed that our list of material matters remains unchanged and in line with the evolving landscape. Read the section from pages 50 to 56 for more details. COMBINED ASSURANCE This Report was produced following strict internal controls and governance protocols. Non-financial data was thoroughly reviewed and validated by the Group Internal Audit team, while PwC Malaysia provided external assurance on the financial statements and related financial information included in the Report. FORWARD-LOOKING STATEMENTS This Report contains forward-looking statements about our future performance and prospects. These projections are based on current assessments but may change due to evolving circumstances. Various factors, including emerging risks, could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Therefore, these statements should not be regarded as guarantees of future performance. BOARD APPROVAL Our Board of Directors (Board) acknowledges its responsibility for the integrity of this Report. They are confident that it addresses the material issues impacting the Group’s ability to create value and provides an accurate representation of our performance for 2024. The Board approved our IAR2024 on 26 March 2025, signed on its behalf by: Tan Sri Dr Ismail Haji Bakar Chairman STATEMENT OF ASSURANCE Assurance Undertaken In strengthening the credibility of the Sustainability Statement, selected aspects of the Statement have been subjected to an internal review by the Bank’s internal auditors and have been approved by the Bank’s Board Audit & Examination Committee. Subject Matter The subject matters covered by the internal review include the following indicators: a) Percentage of operations assessed for corruption-related risks. b) Confirmed incidents of corruption and action taken. c) Total amount invested in the community where the target beneficiaries are external to the listed issuer. d) Total number of beneficiaries of the investment in communities. e) Number of substantiated complaints concerning human rights violations. f) Proportion of spending on local suppliers. g) Number of substantiated complaints concerning breaches of customer privacy and losses of customer data. Scope The boundary of the internal review on the selected sustainability information includes all companies within the Group. FEEDBACK We are committed to continuously improving the quality of our reporting and welcome feedback that can help us make our IARs more relevant to our stakeholders. Should you have any feedback on this report, please reach out to iar@bankislam.com.my CROSS-REFERENCES indicates where additional details can be found elsewhere in this Report An online version of this Report, as well as previous IARs, is available on our corporate website: https://www.bankislam. com/investors/ 1 w w w . b a n k i s l a m. c o m 01 02 03 04 05 06 07 08 09
OVERVIEW OF BANK ISLAM 01 4 Overview of Bank Islam • Who We Are • Vision • Mission • Our Brand Promise • TAAT Values | Highlights 4 2024 Key Highlights • Business Highlights • Sustainability Highlights 5 Our Presence 6 How We Are Structured: Group Corporate Structure 7 Awards and Recognitions 8 Our Products and Services 8 Our Competitive Advantage 9 Significant Events 2024 KEY MESSAGES 02 15 Chairman’s Letter 20 From the Desk of the GCEO 27 Financial Review by the GCFO VALUE CREATION AT BANK ISLAM 03 30 Our Integrated Approach to Value Creation 32 Our Value Creation Business Model 35 Stakeholder Engagement and Value Creation MANAGEMENT DISCUSSION AND ANALYSIS 04 A. STRATEGIC REVIEW 42 Operating Environment • Economic Review and Outlook 2024 • Banking Sector Review and Outlook • Key Market Trends Shaping Our Business 50 Material Matters 57 Key Risks and Mitigations 64 Our Strategic Roadmap: LEAP25 66 Strategic Performance Review 76 Placing Digital at the Core B. PERFORMANCE REVIEW 84 5-Year Financial Summary 85 5-Year Financial Highlights 86 Financing by Contract 86 Segmental Analysis 87 Simplified Statements of Financial Position 88 Statement of Value-added and Distribution 88 Quarterly Performance 89 Financial Calendar 90 Investor Information C. BUSINESS REVIEW 93 Group Retail Banking 100 Group Institutional Banking Bank Islam is committed to fostering a sustainable future by integrating environmental, social, and ethical considerations into our operations. We go beyond compliance by shaping a world where responsible financing minimises risk and maximises positive impact. As Menara Bank Islam stands prominently in Kuala Lumpur’s progressive skyline, it symbolises our vision for a greener, more inclusive future. Just as the skyline reflects growth and transformation, our commitment to sustainability drives positive change in every facet of our operations. We champion ethical financing by thoroughly evaluating every investment and financial product’s environmental, social, and governance (ESG) factors to ensure our capital supports projects that contribute to a more equitable society and a healthier planet. Our dedication to financial inclusion empowers underserved communities with access to essential financial services, enabling full economic participation and fostering real progress through equal opportunities that bridge financial gaps. We focus on sustainable business practices by reducing our carbon footprint and maintaining ethical supply chains. We aim to minimise environmental impact and support a healthy planet for future generations. By embedding sustainability into our strategy, we reduce risk and create long-term value for our stakeholders. At Bank Islam, we are building a more resilient, ethical, and inclusive global economy—benefiting people and the planet for years to come. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 2 Inside Our Report
SUSTAINABILITY STATEMENT 05 108 Sustainability Statement 116 Sustainability Governance 126 Managing Our Climate Risks and Opportunities 137 Sustainable and Responsible Finance 144 Emissions and Environmental Impact 148 Employee Well-Being, Health and Safety 159 Talent and Development 167 Diversity, Equity and Inclusion (DEI) 172 Community Empowerment and Social Finance 179 Good Governance and Conduct 182 Data Privacy and Security 184 Performance Data LEADERSHIP 06 186 Corporate Information 188 Board Composition 189 Board of Directors 190 Board of Directors’ Profile 199 Shariah Supervisory Council’s Profile 202 Management Team’s Profile 210 Heads of Subsidiaries’ Profile 211 Organisation Structure Thursday, 8 May 2025 Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1 50603 Kuala Lumpur. 10.00 a.m. ANNUAL GENERAL ME E T I N G 42nd ADDITIONAL INFORMATION 09 491 Shareholdings’ Analysis 494 Properties Owned by Bank Islam 495 Directory of Main and Regional Offices 499 Ar-Rahnu Branches 501 SME Hubs 502 Bureau de Change 503 Vehicle Financing Sales Hubs 505 Subsidiaries of Bank Islam 506 GRI Content Index 510 TCFD Index 511 Notice of The 42nd Annual General Meeting 517 Statement Accompanying Notice of the 42nd Annual General Meeting 522 Administrative Guide 529 Abbreviation 532 Glossary • Form of Proxy ACCOUNTABILITY 07 212 Corporate Governance Overview Statement 237 Board Audit & Examination Committee (BAEC) Report 244 Statement on Risk Management and Internal Control 263 Additional Compliance Information FINANCIAL STATEMENTS 08 265 Directors’ Report 272 Statement by Directors 273 Report of the Shariah Supervisory Council 279 Statutory Declaration 280 Independent Auditors’ Report 284 Statements of Financial Position 285 Statements of Profit or Loss 286 Statements of Other Comprehensive Income 287 Consolidated Statement of Changes in Equity 288 Statement of Changes in Equity 289 Statements of Cash Flow 292 Notes to the Financial Statements 428 Pillar 3 Disclosure 3 w w w . b a n k i s l a m. c o m 01 02 03 04 05 06 07 08 09
WHO WE ARE Bank Islam, established on 1 July 1983 (20 Ramadan 1403H) holds the distinction of being Malaysia’s inaugural Islamic bank and the first publicly listed Islamic bank in the Main Market of Bursa Malaysia on 8 October 2021. A full-fledged, pure-play Islamic bank with 135 branches and over 900 Cash Dispensing Machines nationwide, Bank Islam provides banking and financial solutions that strictly adhere to the Shariah rules and principles. Our commitment remains steadfast towards fostering sustainable prosperity and upholding ESG values. Bank Islam is an official UN Global Compact Malaysia and Brunei participant, reflecting our commitment to global sustainability goals. Our core subsidiaries, BIMB Investment Management Berhad and BIMB Securities Sdn Bhd, are pioneers in Islamic financial services, namely investment and stockbroking. We strive to create opportunities and improve lives by offering end-to-end financial solutions for our diverse customers, stakeholders, and communities. As the leading Islamic bank in Malaysia, we nurture responsible growth and progress, using our expertise and experience to help our customers achieve success and build a sustainable future for all. VISION The bank that advances prosperity for all MISSION To provide solutions that deliver value RETURN ON EQUITY (AFTER PAZT) 7.6% DIVIDEND PAID RM345.0 million NET PROFIT (PROFIT AFTER ZAKAT AND TAX (PAZT)) RM571.1 million PROFIT BEFORE ZAKAT AND TAX RM773.1 million TOTAL ASSETS RM96.8 billion OUR BRAND PROMISE Assuring Trust. Delivering Value. T Think Customer A Act with Integrity A Advance Beyond T Take Charge TAAT VALUES HIGHLIGHTS Launched Ihsan Sustainability Investment Account (ISIA) 2.0, a Value-based Impact Investment, offering a unique avenue for purposeful investment in UNSDG-aligned financing assets with a social impact contribution through the zakat or Sadaqa House feature Won the Islamic Finance News (IFN) Most Innovative Islamic Bank 2024 335 million transactions via online platforms BUSINESS HIGHLIGHTS EMPLOYEE ENGAGEMENT INDEX 91% Disbursed RM12.3 million through the Blended Financing Programme to nurture 413 underbanked microentrepreneurs to become bankable Disbursed RM1.4 million to assist 109 asnaf microentrepreneurs through BangKIT Business Grant Disbursed RM3.9 million for Education Fund to ensure underserved children received quality education inclusive of 109 orphans Paid RM11.4 million Zakat Environmental Economic Social 12 environmentfriendly branches and contact centres nationwide Established the Group Sustainability Policy, which incorporates our Sustainability and Climate Disclosure Policy. The first bank in Malaysia to certify 86 Certified Green Finance Advisors developed in collaboration with the Asian Banking School (ABS). Surpassed our previous Shariah-ESG asset target and shifted our focus to Sustainable Finance. RM25.7 BILLION IN SUSTAINABLE FINANCE AND TREASURY ASSETS, COVERING AN EXPANDED SCOPE (previously measured by approved green financing: FY2023 – RM4.5 billion). SUSTAINABILITY HIGHLIGHTS Achieved a 59% reduction in carbon emissions at our first environment-friendly branch, and launched plans to introduce eight more branches by 2030 to achieve our carbon neutrality goal. Launched BIMB Mobile and BIMB Web for an improved user experience, seamless navigation and enhanced security. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 4 Overview of Bank Islam 2024 Key Highlights
Scan the QR code for the details of our BRANCH NETWORK or log on to https://www.bankislam.com TOTAL CUSTOMERS 4.7 million The first Islamic Bank established in Malaysia and Southeast Asia WORKFORCE 5,668 Branches Northern Region 26 Branches PERAK PENANG KEDAH Green Contact Centre • Sungai Petani, Kedah Green Branches • Alor Setar, Kedah • Butterworth, Pulau Pinang PERLIS Central Region 45 Branches PUTRAJAYA KUALA LUMPUR SELANGOR Contact Centres • Menara Bank Islam, Kuala Lumpur • Wangsa Maju, Kuala Lumpur Green Branches • Ampang, Selangor • Banting, Selangor • Kajang, Selangor • Sri Gombak, Selangor Southern Region 24 Branches NEGERI SEMBILAN MELAKA JOHOR Green Branch • Senawang, Negeri Sembilan Eastern Region 27 Branches KELANTAN TERENGGANU PAHANG Green Branches • Kubang Kerian, Kelantan • Bandar Baru Tunjung, Kelantan • Kota Bharu, Kelantan • Temerloh, Pahang SARAWAK SABAH East Malaysia 13 Branches LABUAN Cash Depositing Machines 495 Coin Depositing Machines 7 Cash Dispensing Machines 975 5 w w w . b a n k i s l a m. c o m 01 OVERVIEW OF BANK ISLAM 02 03 04 05 06 07 08 09 Our Presence
BIMB HOLDINGS SDN BHD AMANAH SAHAM BUMIPUTERA 6.30% EMPLOYEE PROVIDENT FUND BOARD 17.39% OTHER SHAREHOLDERS 27.44% LEMBAGA TABUNG HAJI TABUNG HAJI 48.87% 100% BANK ISLAM MALAYSIA BERHAD BIMSEC NOMINEES (TEMPATAN) SDN BHD 100% 100% BIMSEC NOMINEES (ASING) SDN BHD BIMB OFFSHORE COMPANY MANAGEMENT SERVICES SDN BHD 100% 100% 100% 51% 49% BIMB SECURITIES SDN BHD 100% 100% 100% 100% BIMB SECURITIES (HOLDINGS) SDN BHD BIMB INVESTMENT MANAGEMENT BERHAD AL-WAKALAH NOMINEES (TEMPATAN) SDN BHD SYARIKAT AL-IJARAH SDN BHD BIMB SOLUTIONS SDN BHD BANK ISLAM TRUST LTD (112330-P) FINODYN SDN BHD 40% Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 6 How We Are Structured: Group Corporate Structure as of 14 March 2025
BEST SRI SUKUK – WATER – Principal Adviser, Shariah Adviser, Lead Arranger and Lead Manager CLIENT EXCELLENCE AWARD – Client Excellence Award from Deutsche Bank and Standard Chartered Bank ISLAMIC FINANCE NEWS (IFN) – Most Innovative Islamic Bank 2024 MALAYSIA’S 100 LEADING GRADUATE EMPLOYERS 2024 (M100) BY GTI MEDIA – Ranked No. 2 in the Banking category (maintaining the same position as in 2023) – Ranked No. 4 out of 240 companies (improved from No. 6 in 2023) MSWG’S NATIONAL CORPORATE GOVERNANCE AND SUSTAINABILITY AWARDS (NACGSA) 2024 – Excellence Award Top 50 (ranked 40th) THE EDGE ESG AWARDS 2024 – Best in E (Environment) – Gold – Best in S (Social) – Gold – Best in G (Governance) – Gold – Best Fund-based on Asset Class (Allocation) – Silver GLOBAL ISLAMIC FINANCE AWARDS (GIFA) 2024 – Best Islamic Bank for Gen-Z – Be U by Bank Islam – Best Technology Implementation – CI/CD and microservices for Go Beyond – Best RPA Initiative – RPA BITIZEN Developer Programme – Best Islamic Microfinance Product of the Year Award THE CAMBRIDGE ISLAMIC FUNDS FORUM AWARDS 2024 – The Best Trust Services Provider for Islamic Asset Management in Malaysia 2024 INLAND REVENUE BOARD OF MALAYSIA (IRBM) BEST TAX PAYER AWARD 2024 7 01 OVERVIEW OF BANK ISLAM 02 03 04 05 06 07 08 09 w w w . b a n k i s l a m. c o m Awards and Recognitions
OUR PRODUCTS Home Financing-i Vehicle Financing-i Credit Card-i ASB Financing-i Personal Financing-i Ar-Rahnu Gold Investment Account Takaful Protection Unit Trust Investment Will Writing Deposit and Investments • Al-Awfar • iGain • Wafiyah • Ihsan Sustainability Investment Account (ISIA) • Term Deposit Tawarruq-i (TDT) • Qard Saving-i • Basic Saving-i • Qard Current-i • Basic Current-i • Foreign Currency Account-i SME, Commercial and Corporate Financing Solutions • Term Financing • Trade Financing • Working Capital • Structured Financing or Programme-based Financing Investment Banking and Advisory Treasury and Markets • Money Market • Foreign Exchange (FX) • Fixed Income Markets • Structured Products Shariah-ESG Fund Management and Retail Asset Management Services Stockbroking services Shariah Advisory Share Margin Financing-i Research Reports OUR DIGITAL FACILITIES BIMB Mobile BIMB Web Be U by Bank Islam BIMB Biz Sadaqa House SMEXpert eBanker Pro eMasjid Halal Integrated Platform BEST Invest app BISonline Merchant Portal EZXcess Financing Chatbot (Adam) Virtual Account Opening (VAO) InfaqPay eJamin (Collaboration with Dapat Vista (M) Sdn Bhd) Wealth Tech (Collaboration with Arabesque Asset Management Ltd) eWallet services (Collaboration with SnapNPay, kiplePay, GHL, MP@y and ME12PAY) GO by Bank Islam Driving a Sustainable Future Robust Shariah Governance Framework The Region’s First Full-fledged Islamic Banking Institution To grow our sustainable finance portfolio to RM28 billion by FY2025. Increased disbursements under our iTEKAD microfinancing programmes, benefitting 413 individuals with RM12.3 million in funding. Ihsan Sustainability Investment Account Empowering clients to build a nature-positive economy, fostering environmental resilience and inclusive growth. Malaysia’s largest network of dedicated Islamic banking channels. Values-based culture, with emphasis on Shariah goals and VBI principles. Strong balance sheet and performance track record, with AA3/Stable/P1 rating by RAM Ratings. Refer to Sustainable Products and Services at page 111 in Sustainability Statement For more information on our products and services, please visit www.bankislam.com Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 8 Our Products and Services Our Competitive Advantage
Forum Perdana Ehwal Islam DiRaja The live telecast of the Forum Perdana Ehwal Islam, sponsored by Bank Islam, was held at Istana Negara. This historic episode discussed “Institusi DiRaja Penyatuan Ummah.” 11 January 3 March 28 February 18 January Bank Islam inked MOA with UUM and launched INASIS Bank Islam Bank Islam signed a Memorandum of Agreement (MoA) on the Allocation and Branding of the Student Accommodation (Inasis) at Universiti Utara Malaysia (UUM). As part of this collaboration, the student residential hall will changed its name and be recognised as Inasis Bank Islam. Bank Islam and Sand Town Solar signed RM91.5 million Financing Agreement for Solar Photovoltaic Farm in Perak Bank Islam signed a financing agreement worth RM91.5 million with Sand Town Solar Sdn Bhd (STS). STS, a subsidiary of Kumpulan Gading Kencana Sdn Bhd (GKSB), is a renewable energy service company specialising in designing and installing solar photovoltaic systems, and establishing and maintaining electrical and energy management systems. Siti Khadijah Market prayer hall upgrade handover ceremony The Handover Ceremony for the upgraded Siti Khadijah Market prayer hall in Kota Bharu, Kelantan, was officiated by the Group CEO of Bank Islam. The project received funding from Bank Islam’s zakat fund, which contributed a total of RM88,584 to benefit traders and visitors. 9 w w w . b a n k i s l a m. c o m 01 OVERVIEW OF BANK ISLAM 02 03 04 05 06 07 08 09 Significant Events 2024
1 April Ihtimam Ramadan 2024/1445H The Ihtimam Ramadan programme took place at Masjid Sheikh Haji Ahmad in Bandar Sri Sendayan, Negeri Sembilan. During the event, 100 asnafs were celebrated, each receiving RM400. Bank Islam staff prepared bubur lambuk and distributed 1,000 packs to frontline workers such as firefighters and police officers. The mosque also received a donation of RM10,000 from the bank. UNITAR and Bank Islam Upward Mobility Development Programme Graduation Ceremony Bank Islam celebrated the graduation of the second group of participants from the Bank Islam-UNITAR Upward Mobility Certification Programme (UMCP). The ceremony was held at the Kuala Lumpur Metropolitan University College (KLMUC) Auditorium, where 40 BITIZEN from clerical roles across the country received certificates for completing the programme. 13 May 16 May 41st Annual General Meeting Bank Islam held its 41st AGM virtually, broadcasted live from Menara Bank Islam. With full Board Members in attendance, the resolutions tabled were unanimously approved by the shareholders. 3 July Bank Islam Upgraded 21 Fishing Boats with solar panels Bank Islam expanded its financial inclusion initiative by installing photovoltaic (PV) solar panels on 21 fishing boats belonging to B40 fishermen in Pengkalan Sungai Mersing, Johor, to promote social impact. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 10 Significant Events 2024
Pay with Rewards™ loyalty programme launch Bank Islam and Mastercard launched a first-of-its-kind innovative rewards programme in Malaysia and the Asia Pacific region-The Bank Islam Mastercard Pay with Rewards. Designed to enhance the consumer loyalty experience, it features a user-friendly app that allows cardholders to track their rewards and manage their preferences. Cardholders can activate redemption either before or after a purchase by selecting from a list of eligible transactions. 12 August 24 August Go Beyond Run Bank Islam organised a 5.5 km run in the city centre, gathering both young talents and those young at heart, along with friends. The event aimed to promote physical and spiritual health, beginning with a communal Subuh prayer and a brief tazkirah at the Surau Wakaf Ahmad Dawjee Dadabhoy located in Menara Bank Islam. 2-3 July 4 August Zakat contribution and courtesy visit in Johor Bank Islam’s leadership team made a courtesy visit to Johor Menteri Besar Datuk Onn Hafiz Ghazi at his official residence. The Bank also handed a zakat contribution to Kolej University Islam Johor Sultan Ibrahim. Mangrove tree planting Bank Islam continued its commitment to sustainability by planting 1,000 mangrove saplings at Pantai Merchang in Marang, Terengganu. This initiative was carried out in partnership with the Sultan Mizan Antarctic Research Foundation and Universiti Malaysia Terengganu. 11 w w w . b a n k i s l a m. c o m 01 OVERVIEW OF BANK ISLAM 02 03 04 05 06 07 08 09
26 September 13 September MoU Signing Between Bank Islam and Nomura Asset Management Malaysia Bank Islam onboards Nomura Asset Management Malaysia (Nomura) as its Asset Management partner, marking Bank Islam’s inaugural direct partnership with a global asset management firm. The strategic partnership provides broader Shariah-compliant product offerings through six investment products. Bank Islam Sports Carnival A total of 1,158 BITIZEN from seven contingents nationwide competed to win 45 medals across 24 events at the 21st Bank Islam Sports Carnival, held at IIUM Gambang Campus, Kuantan, Pahang. Restoran Sup Kawah Hitam BJCK launch Buku Jalanan Chow Kit (BJCK) operates Restoran Sup Kawah Hitam to generate income that funds free and quality education for underprivileged children in the Chow Kit area. Supported by Bank Islam through Sadaqa House, this initiative has positively impacted over 100 children, along with staff and the local community. The aim is to establish the restaurant as a sustainable source of revenue for BJCK. 7 October 15 October The Edge ESG Award 2024 Bank Islam, through BIMB Investment Management Bhd, has won several awards at the Edge ESG Awards 2024 for its Makmur MyWakaf RM fund. It was recognised as the Best Fund Based on Asset Class and received accolades in Environmental, Social, and Governance (ESG) categories. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 12 Significant Events 2024
12 November 16 November 16 November 27 October Forest Tree Planting Initiative – Non-Dipterocarp Arboretum Project Bank Islam planted a total of 100 saplings from six species, including merbau, kelumpang jari, and asam gelugur, in a 0.16-hectare area as part of the Non-Dipterocarp Arboretum project conducted in collaboration with the Faculty of Forestry and Environment, Universiti Putra Malaysia (UPM) at the Sultan Idris Shah Forestry Education Centre in Ayer Hitam Forest Reserve, Puchong, Selangor. Strategic Collaboration Between Bank Islam and PMB Investment Berhad The Bank inked a partnership with PMB Investment Bhd, an Islamic fund management company under Pelaburan MARA Bhd, to promote and distribute their unit trusts across Malaysia. Corporate Social Responsibility (CSR) Programme with the local community and strategic partners at Kg Muara Tebas, Kuching, Sarawak Bank Islam, Universiti Malaysia Sarawak (UNIMAS), and Malaysian Fisheries Development Authorities (LKIM) led a CSR event in Kampung Muara Tebas, Kuching, focusing on community well-being and environmental sustainability, with support from TV Sarawak and Borneo Medical Centre. Bank Islam opened iTEKAD Entrepreneurs Hub with the cooperation of institutions of higher learning Bank Islam announced the launch of the latest Hab Usahawan iTEKAD in Universiti Teknologi MARA (UiTM) Sarawak Branch. The hub is a one-stop training and guidance centre for local microentrepreneurs, particularly the asnaf and B40. This is the third hub following similar openings in University College Bestari (UCB) in Setiu, Terengganu, and the Institute of Poverty Research and Management (InsPek), Universiti Malaysia Kelantan (UMK). 13 w w w . b a n k i s l a m. c o m 01 OVERVIEW OF BANK ISLAM 02 03 04 05 06 07 08 09
Bank Islam launched BIMB Mobile and BIMB Web Bank Islam unveiled its new cutting-edge digital banking platforms, BIMB Mobile and BIMB Web (web.bimb.com), marking a bold leap to offer an improved user experience, seamless navigation and enhanced security for over four million customers nationwide. 21 November 22 November 6 December 10 December Certified Green Finance Advisor programme graduation Bank Islam is the first financial institution in Malaysia to embark on a green financing certification program for its employees. This program, created by the Asian Banking School, aims to equip the bank’s staff with important knowledge about green and sustainable finance. Supporting Flood Relief Efforts Bank Islam contributes to Skuad Ihsan Madani: Wira KESUMA for flood relief work. At the event, Bank Islam handover donation for post-flood repair donations to the DirectorGeneral of the Department of Human Resources, Ministry of Human Resources Malaysia. Integrity Day Forum at USIM Co-hosted with Universiti Sains Islam Malaysia (USIM), the event reaffirmed Bank Islam’s unwavering commitment to fostering integrity as a cornerstone of ethical leadership and sustainable growth. This impactful collaboration emphasises integrity’s transformative power across generations. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 14 Significant Events 2024
As the Chairman, I had the privilege of overseeing a period of remarkable growth and transformation at Bank Islam. We have expanded beyond our traditional focus in retail finance to establish ourselves as a key player in institutional banking. We enhanced our digital capabilities with advanced online and mobile banking platforms, making us accessible and convenient for everyone. We have also made significant strides in ESG and Shariah-compliant financing, among other achievements. DEAR VALUED STAKEHOLDERS, Reflecting on 2024, I am reminded of the core values that define Bank Islam: our dedication to purpose-driven banking and our responsibility to the community we serve. In a time of rapid change, where technology is reshaping financial services and customer expectations are constantly evolving, we remain focused on our principle of responsible and ethical banking as we continue to advance prosperity for all. Integrating Sustainability for Enduring Value TAN SRI DR ISMAIL HAJI BAKAR Chairman ‘’In the name of Allah, the Most Compassionate, the Most Merciful All praise is due to Allah, the Lord of the Worlds, and peace and blessings be upon the Prophet Muhammad, whom Allah send as mercy to the universe, which Allah make him a guiding and a rightly guided man, and an illuminating lamp. And peace and blessing on his family and companions, and those who followed them benevolently until the Day of Judgment and then after. May Allah’s peace, mercy and blessings be upon you.’’ 15 w w w . b a n k i s l a m. c o m 01 02 KEY MESSAGES 03 04 05 06 07 08 09 Chairman’s Letter
Our business and commitment to being a responsible and ethical bank have evolved. Beyond our commitment to meeting the financial needs of underserved communities, ethical and responsible practices now fill every aspect of our operations and strategies, from strengthening data security and enhancing customer experience to driving climate action. These values are not just a part of our business; they serve as a compass for our growth, ensuring our success translates into lasting, inclusive, and sustainable value for our stakeholders, communities, and the country. On this note, I would like to thank you for reading our Integrated Annual Report 2024. Within these pages, you will find an account of our value creation journey and achievements during the past year. I trust that the insights within these pages will offer a deeper understanding of how we continue to create sustainable value in an evolving banking landscape grounded in responsibility, ethics, and a sharp vision for the future. REFLECTING ON 2024 Looking back on 2024, the global economy proved resilient, recording growth of 3.2% despite persistent geopolitical and trade challenges. The recovery was mainly driven by declining inflation across major advanced economies and a shift in the US Federal Reserve’s (Fed) monetary policy, which saw a reversal of profit rate hikes, contributing to improved investor sentiment. Supported by the global recovery, Malaysia’s GDP showed notable progress and grew by 4.9% in 2024, up from 3.6% in 2023. The economy has also been further strengthened by robust domestic demand, alongside significant growth in overall investment activities. Our economy remained resilient, supported by strong consumer spending and healthy government expenditures. Amidst the continuing US-China trade war, the country has positioned itself as a politically neutral hub for manufacturing, attracting investment and benefiting from supply chain diversification. The Malaysian Ringgit (MYR) stood out in 2024 as the only regional currency to strengthen against the USD, closing the year with an impressive gain of 2.7%. The narrowing profit rate differential between the Fed and Bank Negara Malaysia (BNM) was a key driver behind this resilience. While the Fed adopted a more measured easing stance, BNM’s keeping rates on hold gave the Ringgit a steady advantage. Meanwhile, Malaysia’s strong economic fundamentals and sound policymaking further reinforced the currency’s stability. Headline inflation averaged a manageable 1.8% in 2024, supporting a favourable growth inflation outlook. It allowed BNM to maintain its benchmark profit rate at 3.0%, reflecting confidence in Malaysia’s robust economic performance. Despite these positive macroeconomic indicators, the reality for businesses and individuals has been more complex. Rising costs of goods and services continue to squeeze margins and erode spending power. While these conditions have contributed to financing growth within the Malaysian banking sector, competition for deposits has also intensified. This has led to compressed Net Income Margins (NIM) and a more challenging operating environment for banks, including ourselves. In response, we focused on driving operational and cost efficiencies, reducing funding costs and expanding non-fund income streams through strategic growth areas such as wealth management. We continuously seek ways to expand access to financing to alleviate the cost pressures individuals and businesses across the country face. ADVANCING OUR SOCIAL MISSION As Bank Islam continues to grow in the banking landscape, our core focus remains clear: driving inclusion for underserved people and communities who would otherwise struggle to access the financial services they need to thrive. Sadaqa House, our dedicated social finance platform, remains a key part of this noble mission. We harness the philanthropic capitals of sadaqa and zakat. Through Sadaqa House’s blended finance programmes, iTEKAD Maju and iTEKAD BangKIT, we continue to provide underbanked micro-entrepreneurs with access to funding. We also offer business training, financial literacy resources and other vital inputs necessary to build successful and sustainable businesses. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 16 Chairman’s Letter
We expanded our support for microentrepreneurs in 2024 by introducing the Hab Usahawan iTEKAD. These hubs, established across six states in Malaysia, are designed to empower the asnaf and B40 communities. We expanded our support for microentrepreneurs in 2024 by introducing the iTEKAD Entrepreneur Hub. These hubs, established across six states in Malaysia, are designed to empower the asnaf and B40 communities. It offers skills training, business coaching, and networking opportunities for aspiring entrepreneurs, fostering an ecosystem of growth and collaboration. This initiative is a testament to our commitment to local community development, leveraging partnerships with institutions such as universities to provide microentrepreneurs with accessible and practical resources within their immediate reach. Aligned with the principles of Maqasid Shariah, proceeds from the philanthropic capitals of Sadaqa House are reinvested into development programmes across five key impact pillars: education, infrastructure, livelihood improvement, healthcare, and community support. In 2024, I am proud to share that the total contributions to these programmes have more than RM4.1 million. Additionally, our Sadaqa House Orphan Fund continued to expand in scale and impact, with RM1.38 million invested in educational initiatives, infrastructure improvements, and more. These initiatives stand as a powerful testament to the transformative potential of social finance when strategically managed and effectively channelled. They embody the values we hold close and reflect our commitment to driving meaningful and lasting impact. TAKING ACTION FOR THE PLANET At Bank Islam, our longstanding commitment to social responsibility has always been the foundation of our values. We embrace our role as an industry leader in climate action, supporting climate-friendly transitions while advancing our decarbonisation journey. I’m proud to announce that as part of our LEAP25 transformation plan, we set an ambitious target of RM4 billion in green financing by 2025. I am proud to share that not only did we achieve this goal ahead of schedule, but we surpassed it in 2023 – two years ahead of plan. This accomplishment highlights our unwavering commitment to sustainability and our ability to drive meaningful change. Through this initiative, we’ve enabled Malaysian businesses to adopt sustainable practices, from efficient waste and water management to solar energy adoption and the use of cutting-edge, energyefficient technologies. Guided by Maqasid Shariah, our enhanced sustainability governance framework drives us beyond compliance – proactively maximising positive impact and preventing harm, closely aligning with principles that prioritise the public good. As part of this commitment, we aim to achieve operational carbon neutrality (Scopes 1 and 2) by 2030 and net-zero emissions by 2050. Over the past few years, we introduced climate-focused committees, including the Climate Risk Committee, which oversees all climate risk management processes. We also established the Climate Risk Unit, which brings together subject matter experts to drive excellence in our climate-related practices. Taking the next step in this journey, we established the Group Sustainability Division in 2024, led by our Group Chief Sustainability Officer (GCSO). This dedicated division brings specialised expertise, ensuring that our sustainability and climate-related initiatives are managed in a focused and data-driven manner, enabling continuous improvement across group-wide ESG efforts. However, effective governance and management are only part of this equation. I am pleased to share that in 2024, the management has made considerable effort to upskill employees at all levels. Sustainability and climaterelated training were made mandatory, and our climate-related risk management training was integrated into the operational risk e-learning programme. We established targeted training for employees in specific roles, such as operational risk controllers and business continuity coordinators. We also held specialised briefings for supply chain partners in an effort to ensure our sustainability principles extend across our ecosystem. Sadaqa House social impact projects contributions exceeded RM4.1 million in 2024 17 w w w . b a n k i s l a m. c o m 01 02 KEY MESSAGES 03 04 05 06 07 08 09
In 2024, we introduced the Bank Islam Sustainable Finance Transformation Programme at the leadership level. The programme which was developed by the Asian Banking School (ABS) in collaboration with the Institute of Green Finance (IIGF) at the Central University of Finance and Economics (CUFE) in Beijing, China provides our Senior Management with strategic expertise to advance our sustainability agenda and drive effective stewardship. Further strengthening our commitment to global sustainability standards, we became members of the United Nations Global Compact (UNGC) Malaysia and Brunei. This platform allows us to collaborate with like-minded companies and gain insights and best practices on key sustainability topics, including climate action, resource efficiency, diversity, and SME empowerment. These efforts strongly demonstrate our commitment to the planet, sustainability, and making a positive impact in the world. We are excited to continue this journey, understanding that every step we take shapes the future of our bank and contributes to the well-being of our environment and society. HARNESSING THE POTENTIAL OF OUR PEOPLE As Bank Islam grows and adapts to the changing financial landscape, we recognise that our greatest asset is our talented and dedicated BITIZEN (Bank Islam Citizen). They are central to our success and the driving force behind our achievements. Recognising the importance of being an employer of choice, we have invested considerable time and effort into providing positive and supportive work environments and supporting our employees’ holistic wellness and wellbeing. This is where our Bank Islam Live Well programme, a comprehensive approach that supports BITIZEN’s welfare, emotional, mental, physical, and spiritual needs, comes in. Through purpose-fit initiatives, from peer-to-peer support platforms to Islamic educational webinars, we ensure our employees are empowered to thrive personally and professionally. Complementing this initiative and acknowledging the growing preference for flexible working arrangements, we introduced BITIZone@Cyberjaya, a hybrid workplace, as part of our Flexi Hours policy. Designed as an open format with collaborative space, it enables employees to “hot desk” in a dynamic and creative environment, fostering greater flexibility and a healthy work-life balance. Underscoring its impact, 89% of our BITI-Pulse employee survey respondents cited flexibility and the work environment as key reasons for staying with Bank Islam. To further strengthen our talent proposition and drive the long-term retention of our best employees, we launched the Bank Islam Talent Council in 2024. We strategically assessed and developed pathways for Senior Management successors and emerging leaders identified across the Group. A customised tiered development approach was formulated for each emerging leader, equipping them with the skills and competencies necessary to step into leadership roles in the future. Ultimately, our efforts to nurture, develop, and support our employees align with our business goals and reflect our commitment to being a responsible and ethical bank. We believe sharing prosperity means investing in our people and ensuring they have the tools, opportunities, and support needed to realise their full potential. These efforts focus on achieving business success and ensuring that BITIZEN has the chance to develop, contribute, and benefit from our successes. OUTLOOK The economic landscape presents a blend of optimism and caution. On a positive note, the International Monetary Fund (IMF) projects global growth to stabilise at 3.3% over the next two years, while global inflation is expected to decline to 4.2% in 2025 and further to 3.5% in 2026. Malaysia’s economic outlook remains positive. BNM will likely keep the Overnight Policy Rate (OPR) steady at 3.00% throughout 2025. The economy is projected to grow between 4.5% and 5.5% in 2025, supported by sustained domestic demand, business expansion, and the continuation of mega projects. Meanwhile, inflation is expected to rise, ranging from 2.0% to 3.5%, driven by potential inflationary pressures from subsidy rationalisation and external shocks that trade wars and geopolitical risks may cause. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 18 Chairman’s Letter
The current US administration has brought a new approach to global trade and geopolitics that will likely impact the global economy, including Malaysia. Meanwhile, at the domestic level, planned subsidy cuts in 2025 may introduce upward inflationary pressures, further depressing the spending power of Malaysian individuals and businesses. We will be well-positioned to weather any negative impacts by remaining attuned to the evolving market environment and focusing on providing customer-centric, accessible, and inclusive products and solutions. Above all, our approach will remain firmly rooted in a commitment to responsible and ethical banking, geared towards outcomes that serve ourselves and our stakeholders, communities, and natural environments. We will continue safeguarding our sustainability and strength as an organisation, ensuring we meet whatever the future holds. ACKNOWLEDGEMENTS On behalf of the Board, I would like to extend my deepest gratitude to Mohd Asri Awang, our outgoing Independent Non-Executive Director, and Associate Professor Dr Nurul Aini Muhamed, our outgoing Shariah Supervisory Council (SSC) Member, who concluded their tenures in 2024. Their contributions to governance, Shariah compliance, and ethical banking principles have been critical to our growth and evolution. I wish them continued success in their future endeavour. At the same time, I am pleased to welcome Datuk Hamzah Bachee as Independent Non-Executive Director and Professor Dr Wan Abdul Fattah Wan Ismail as our SSC Member. Their expertise will enhance our ability to navigate a dynamic financial landscape and I look forward to working closely with them over the coming years and benefiting from their wisdom in the years to come. I would also like to express my deepest gratitude to everyone who has contributed to our success in 2024. To our Board of Directors and SSC Members, your invaluable guidance, contributions, dedication, and tireless efforts in shaping our governance and Shariah-compliant practices have been essential to our growth. To our customers, shareholders, and business partners, your trust and engagement inspire us to deliver financial solutions that align with ethical values and evolving customer needs. This dedication directly shapes the innovation of new platforms, such as the BIMB Mobile and BIMB Web banking platform, which have strengthened our position in the banking landscape. We also recognise the vital role of regulatory bodies, like BNM, Bursa Malaysia and the Securities Commission, in fostering a stable and dynamic financial ecosystem. To our strategic partners, your capabilities, experience, and know-how have accelerated our continued value creation journey, and we are thankful for your continued support. Finally, to Bank Islam’s customers and communities, you remain at the centre of everything we do. Your aspirations drive our purpose. Our mission to expand financial accessibility, create lasting value, and lead with integrity to fulfil your greatest financial and personal potential remains our top priority. As we move into 2025, we remain committed to responsible and ethical banking, ensuring that every step we take benefits our stakeholders, communities, and the broader economy. Thank you for being an integral part of our journey. TAN SRI DR ISMAIL HAJI BAKAR Chairman To Bank Islam’s customers and communities, you remain at the centre of everything we do. Your aspirations drive our purpose. Our mission to expand financial accessibility, create lasting value, and lead with integrity to fulfil your greatest financial and personal potential remains our top priority. 19 w w w . b a n k i s l a m. c o m 01 02 KEY MESSAGES 03 04 05 06 07 08 09
DEAR STAKEHOLDERS, 2024 has been an exciting year at Bank Islam. We witnessed strong financial performance and made headway toward key operational advancements that enhance efficiency. We launched upgraded and modernised banking platforms and further deepened our commitment to sustainability within our business and through our financing and investment solutions. These advancements reflect our firm belief in responsible and ethical business practices, fostering trust among our partners and customers as we evolve into a future-ready financial institution. DATO’ MOHD MUAZZAM MOHAMED Group Chief Executive Officer OPERATING ENVIRONMENT Malaysia’s economic landscape in 2024 demonstrated commendable resilience, supported by moderating global inflation and unexpectedly strong Gross Domestic Product (GDP) growth of 4.9%. However, despite these positive indicators, businesses and households struggled with cost pressures. We observed a growing debt service ratio among our retail customers due to decreased net take-home pay. In contrast, non-retail customers faced margin compression due to rising costs, with much of the financing demand channelled towards managing rising operating expenses rather than new investments. In the banking sector, intensifying competition for deposits and the need to sustain Net Income Margins (NIM) led to a more disciplined approach to managing funding costs. Despite these challenges, we exercised financial discipline and strategic foresight to ensure stable asset quality and a prudent funding composition. We maintained a NIM of 2.13%, while achieving growth in retail and commercial banking at 6.3% and 6.7%, respectively. This was achieved by focusing on stable, low-cost deposits and prioritising on Current, Savings and Transactional Investment Account (CASATIA) deposits over term placements. ‘’In the name of Allah, the Most Compassionate, the Most Merciful All praise is due to Allah, the Lord of the Worlds, and peace and blessings be upon the Prophet Muhammad, whom Allah send as mercy to the universe, which Allah make him a guiding and a rightly guided man, and an illuminating lamp. And peace and blessing on his family and companions, and those who followed them benevolently until the Day of Judgment and then after. May Allah’s peace, mercy and blessings be upon you.’’ Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 20 From the Desk of the GCEO
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