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
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