Incorporated on March 20, 1997, BIMB Holdings Bhd (BHB) is a Main Market-listed investment holding company that operates along Islamic principles and whose core subsidiaries are pioneers in various Islamic financial services including banking, takaful and stockbroking.
BHB’s core subsidiaries are Bank Islam Malaysia Bhd (51%-owned), Syarikat Takaful Malaysia Bhd (65.22%-owned) and BIMB Securities Sdn Bhd (100%-owned).
Its key markets are Malaysia and Indonesia.
Group managing director and CEO Johan Abdullah shares with The Edge Financial Daily his strategies and dreams for the company.
TEFD: What are the company’s competitive strengths and advantages?
Johan: In Islamic banking, we have established our brand equity — we won the platinum award for Best Islamic Financial Services from Reader’s Digest Trusted Brands Award for three consecutive years i.e. 2009, 2010 and 2011.
We are the largest Islamic banking franchise, with 117 branches and 968 self-service terminals. We also have a strong controlling shareholder, i.e. Lembaga Tabung Haji, robust capital adequacy at more than 15%, strong liquidity position with current account savings account (CASA) ratio at 40%, and a competent and experienced management team.
Where takaful is concerned, we have an established branch network as well as extensive distribution channels.
We also have an array of innovative products — enhanced by the two successful business models which are the Mudharabah (profit sharing) and Wakalah (appointing agent) model. Takaful Malaysia takes pride in being the only takaful company, steadily offering a 15% no claim rebate payment to all general and selected family takaful product participants, if no claims are incurred within the coverage period, and depending on the company’s performance.
In stockbroking, we have the only full- fledged Islamic stockbroking firm in Malaysia that provides end-to-end syariah-compliant products and services.
What have been the major achievements of the company in the past four years?
Bank Islam launched its new corporate identity in 2007. In 2008, it recorded its highest profit of RM308.27 million in 25 years. That year, it also launched its first Islamic structured and capital protected funds, An Najah NID-I, the first syariah-based structured product with healthcare as the investment theme.
The following year, it won several awards — Reader’s Digest Platinum Trusted Brand Award 2009 for Islamic Financial Services and Best Mixed Asset MYR Balanced Islamic Fund in conjunction with The Edge-Lipper Malaysia Fund Awards 2009 for Bank Islam’s ASBI Dana Al-Munsif managed by BIMB Investment Management Bhd.
Last year, we launched several new products and won various awards, including the Platinum Award for Best Islamic Financial Services — Reader’s Digest 2010 Trusted Brands Award.
We also launched Waheed-i, the first ringgit fixed-term deposit product based on the syariah contract of Wakalah, and the Islamic pawn-broking business (Ar-Rahnu) in Kelantan, with two outlets to date. We aim to increase to five outlets by end of 2011.
Bank Islam was also joint lead manager, joint book runner and syariah adviser for the RM10 billion Aman MTN Sukuk, with a participation of RM200 million.
It was also ranked joint leader as an Islamic principal dealer by Bank Negara Malaysia. RAM assigned Bank Islam A1/P1 rating with a stable long-term outlook
Takaful Malaysia launched the first series of Wakalah products — Takaful mySinar, Takaful myImpian, Takaful myMedicare and Takaful myRawat — in 2008. In 2009, it launched CSR Takaful myJalinan umbrella brand for all CSR initiatives, and unveiled a new corporate logo for its 25th anniversary.
Last year, it won various awards and was awarded membership in The Edge Billion Ringgit Club.
Last year also saw the launching of its retail strategy — Agency Provident Fund (APF), 3-tier agency structure and 3-tier products (Takaful myInvest, Takaful myGemilang, Takaful myGraduan — and Takaful myCare Centres. This year, we launched our first online family product — The First Life Plan, and Takaful mySME solutions.
As for BIMB Securities, it obtained approval from the Securities Commission to operate as a “1+1” stockbroking firm, which entails the provision of expanded activities almost similar to that of an investment bank.
What are the major challenges your company faced over the years and how did it overcome them?
The first challenge is that sustained improvements in core subsidiaries’ performance are not reflected in BHB’s market price to create value-gains for BHB’s shareholders.
To overcome this, BHB has actively embarked on an investor relations initiative to enhance BHB’s visibility to analysts and the investment community.
The second challenge is competition for talents with the right skill-set, particularly with the entry of highly-capitalised multinational players.
To retain talents, we revised our compensation and benefits structure to be on par if not better within the financial industry. We will be looking into strategic hiring, specifically recruitment of expatriates for critical positions. We are also taking advantage of the new BNM initiatives and guidelines on recruitment of Islamic finance professionals. We have also started to consider other types of employment, not limited to permanent and fixed-term contract by engaging talents for specific projects to overcome the shortage of skills in the market.
At group level, cost-income (C/I) ratio remains high compared with the indstry average. The challenge is to bring C/I ratio down by rationalising costs whilst expanding business to sustain long-term growth, where majority of financial groups, especially those that operate dual financial services i.e. Islamic and conventional, have the ability to leverage more effectively on their respective groups’ common infrastructure and support services, leading to a greater cost efficiency.
The BHB group’s relatively high C/I ratio is mainly due to the continuous building of business capacity, improvements on information technology and enhancement of risk infrastructure within Bank Islam and Takaful Malaysia, significant investment in human capital to attract and retain talent within the group with the right expertise and skill set, and significant promotional expenses such as rebranding exercise and commission to agents to build sustainability of income over the medium and long term.
Moving forward, the BHB group expects to stabilise its C/I ratio at the current level, where its revenue growth is targeted at 21.6% for the financial year ended Dec 31, 2010 (as announced to Bursa Malaysia).
The fourth challenge is increasing standards for regulatory capital requirement under the forthcoming Basel III whereby banking institutions are required to maintain a higher Tier 1 capital, including a capital conversion buffer and a counter-cyclical buffer.
At present, BHB’s main focus is on its Internal Capital Adequacy Assessment Process (ICAAP), which is to further improve its risk weighted capital ratio under the Capital Adequacy Framework for Islamic Banks (CAFIB) and core capital ratio, to be above 13% and 10% respectively.
The fifth challenge is in the takaful sector: the lack of awareness on takaful among the general public; people’s perception that takaful is only meant for the Muslims; lack of trained human capital, capable and professional agents to market the products; lack of skilled and in-depth knowledgeable human resource in technical areas, such as product development, actuary and investment, especially in our syariah-compliant business.
To tackle these issues, the company has intensified its efforts to constantly educate Malaysians on takaful.
To grow the agency force, the company had on March 4, 2010 launched the APF, which is a form of retirement scheme for our agents.
How is the company positioning itself within your industry? What are your strategies to grow or gain market share?
In Islamic banking, we seek to establish an extensive network of branches, and expand electronic delivery channel that would enhance our reach to customers.
We continuously develop new financial solutions and product offerings that suit the ever-evolving customer needs, benchmarked to international standards.
We have also adopted a “Reshaping the Balance Sheet Strategy 2011” to accelerate business financing growth while sustaining the existing consumer financing momentum.
With the unveiling of its new logo in November 2009, Takaful Malaysia is positioning itself as the new and improved syariah-compliant company that is modern, young and energetic. It has right-sized its overall operations and restructured its branch network.
To strengthen our market presence, we introduced three new family takaful products: Takaful myGraduan, Takaful myInvest and Takaful myGemilang.
To increase our market share, we will grow our agency force to 2,000-strong by the end of this financial year.
In stockbroking, BIMB Securities is positioning itself as the only full-fledged Islamic stockbroking firm in Malaysia.
What are your company’s plans for the future, short-term and long-term?
Being the pioneer of Islamic banking, takaful and stockbroking solutions, the brand and customers’ loyalty towards BHB is of pivotal importance to ensure long- term business relevancy and market share control within the industry. Constant developments and innovations in the areas of products and services, delivery channel network, IT systems and customer experience are important to pave the way forward to compete in this market.
What is your dream for your company? How would you like to see it in 10 years?
To be the leader in global Islamic financial services.
This article appeared in The Edge Financial Daily, November 29, 2011.
BHB’s core subsidiaries are Bank Islam Malaysia Bhd (51%-owned), Syarikat Takaful Malaysia Bhd (65.22%-owned) and BIMB Securities Sdn Bhd (100%-owned).
Its key markets are Malaysia and Indonesia.
Group managing director and CEO Johan Abdullah shares with The Edge Financial Daily his strategies and dreams for the company.
TEFD: What are the company’s competitive strengths and advantages?
Johan: In Islamic banking, we have established our brand equity — we won the platinum award for Best Islamic Financial Services from Reader’s Digest Trusted Brands Award for three consecutive years i.e. 2009, 2010 and 2011.
We are the largest Islamic banking franchise, with 117 branches and 968 self-service terminals. We also have a strong controlling shareholder, i.e. Lembaga Tabung Haji, robust capital adequacy at more than 15%, strong liquidity position with current account savings account (CASA) ratio at 40%, and a competent and experienced management team.
Where takaful is concerned, we have an established branch network as well as extensive distribution channels.
We also have an array of innovative products — enhanced by the two successful business models which are the Mudharabah (profit sharing) and Wakalah (appointing agent) model. Takaful Malaysia takes pride in being the only takaful company, steadily offering a 15% no claim rebate payment to all general and selected family takaful product participants, if no claims are incurred within the coverage period, and depending on the company’s performance.
In stockbroking, we have the only full- fledged Islamic stockbroking firm in Malaysia that provides end-to-end syariah-compliant products and services.
Johan wants to position BHB to be the leader in global Islamic financial services.
What have been the major achievements of the company in the past four years?
Bank Islam launched its new corporate identity in 2007. In 2008, it recorded its highest profit of RM308.27 million in 25 years. That year, it also launched its first Islamic structured and capital protected funds, An Najah NID-I, the first syariah-based structured product with healthcare as the investment theme.
The following year, it won several awards — Reader’s Digest Platinum Trusted Brand Award 2009 for Islamic Financial Services and Best Mixed Asset MYR Balanced Islamic Fund in conjunction with The Edge-Lipper Malaysia Fund Awards 2009 for Bank Islam’s ASBI Dana Al-Munsif managed by BIMB Investment Management Bhd.
Last year, we launched several new products and won various awards, including the Platinum Award for Best Islamic Financial Services — Reader’s Digest 2010 Trusted Brands Award.
We also launched Waheed-i, the first ringgit fixed-term deposit product based on the syariah contract of Wakalah, and the Islamic pawn-broking business (Ar-Rahnu) in Kelantan, with two outlets to date. We aim to increase to five outlets by end of 2011.
Bank Islam was also joint lead manager, joint book runner and syariah adviser for the RM10 billion Aman MTN Sukuk, with a participation of RM200 million.
It was also ranked joint leader as an Islamic principal dealer by Bank Negara Malaysia. RAM assigned Bank Islam A1/P1 rating with a stable long-term outlook
Takaful Malaysia launched the first series of Wakalah products — Takaful mySinar, Takaful myImpian, Takaful myMedicare and Takaful myRawat — in 2008. In 2009, it launched CSR Takaful myJalinan umbrella brand for all CSR initiatives, and unveiled a new corporate logo for its 25th anniversary.
Last year, it won various awards and was awarded membership in The Edge Billion Ringgit Club.
Last year also saw the launching of its retail strategy — Agency Provident Fund (APF), 3-tier agency structure and 3-tier products (Takaful myInvest, Takaful myGemilang, Takaful myGraduan — and Takaful myCare Centres. This year, we launched our first online family product — The First Life Plan, and Takaful mySME solutions.
As for BIMB Securities, it obtained approval from the Securities Commission to operate as a “1+1” stockbroking firm, which entails the provision of expanded activities almost similar to that of an investment bank.
What are the major challenges your company faced over the years and how did it overcome them?
The first challenge is that sustained improvements in core subsidiaries’ performance are not reflected in BHB’s market price to create value-gains for BHB’s shareholders.
To overcome this, BHB has actively embarked on an investor relations initiative to enhance BHB’s visibility to analysts and the investment community.
The second challenge is competition for talents with the right skill-set, particularly with the entry of highly-capitalised multinational players.
To retain talents, we revised our compensation and benefits structure to be on par if not better within the financial industry. We will be looking into strategic hiring, specifically recruitment of expatriates for critical positions. We are also taking advantage of the new BNM initiatives and guidelines on recruitment of Islamic finance professionals. We have also started to consider other types of employment, not limited to permanent and fixed-term contract by engaging talents for specific projects to overcome the shortage of skills in the market.
At group level, cost-income (C/I) ratio remains high compared with the indstry average. The challenge is to bring C/I ratio down by rationalising costs whilst expanding business to sustain long-term growth, where majority of financial groups, especially those that operate dual financial services i.e. Islamic and conventional, have the ability to leverage more effectively on their respective groups’ common infrastructure and support services, leading to a greater cost efficiency.
The BHB group’s relatively high C/I ratio is mainly due to the continuous building of business capacity, improvements on information technology and enhancement of risk infrastructure within Bank Islam and Takaful Malaysia, significant investment in human capital to attract and retain talent within the group with the right expertise and skill set, and significant promotional expenses such as rebranding exercise and commission to agents to build sustainability of income over the medium and long term.
Moving forward, the BHB group expects to stabilise its C/I ratio at the current level, where its revenue growth is targeted at 21.6% for the financial year ended Dec 31, 2010 (as announced to Bursa Malaysia).
The fourth challenge is increasing standards for regulatory capital requirement under the forthcoming Basel III whereby banking institutions are required to maintain a higher Tier 1 capital, including a capital conversion buffer and a counter-cyclical buffer.
At present, BHB’s main focus is on its Internal Capital Adequacy Assessment Process (ICAAP), which is to further improve its risk weighted capital ratio under the Capital Adequacy Framework for Islamic Banks (CAFIB) and core capital ratio, to be above 13% and 10% respectively.
The fifth challenge is in the takaful sector: the lack of awareness on takaful among the general public; people’s perception that takaful is only meant for the Muslims; lack of trained human capital, capable and professional agents to market the products; lack of skilled and in-depth knowledgeable human resource in technical areas, such as product development, actuary and investment, especially in our syariah-compliant business.
To tackle these issues, the company has intensified its efforts to constantly educate Malaysians on takaful.
To grow the agency force, the company had on March 4, 2010 launched the APF, which is a form of retirement scheme for our agents.
How is the company positioning itself within your industry? What are your strategies to grow or gain market share?
In Islamic banking, we seek to establish an extensive network of branches, and expand electronic delivery channel that would enhance our reach to customers.
We continuously develop new financial solutions and product offerings that suit the ever-evolving customer needs, benchmarked to international standards.
We have also adopted a “Reshaping the Balance Sheet Strategy 2011” to accelerate business financing growth while sustaining the existing consumer financing momentum.
With the unveiling of its new logo in November 2009, Takaful Malaysia is positioning itself as the new and improved syariah-compliant company that is modern, young and energetic. It has right-sized its overall operations and restructured its branch network.
To strengthen our market presence, we introduced three new family takaful products: Takaful myGraduan, Takaful myInvest and Takaful myGemilang.
To increase our market share, we will grow our agency force to 2,000-strong by the end of this financial year.
In stockbroking, BIMB Securities is positioning itself as the only full-fledged Islamic stockbroking firm in Malaysia.
What are your company’s plans for the future, short-term and long-term?
Being the pioneer of Islamic banking, takaful and stockbroking solutions, the brand and customers’ loyalty towards BHB is of pivotal importance to ensure long- term business relevancy and market share control within the industry. Constant developments and innovations in the areas of products and services, delivery channel network, IT systems and customer experience are important to pave the way forward to compete in this market.
What is your dream for your company? How would you like to see it in 10 years?
To be the leader in global Islamic financial services.
This article appeared in The Edge Financial Daily, November 29, 2011.
