CORPORATE BANKING CHALLENGES IN 2021 OPPORTUNITIES IN 2021 • C hallenging operating environment marked by subdued economic growth due to lower government spending and continued uncertainties arising from the COVID-19 pandemic. The prevailing record low interest rates (OPR) in Malaysia also led to net income margin compression across the banking industry. The challenging operating environment in 2021 had a strong impact on our performance: - W e experienced Negative Fund-Based Income Growth in 2021, due to the low-yield environment across the globe and the massive cost-cutting measure businesses undertook to survive the pandemic. - N on-fund-based Income declined due to low use of Bank Guarantees and Letters of Credit during the year. Additionally, income from processing & arrangement fees is still pending due to the high number of Pending Acceptance, Pending Documentation and Pending Disbursement cases. - O ur Impairment increased by RM228.6m as at Dec 2021, due to a new account being classified as impaired in Dec 2021. This raised our impairment ratio to 3.52%. • Higher business operating costs due to implementation of the minimum wage, additional taxes, delayed subsidy claims, renegotiation of concessions contracts and disruptions in the supply chain. • G rew our unrated Sukuk activity to facilitate financing assets growth and generate fund-based and fee-based income for the Bank. • C ontinued refinancing opportunities due to the low interest rate environment. • S upporting existing customers impacted by the pandemic through repayment moratoriums, rescheduling and restructuring, as well as minimising expected credit losses of customers by reducing unutilised facility lines. • E xploring financing opportunities with potential customers under the Government’s Prihatin programmes. • S upplementing Non-Fund-Based Income with advisory services and operational charges. • E xpanding the reach of Green Financing beyond the utilities and energy sectors, to areas including the green building segment of the property sector, sustainable plantations and ESG-aligned industries, such as the installation of solar panels. • I mproving our asset composition ratio in favour of term facilities, as a buffer against fluctuating assets such as trade and revolving facilities. BANK I SLAM MALAYS IA BERHAD 98
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