Dear Shareholders, Bank Islam Malaysia Berhad (“BIMB or “the Group”) continues to evolve as a business and 2021 was a pivotal year for us. In October, we became a public-listed company, giving the Malaysian public their first opportunity to invest in Malaysia’s only public-listed, full-fledged Islamic banking group. 2021 also marked the completion of the first year of our LEAP25 corporate strategy that sets-out our goals and pathway for delivering sustainable value for our shareholders as we navigate what is increasingly being called the Next Normal. OPERATING ENVIRONMENT Our transformation journey in 2021 continued against a chal lenging backdrop, as the Malaysian economy faced renewed headwinds f rom the resurgence of COVID-19 cases and the banking industry itself continuing to undergo a fundamental transformation. The year began with forecasts of robust economic growth at the domestic and international levels. Bank Negara Malaysia ( “BNM” ) projected that Malaysia’s GDP would grow by 6% - 7.5%, in 2021, a marked turnaround f rom the 5.6% contraction in 2020. The recovery was underpinned by rising vaccination rates, the easing of movement restrictions, the rebound in economic activity and the continued impact of the government’s stimulus spending. This favourable scenario was projected to support the performance of the Malaysian banking sector. However, the strong growth in the domestic economy was undermined by the emergence of the highly-infectious Delta and Omicron variants of COVID-19 in the second-half of the year. The resulting restrictions on movement and economic activity led to softer economic conditions. Despite these challenges, the Malaysian economy expanded by 3.1% for the year as a whole. The expansion was supported by BNM maintaining the interest rate at a record low of 1.75% throughout the year, with the low cost of funding supporting a rebound in consumption and business investment. However, the low-rate environment has also led to compressed interest rate margins across the banking industry, which has negatively impacted the banking sector’s profitability. Notwithstanding these challenges, the Malaysian banking industry showed remarkable resilience during the year. Financing growth in 2021 returned to pre-pandemic levels, rising by 4.1%, up from the 3% financing growth the year THE MALAYSIAN ECONOMY EXPANDED BY 3.1%; SUPPORTED BY BNM MAINTAINING THE INTEREST RATE AT A RECORD LOW OF 1.75% THROUGHOUT THE YEAR, WITH THE LOW COST OF FUNDING SUPPORTING A REBOUND IN CONSUMPTION AND BUSINESS INVESTMENT BANK I SLAM MALAYS IA BERHAD 14 MESSAGE FROM THE GROUP CHIEF EXECUTIVE OFFICER
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