PERFORMANCE REVIEW Strong Capital Position BIMB maintains a strong capital base. Our total capital ratio of 18.6% (2020: 19.8%) provides an ample buffer for loss absorption and business growth. Pre-tax Return-on-Equity (ROE) for the year stood at 11.1% (2020: 12.1%). Our ROE after zakat and tax stands at 8.4% for 2021. Return on Assets (ROA) before zakat and tax declined slightly from 1.0% in 2020 to 0.9% in the year under review. Investing in Growth and Optimising Costs Our cost-to-income ratio (CIR) rose to 57.0% (2020: 53.8%). The rise in CIR reflects the higher operating expenses we have incurred as we invest in our workforce and infrastructure. Among the expenses are the improvements that we are making to digital infrastructure. Cost optimisation remains a key priority as we move forward, in line with our LEAP25 strategy which sets a clear target of bringing our cost-to-income ratio down. In the year ahead, our expenditure will, increasingly, be directed to earningsaccretive targets. EFFECTIVE RISK MANAGEMENT BIMB conducts its business in accordance with the principle of al-ghunm bi al-ghurm, or that one is entitled to a gain if one is willing to bear the loss. Accordingly, we maintain a robust risk management framework that addresses both the general risks inherent in the operating environment and those that are particular to our core business. In the current operating environment, we recognise credit risk due to the uncertainty in the current economic environment and operational risk arising from changes in consumer behaviour, with a shift to digital banking, as the key risks that the Group faces. Additionally, we recognise that cyber risk is a growing challenge as we embrace an increasingly digital future and we have invested in hardening our systems and providing our people with the necessary skills to mitigate the threat from cyber risk. A full discussion on our key risks and risk management policy can be found on pages 58 to 61 and 193 to 208 of this report. OUTLOOK The outlook for the year ahead is projected to be more supportive of our performance. BIMB forecasts that the Malaysian economy will grow by 5.3% in 2022, almost double the rate achieved in 2021. Our optimism for the year ahead comes with a degree of caution though, as the evolving economic and geo-political scenario carries considerable downside risk. Nevertheless, as we move forward, we are confident that our ample pre-emptive provisions, the high quality of our assets and our healthy capital level leave us well-positioned to navigate through challenging market conditions and continue delivering value for our shareholders. Notwithstanding the continued challenges, the business environment in the year ahead presents a more favourable prospect, with rising expectations of an economic recovery helping spur growth in the Malaysian business sector. These strong growth expectations are underpinned by BNM’s continued maintenance of low interest rates, the move to the endemic phase of COVID-19 and the reopening of Malaysia’s borders. We believe that BIMB is well-positioned to capitalise on these opportunities. Moving forward, our growth will continue to be driven by our principles as a VBI. This commitment aligns us with the growth strategy for the Malaysian financial sector laid-out in BNM’s Financial Sector Blueprint (FSB) 2022-2026. The FSB sets out the development priorities for Malaysia’s financial industry to promote a smooth transition to green economy and integrate climate risk management into banks’ internal functions & operations. The FSB aims to deliver on these goals through five key thrusts: Fund Malaysia’s economic transformation; Elevate the financial well-being of households & businesses; Advance digitalisation of the financial sector; Position the financial system to facilitate an orderly transition to a greener economy; and Advance value-based finance through Islamic finance leadership. These five thrusts, which will now set the direction for the Malaysian financial industry, are aligned with BIMB’s LEAP25 roadmap which places VBI at the heart of our business model. AZIZAN ABD AZIZ Group Chief Financial Officer INTEGRATED ANNUAL REPORT 202 1 Key Messages Overview Value Creation MD&A Sustainability Leadership Accountability Financial Additional Information 75
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