Bank Islam Integrated Annual Report 2023

INTEGRATED ANNUAL REPORT 2023

CORPORATE BOOK This report is available online via the Bank Islam website. SCOPE AND BOUNDARY OF REPORTING This IAR is produced and published annually, covering our financial and non-financial performance for the reporting period from 1 January to 31 December 2023, unless otherwise stated. The report provides a complete and balanced review of the primary activities of the Group, namely our overall performance and the delivery of initiatives towards achieving our goals, providing material information relating to our strategy and business model, operating environment, material risks, stakeholder interests, performance, governance and prospects. The boundary of the report extends beyond financial reporting. It includes non-financial performance, opportunities, risks and outcomes attributable to/or associated with our key stakeholders, which directly or indirectly influence our ability to create sustainable value. REPORTING FRAMEWORKS Bank Islam’s integrated reporting process, as well as the contents of this report, are guided by the principles and requirements of the following: • Malaysian Code on Corporate Governance (MCCG) 2021 • Companies Act 2016 • Malaysian Financial Reporting Standards (MFRS) • Bank Negara Malaysia Corporate Governance Policy • Bursa Malaysia’s Main Listing Requirement on Sustainability Reporting • Bursa Malaysia’s Sustainability Reporting Guide • Global Reporting Initiative (GRI) Sustainability Reporting Standards • Task Force on Climate-Related Financial Disclosures (TCFD) • The United Nations Sustainable Development Goals (UNSDGs) This report was developed with reference to the following standards, guidelines, and best practices. • Value Reporting Foundation (VRF) • Malaysian Code on Corporate Governance (MCCG) 2021 by Securities Commission Malaysia • Companies Act 2016 • Bank Negara Malaysia Corporate Governance Policy Aligned with our theme “Inspiring Progress, Ensuring Sustainability for All,” Bank Islam Malaysia Berhad’s Integrated Annual Report (IAR) 2023 offers a balanced view of both financial and non-financial performance, measured against key sustainability metrics. It demonstrates our commitment to deliver sustainable value for all stakeholders, built on a foundation of longterm value creation, responsible Islamic banking practices and positive contributions to a more sustainable future. CONTENTS • Provides a comprehensive overview of the Group’s performance for 2023 and the outlook for 2024 About Our Report

https://www.bankislam.com MATERIALITY AND MATERIAL MATTERS This report aims to disclose information about matters that substantively affect our ability to create value over the short, medium and long-term and to deliver on our core purpose. A thorough assessment of material issues to Bank Islam was conducted in 2022, followed by refinements in 2023, to ensure the list remains current and reflects the evolving landscape. Identification of material issues was based on evaluating how we create value, the impact of the external operating context on the value creation, our stakeholders’ material interest, and the principal risks facing the Group. The content of this report focuses on the issues, opportunities and challenges that are material to both our stakeholders and our business, which consequently impacts our performance. By applying the principle of materiality to our reporting disclosures, we present vital topics that influence the Group’s strategy for creating long-term value for our key stakeholders. For more details, refer to Material Matters on pages 48-55. COMBINED ASSURANCE The 2023 IAR was compiled following strict internal controls and governance protocols. The non-financial data within the report underwent a thorough review and validation by the Group Internal Audit team. PwC Malaysia has also provided external assurance on the financial statements and the pertinent financial information included in the report. FORWARD-LOOKING STATEMENTS This IAR contains certain forward-looking statements regarding Bank Islam’s future performances and prospects. These statements and forecasts are based on current judgments, subject to uncertainties as circumstances evolve. Various factors may cause actual results to differ materially from those expressed or implied by these forward-looking statements, including emerging risks and other factors that might adversely impact our business and financial performance. Therefore, these forwardlooking statements should not be construed as guarantees to Bank Islam’s future performance. APPROVAL BY THE BOARD Bank Islam’s Board acknowledges its responsibility in ensuring the integrity of this IAR, in the Board’s assessment, addresses material issues to the Group’s ability to create value and fairly represents Bank Islam’s performance for the year 2023. This Integrated Annual Report for the Financial Year Ended 31 December 2023 was approved by the Board on 15 April 2024 and signed on its behalf by: Tan Sri Dr Ismail Haji Bakar Chairman CAPITALS FC Financial HU Human MF Manufactured IN Intellectual SR Social and Relationship NT Natural STRATEGIC FOCUS AREAS SP Sustainable Prosperity CE Community Empowerment CC Customer-centricity VBC Values-based Culture RE Real Economy D Digitalisation KEY RISKS CR Credit Risk ITR Information Technology (IT) Risk MR Market Risk SNC Shariah NonCompliance (SNC) Risk LR Liquidity Risk RCR Regulatory/Compliance Risk OR Operational Risk CR Climate-Related Risk STAKEHOLDERS IV Investors CU Customers EM Employees LC Local Communities GR Government and Regulators MATERIAL MATTERS SRF Sustainable and Responsible Finance CESF Community Empowerment and Social Finance CX Customer Experience SSC Sustainable Supply Chain TD Talent and Development CRO Climate Risks and Opportunities GGC Good Governance and Conduct EHS Employee Well-being, Health and Safety DPS Data Privacy and Security DI Diversity and Inclusion EEI Emissions and Environmental Impact UNSDGs

OVERVIEW OF BANK ISLAM 04 Overview of Bank Islam Who We Are | Highlights | Vision | Mission | Our Brand Promise | TAAT Values 05 2023 Key Highlights • Financial Highlights • Business Highlights • Sustainability Highlights 06 Our Presence 07 How We Are Structured: Group Corporate Structure 08 Awards & Recognition 09 Our Competitive Advantage 09 Our Products & Services 10 Significant Events 2023 KEY MESSAGES 16 Chairman’s Letter 20 From the Desk of the GCEO 26 Financial Review by the GCFO VALUE CREATION AT BANK ISLAM 30 Our Approach to Value Creation – How We Create Value 32 Our Value Creating Business Model 34 Performance by Capitals 38 Stakeholder Engagement 40 Value We Create Inside Integrated Annual Report 2023 MANAGEMENT DISCUSSION AND ANALYSIS STRATEGIC REVIEW 43 Operating Environment 48 Material Matters 56 Key Risks and Mitigation 60 Our Strategic Roadmap: LEAP25 62 Strategic Performance Review PERFORMANCE REVIEW 68 5-Year Financial Summary 69 5-Year Financial Highlights 70 Financial by Contract 70 Segmental Analysis 71 Simplified Statements of Financial Position 72 Statement of Value Added & Distribution 72 Quarterly Performance 73 Financial Calendar 74 Investor Relations BUSINESS REVIEW 77 Group Retail Banking 86 Group Institutional Banking SUSTAINABILITY STATEMENT 97 Sustainability Statement 109 Economic Impact 118 Environmental Impact 122 Social Impact 152 Governance 170 Performance Data Table LEADERSHIP 172 Corporate Information 174 Board Composition 175 Board of Directors’ Profile 184 Shariah Supervisory Council’s Profile 187 Management Team’s Profile 195 Heads of Subsidiaries’ Profile 196 Organisation Structure

Bank Islam Malaysia Berhad (Bank Islam or the Group) has been leading the way in advancing prosperity for all our customers for the past 40 years. As we continue to move forward, our core objective remains the same – to create sustainable value for all our stakeholders. To achieve this, we have redefined our growth strategy and embraced innovative methods to future-proof our business. Our LEAP25 business strategy roadmap underpins our transformation journey, as we focus on driving sustainability, pursuing new opportunities, accelerating digital initiatives, and enhancing efficiency. At the heart of our transformation programme is a customer-centric approach, coupled with our broad range of offerings and comprehensive digitalisation efforts. We believe this approach will help us to create new growth opportunities, while also enabling us to contribute to sustainability, green financing, Shariah-ESG and ESG-compliant investing. As we commemorate 40 years of advancing prosperity for all, we take pride in our accomplishments and look forward to the opportunities ahead. Our unwavering commitment to providing innovative solutions and unparalleled customer experiences while staying true to our core values of integrity, excellence, and social responsibility. ACCOUNTABILITY 197 Corporate Governance Overview Statement 224 Additional Compliance Information 225 Board Audit & Examination Committee (BAEC) Report 231 Statement on Risk Management and Internal Control FINANCIAL STATEMENTS 247 Directors’ Report 254 Statement by Directors 255 Report of the Shariah Supervisory Council 261 Statutory Declaration 262 Independent Auditors’ Report 266 Statements of Financial Position 267 Statements of Profit or Loss 268 Statements of Other Comprehensive Income 269 Consolidated Statement of Changes in Equity 271 Statements of Cash Flow 275 Notes to the Financial Statements 405 Pillar 3 Disclosure ADDITIONAL INFORMATION 470 Shareholdings’ Analysis 473 Properties Owned by Bank Islam 474 Directory of Main and Regional Offices 478 Ar-Rahnu Branches 480 SME Hubs 481 Bureau de Change 482 Vehicle Financing Sales Hubs 484 Subsidiaries of Bank Islam 485 GRI Content Index 489 TCFD Index 490 Notice of the 41st Annual General Meeting 496 Statement Accompanying Notice of the 41st Annual General Meeting 500 Administrative Guide 506 Abbreviation 509 Glossary • Form of Proxy Inspiring Progress EnsuringSustainability For All

WHO WE ARE Bank Islam, established on 1 July 1983 (20 Ramadan 1403H) holds the distinction of being Malaysia’s inaugural Islamic bank and the first publicly listed Islamic bank in the Main Market of Bursa Malaysia on 8 October 2021. A fullfledged, pure-play Islamic bank with 135 branches and over 900 self-service terminals nationwide, Bank Islam provides banking and financial solutions that strictly adhere to the Shariah rules and principles. Our commitment remains steadfast towards fostering sustainable prosperity and upholding ESG values. Bank Islam is an official UN Global Compact Malaysia and Brunei participant, reflecting our commitment to global sustainability goals. Our core subsidiaries, BIMB Investment Management Berhad and BIMB Securities Sdn Bhd, are pioneers in Islamic financial services, namely investment and stockbroking. We strive to create opportunities and improve lives by offering end-to-end financial solutions for our diverse customers, stakeholders, and communities. As the leading Islamic bank in Malaysia, we nurture responsible growth and progress, using our expertise and experience to help our customers achieve success and build a sustainable future for all. VISION The bank that advances prosperity for all MISSION To provide solutions that deliver value TAAT VALUES T Think Customer A Act with Integrity A Advance Beyond T Take Charge HIGHLIGHTS RETURN ON EQUITY (AFTER PAZT) 7.8% TOTAL CUSTOMERS 4.4 million DIVIDEND PAID 16.81 sen NET PROFIT (PROFIT AFTER ZAKAT & TAX (PAZT)) RM553.1 million PROFIT BEFORE ZAKAT & TAX RM746.8 million TOTAL EMPLOYEES 4,908 OUR BRAND PROMISE Assuring Trust. Delivering Value. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 04 Overview of Bank Islam

PROFIT BEFORE ZAKAT AND TAX RM746.8 million (2022: RM746.9 million) NET RETURN ON EQUITY 7.8% (2022: 7.5%) CASATIA RATIO 39.9% (2022: 36.8%) TOTAL ASSETS RM91.0 billion (2022: RM89.9 billion) ASSET GROWTH 1.2% (2022: 12.1%) GROSS IMPAIRED FINANCING RATIO 0.9% (2022: 1.3%) FINANCING GROWTH 3.0% (2022: 11.6%) Won Gold for Banking, Investment & Insurance Category at the 2023 Putra Aria Brand Awards Launched Selangor Halal SME Solution webpage with Halal International Selangor to provide SMEs with access to comprehensive solutions EMPLOYEE ENGAGEMENT INDEX 78% Disbursed RM8.3 million through Blended Financing Programme for microentrepreneurs Zakat paid RM13.8 million Provided BangKIT Business Grant to 125 asnaf entrepreneurs Environmental Social Economic 7 environment-friendly branches nationwide Official participant of the UN Global Compact Malaysia and Brunei Invested RM12.8 million in community enrichment FINANCIAL HIGHLIGHTS BUSINESS HIGHLIGHTS SUSTAINABILITY HIGHLIGHTS SHARIAH-ESG ASSET PORTFOLIO RM4.5 billion (2022: RM2.9 billion) Launched Ihsan Sustainable Investment Account (ISIA), the first Value-based Impact Investment, offering a unique avenue for purposeful investment in SDG-aligned financing assets with a social impact contribution through the zakat or Sadaqa House feature. 218.3 million Volume of active inquiries and transactions via online platforms 05 1 2 3 4 5 6 7 8 9 www.bankislam.com OVERVIEW OF BANK ISLAM 2023 Key Highlights

WORKFORCE 4,908 Cash Recycler Machines 496 Total of Self-service Terminals (SST) Nationwide 994 The first Islamic Bank established in Malaysia and Southeast Asia Scan the QR code for the details of our BRANCH NETWORK or log on to https://www.bankislam.com TOTAL CUSTOMERS 4.4 million Automated Teller Machines 486 Branches Central Region 45 Branches PUTRAJAYA KUALA LUMPUR SELANGOR Southern Region 24 Branches NEGERI SEMBILAN MELAKA JOHOR Contact Centres • Menara Bank Islam, Kuala Lumpur • Wangsa Maju, Kuala Lumpur SARAWAK SABAH East Malaysia 13 Branches Northern Region 26 Branches Eastern Region 27 Branches PERAK PULAU PINANG KEDAH KELANTAN TERENGGANU PAHANG Green Branches • Kubang Kerian, Kelantan • Temerloh, Pahang Green Contact Centre • Sungai Petani, Kedah Green Branches • Alor Setar, Kedah • Sungai Petani, Kedah • Butterworth, Pulau Pinang Green Branch • Kajang, Selangor Green Branch • Senawang, Negeri Sembilan PERLIS Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 06 Our Presence

BIMB HOLDINGS SDN BHD AMANAH SAHAM BUMIPUTERA 6.31% EMPLOYEES PROVIDENT FUND BOARD 16.96% OTHER SHAREHOLDERS 27.86% LEMBAGA TABUNG HAJI TABUNG HAJI 48.87% 100% BANK ISLAM MALAYSIA BERHAD BIMSEC NOMINEES (TEMPATAN) SDN BHD 100% 100% BIMSEC NOMINEES (ASING) SDN BHD BIMB OFFSHORE COMPANY MANAGEMENT SERVICES SDN BHD 100% 100% 100% 51% 49% BIMB SECURITIES SDN BHD 100% 100% 100% 100% BIMB SECURITIES (HOLDINGS) SDN BHD BIMB INVESTMENT MANAGEMENT BERHAD AL-WAKALAH NOMINEES (TEMPATAN) SDN BHD SYARIKAT AL-IJARAH SDN BHD BIMB SOLUTIONS SDN BHD BANK ISLAM TRUST COMPANY (LABUAN) LTD (112330-P) 07 1 2 3 4 5 6 7 8 9 www.bankislam.com OVERVIEW OF BANK ISLAM How We Are Structured: Group Corporate Structure as of 29 March 2024

THE EDGE ESG AWARDS 2023: 1. Gold Award, Best E (Environment) Fund category: Makmur myWakaf Fund (MWF) 2. Gold Award, Best S (Social) & G (Governance) Fund category: Makmur myWakaf Fund (MWF) 3. Gold Award, Best G (Governance) Fund category: Makmur myWakaf Fund (MWF) 4. Silver Award, Best Allocation Fund category 5. Silver Award, Best Overall Winner category: BIMB-Arabesque ShariahESG AI Technology Fund (BGSEAIT) 6. Silver Award, Equity Fund category: BIMB-Arabesque Shariah-ESG AI Technology Fund (BGSEAIT) WORLD TOURISM AWARD 2023 1. The Best Islamic Banking RAM LEAGUE AWARDS 2022 1. 3rd, Lead Manager by Programme Value category 2. 3rd, Lead Manager (Sukuk) by Programme Value category THE ASSET ISLAMIC FINANCE AWARDS 2023 1. Best Sustainable and Responsible Investment (SRI) Sukuk THE ASSET TRIPLE A AWARDS 2023 1. Highly commended, Best Individual in Trading (Malaysian Ringgit bond): Joseph Ng MUSE CREATIVE AWARDS 2023 1. Platinum Winner: Video – Banking category, Title: “Doorway to Success with Bank Islam SME Banking” CGC 28TH FI/FDI & SME AWARDS 2022 1. Top FI Partner in the SME category LIFE AT WORK AWARDS 1. Promising Young HR (Malaysian organisation category) – Winner: Norlieyana Roos Affandey 2. CHRO Champion (Malaysian organisation category) – 1st Runner Up: Iskandar Shah Zulkarnain BURSA EXCELLENCE AWARDS 2022 1. 2022 Best Institutional Bursa Malaysia-i Participating Organisation – 1st Runner Up: BIMB Securities Sdn Bhd GRADUAN BRAND AWARDS 2023 1. Top 10 (4th place), Overall Ranking among Malaysia’s Most Preferred Employers in 2023 2. 1st runner up, Banking & Financial Services Sector category GRADUATES’ CHOICE AWARDS 2023 1. No. 1 Employer of Choice, Islamic Banking category 2. 4th, Top Employer of Choice, Banking category 3. 5th, Top Employer of Choice, Investment Banking category 4. Top 1% Employer of Choice in the Overall Ranking in Malaysia MALAYSIA’S 100 LEADING GRADUATE EMPLOYERS 2023 1. Top 10 (6th place), Overall Ranking 2. 1st runner up, Banking & Financial Services Sector category Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 08 Awards & Recognition

Personal Financing House Financing ASB Financing Vehicle Financing SME Financing Credit Card Ar-Rahnu Takaful Protection Will Writing Deposit • Term Deposit Tawarruq (TDT) • Al-Awfar Investment Products Commercial and Corporate Financing Solutions • Term Financing • Trade Financing • Working Capital • Structured Financing or Programme-based Financing Investment Banking and Advisory Treasury and Markets • Money Market • Foreign Exchange (FX) • Fixed Income Markets • Structured Products Connected Systems (Strategy & Technology) • IT Blueprint • CODE S+ • Data Analytics • Fintech Partnerships • Cloud-Native Digital Banking • Robotic Process Automation (RPA) • Electronic Know Your Customer (eKYC) Connected Processes (People & Channel) • Digital Academy • Bank Islam Shared Values • Digital bank through Be U • Mobile apps • Internet Banking Internet Banking GO by Bank Islam GO Biz by Bank Islam Be U by Bank Islam Sadaqa House SMEXpert eBanker Pro eMasjid Halal Integrated Platform BEST app BISonline Merchant Portal EZXcess Virtual Account Opening (VAO) InfaqPay eJamin (Collaboration with Dapat Vista (M) Sdn Bhd) Wealth Tech (Collaboration with Arabesque Asset Management Ltd) eWallet services (Collaboration with SnapNPay, kiplePay, GHL, MP@y and ME12PAY) OUR PRODUCTS DIGITAL ECOSYSTEM OUR DIGITAL FACILITIES Our Products & Services Banking on Shared Success: Advancing Prosperity for the Good of All Robust Shariah Governance Framework The Region’s First Full-Fledged Islamic Banking Institution Sizeable green financing portfolio, achieved Shariah-ESG assets target of more than RM4 billion Recognised by the General Council for Islamic Banks and Financial Institutions (CIBAFI) for sustainable development initiatives inclusive of ESG practices Dedicated Centre of Social Finance – Group Social Finance Division Ihsan Sustainability Investment Account Empowering clients to build a naturepositive economy, fostering environmental resilience and inclusive growth. Malaysia’s largest network of dedicated Islamic banking channels Values-based culture, with emphasis on Shariah goals and VBI principles Strong balance sheet and performance track record, with AA3/Stable/P1 rating by RAM Ratings Our Competitive Advantage 09 1 2 3 4 5 6 7 8 9 www.bankislam.com OVERVIEW OF BANK ISLAM

January July February March June 17 March 2023 MoU Signing Ceremony with Mesinkira Bank Islam has partnered with Mesinkira Sdn Bhd (Mesinkira) to introduce an integrated mobile business management solution. The collaboration aims to help underbanked microentrepreneurs digitise their operations by providing tools for inventory management, sales tracking, and financial reporting. This will empower small businesses to enhance their efficiency and access to new markets. 18 January 2023 Bank Islam Clinches Putra Brand Awards 2022 Bank Islam won Bronze in the Banking, Investment, and Insurance categories at the Putra Brand Awards. The win signifies the Group’s effort in brand building and recognises Bank Islam as one of the preferred brands in the financial services industry. 13 February 2023 Launch of e-Duit Programme in Jeniang, Kedah Bank Islam, in collaboration with Bank Negara Malaysia (BNM), led the launch of the e-Duit Programme in Jeniang, Kedah. The launch is aimed at promoting cashless transactions among microentrepreneurs operating at the morning market in the rural town with more than 100 entrepreneurs signing up for the programme. 22 February 2023 Al-Awfar Crowns its 39th millionaire Al-Awfar celebrated its 14th Anniversary and 39th RM1 million grand prize winner. Five other special draw prize winners received a BMW 302i car, while another four winners drove home a Honda CR-V each. The event also announced Junior Grand Prize winners, who were each awarded a MacBook Pro and cash prizes of RM100,000 and RM50,000 respectively. 25 June 2023 Handover of EPIC Homes by Sadaqa House Sadaqa House and EPIC Society achieved a remarkable feat and made a positive impact by building a home in just three days. Volunteers from Sadaqa House, EPIC Society, and Malaysia Professional Accountancy Centre (MyPAC) students funded by Bank Islam came together for this project. The completed house was delivered to Rozi Tahir from the Semai Muslim community. 6 July 2023 Bank Islam 40th Anniversary Special Forum Perdana Ehwal Islam at Masjid Putrajaya A special episode of the Forum Perdana Ehwal Islam Programme (TV1) was broadcast live from Masjid Putrajaya, marking Bank Islam’s 40th Anniversary celebration. During the broadcast, Bank Islam announced a significant contribution of RM825,000 to the Rumah Baiti Jannati programme in collaboration with Dewan Bandaraya Kuala Lumpur. Additionally, the Ringgit to Ringgit initiative, amounting to RM400,000, was also launched, further highlighting the Group’s commitment to shared prosperity. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 10 Significant Events 2023

April May 18 March 2023 YSM Agropreneurs Incubator Project at International Islamic University Malaysia 32 graduates of the YSM (Youth Single Mother) Agropreneurs Incubator Project have completed their intensive agricultural and entrepreneurship classes. The participants were trained in organic farming techniques and educated on marketing their products. 31 March 2023 The Signing of a Memorandum of Understanding between Bank Islam Malaysia Berhad and Yayasan Didik Negara (YDN) Bank Islam signed a Memorandum of Understanding (MoU) with Yayasan Didik Negara (YDN) to support the Ministry of Education’s (MOE) role in education. The signing was witnessed by the Education Minister, YB Fadhlina Sidek, Bank Islam GCEO, Dato’ Mohd Muazzam Mohamed, and YDN CEO, Hardian Hadir. 6 April 2023 Ramadan Ihtimam Programme Bank Islam organised the Ramadan Ihtimam Programme in Pengkalan Chepa, Kelantan, celebrating the holy month of Ramadan with the local community. Activities such as distributing ‘Bubur Lambuk’ and zakat presentation to asnaf were organised, fostering shared prosperity in the community where we serve. 7 June 2023 Continued Collaboration with the Football Association Malaysia (FAM) Bank Islam extended our collaboration with FAM to support the Harimau Malaya national football squad. This fourth renewal partnership, not only provides crucial support to the team but also offers fans a distinctive card design. 18 April 2023 AIBIM Ramadan Relief Programme 2023 – “Kempen Seorang Sekampit Beras” Bank Islam joins hands with Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) for the annual Ramadan Relief Programme, which aims to offer essential support to disadvantaged communities, including food, clothing and other necessities during Ramadan. 26 May 2023 Bank Islam 40th Annual General Meeting (AGM) Bank Islam’s 40th AGM was held virtually, with a live broadcast from Menara Bank Islam. Attended by the full quorum of Board members, the resolutions tabled were unanimously approved by the shareholders. 8 June 2023 Bank Islam Mastercard Credit Card-i Campaign “TRIP TO UEFA 2023” Prizegiving Ceremony Bank Islam launched an exclusive “Trip to UEFA 2023” campaign for Bank Islam Mastercard Credit Card-i cardmembers, offering a once-in-a-lifetime experience to watch the UEFA Champions League final match in Türkiye. The Grand Prize includes two tickets to the UEFA Champions League Final, two roundtrip flight tickets to Türkiye, four days and three nights of luxury accommodation, as well as cash allowance. 11 1 2 3 4 5 6 7 8 9 www.bankislam.com OVERVIEW OF BANK ISLAM

Significant Events 2023 October August 7 July 2023 CGC 28th FI/DFI & SME Award 2023 – Award Top FI Partner in SME Category Bank Islam clinches Top FI Partner Award at the 28th FI/DFI & SME Awards 2022 ceremony organised by Credit Guarantee Corporation Malaysia Berhad (CGC), held at the Grand Hyatt Kuala Lumpur. 8 July 2023 Launch of the New Al-Awfar Bank Islam launched the enhanced version of our signature investment account, Al-Awfar, with exciting rewards for existing and new customers at IOI City Mall, Putrajaya. The New Al-Awfar – Wow! Banyaknya! Campaign offers amazing prizes worth more than RM18 million, along with 10 new categories for customers to win. Winners of the Al-Awfar yearly bonus draw now have the opportunity to win one kilogram of gold bar and two Harley Davidson motorbikes. 5 August 2023 Engagement with iTEKAD Microentrepreneurs in Kuching, Sarawak Bank Islam is broadening access to our iTEKAD microfinancing programme for local farmers and entrepreneurs in Sarawak by 17 August 2023 Bank Islam’s 40th Anniversary Celebration As part of our 40th Anniversary celebration, Bank Islam unveiled our “40th Anniversary Cube” – a symbolic representation of its journey from inception to the present day, at Menara Bank Islam. Developed in collaboration with IBFIM (Islamic Banking and Finance Institute of Malaysia), the cube features several augmented reality sections within the timeline, allowing the public to scan with provided devices. This interactive and innovative approach offers visitors a unique and immersive experience, reflecting Bank Islam’s commitment to progress and innovation over the past four decades. partnering with Farm Direct Shop (FDS), a local social enterprise. Bank Islam hosted a briefing session in Kuching for local microentrepreneurs to inform them about the resources available to support their business growth. This initiative aims to empower and assist microentrepreneurs in expanding their businesses and reaching their full potential. 5 October 2023 Certification of ISO 37001: 2016 Anti-Bribery Management System (ABMS) Bank Islam has obtained the ISO 37001 Anti-Bribery Management System (ABMS) certification from ABAC Center of Excellence Sdn Bhd (ABAC), making it the first full-fledged Islamic financial institution in Malaysia to be awarded this prestigious accreditation. ISO 37001 is an international standard that specifies requirements and provides guidance for establishing, implementing, maintaining, reviewing, and improving an anti-bribery management system. 22 to 24 September 2023 Bank Islam Sports Carnival 2023 The Bank Islam held its Sports Carnival at Universiti Teknikal Malaysia Melaka (UTeM). The annual event provides Bank Islam’s employees or BITIZENs the chance to gather and take part in various sporting activities, fostering teamwork and sportsmanship. This year, 1,343 athletes from seven contingents participated in 43 sporting events, strengthening camaraderie among BITIZENs. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 12

September 22 August 2023 iTEKAD Strategic Collaboration Event Bank Islam, the leading advocate of iTEKAD, was at BNM’s inaugural ‘Majlis Jalinan Kerjasama iTEKAD’, officiated by the Prime Minister, Dato’ Seri Anwar Ibrahim. 29 August 2023 1H2023 Financial Results Announcement The Group’s Financial Results were announced on 29 August. Bank Islam reported a net profit of RM254.2 million for the six months ended 30 June 2023 (1H2023), an increase of 14.0% over the corresponding period in 2022. 7 September 2023 Launch of Be U by Bank Islam VISA Debit Card-i Bank Islam strengthens its digital banking presence with the launch of Be U by Bank Islam Visa Debit Card-i. This innovative card offers swift, secure, and contactless transactions worldwide at over 100 million Visa merchant locations. With five unique designs, it meets evolving consumer needs and demonstrates Bank Islam’s commitment to modern and Shariah-compliant solutions. 16 September 2023 Bank Islam Media Community Drive 2023 The Bank Islam Media Community Drive, an event held to strengthen the strategic relationship between Bank Islam and the media fraternity, was held from Selangor to Penang. The objective was to thank the media for their support towards Bank Islam over the years. This treasure hunt format community drive saw the participation of 160 media personnel from 22 media agencies. The fun event was laced with CSR activities benefitting Pertubuhan Kebajikan Anak-anak Yatim/ Miskin Dar Hikmah in Gopeng, Perak. 11 September 2023 Launch of Bank Islam’s Surau Abu Hurairah at Zoo Negara Malaysia Bank Islam’s Surau Abu Hurairah was officially launched at Zoo Negara Malaysia with the collaboration of the Ministry of Defense (MINDEF), the Malaysian Armed Forces (ATM), and the Malaysian Zoological Society. The project’s goal was to provide a fully equipped, comfortable, and easily accessible place of worship for the visitors and staff of Zoo Negara. The surau was named after a companion of Prophet Muhammad SAW, Abu Hurairah, known for his kindness towards animals. 15 September 2023 Sadaqa House Giving Day Sadaqa House organised Giving Day, committed the disbursement of RM694,255 to three changemakers. This generous donation was distributed to benefit 55 congenital heart patients and 60 orphans or asnaf. At the event, MyVista, one of Sadaqa House’s changemakers, fitted a prosthetic arm for one of the recipients, showcasing the impactful work of the initiative. 18-20 September 2023 Kuala Lumpur International Finance Forum 2023 Bank Islam was at the 18th Kuala Lumpur Finance Forum 2023, with the theme of “Harnessing Islamic Finance and Social Finance for a Sustainable Future.” Bank Islam GCEO, Dato’ Mohd Muazzam, delivered a keynote on “Unlocking the Potential of Embedded Finance in Empowering Islamic Finance”. 13 1 2 3 4 5 6 7 8 9 www.bankislam.com OVERVIEW OF BANK ISLAM

Significant Events 2023 December 17 October 2023 Issuance of the 5th Tranche of RM400 million Subordinated Sukuk Murabahah Bank Islam has successfully issued our fifth tranche of RM400.0 million Subordinated Sukuk Murabahah under its RM10.0 billion Sukuk Murabahah Programme. This Sukuk Murabahah qualifies as Tier 2 regulatory capital for Bank Islam, in accordance with BNM’s Capital Adequacy Framework for Islamic Banks (Capital Components). This issuance enhances Bank Islam’s capital adequacy, aligning it with the Basel III requirements. 23 October 2023 11th Joint Committee on Climate Change (JC3) Conference Bank Islam took part in the JC3 Conference organised by BNM to advocate for action on climate change. Bank Islam GCEO was invited to be a speaker at the event, highlighting the Group’s commitment to sustainability. 18 November 2023 Mangrove Tree Planting at Cherating, Pahang Demonstrating commitment to protect biodiversity, Bank Islam organised a mangrove tree planting activity in Cherating, Pahang. A total of 170 volunteers from the International Islamic University Malaysia (IIUM), University Islam Pahang Sultan Ahmad Shah (UniPSAS), Drug Intervention Community (DIC) Pahang, Malaysian Nature Society (MNS) and local community members participated in this meaningful event. 30 November – 12 December 2023 COP28 in Dubai Bank Islam’s GCEO was invited as a speaker at the Malaysian Pavilion during the UN Climate Change Conference (COP28) in Dubai. This international conference, also known as COP – Member States Conference for the United Nations Framework Convention on Climate Change (UNFCCC), brought together 86,000 attendees from around the world. The conference aims to address the pressing issue of reducing the destruction of nature caused by human activity. The discussions at COP28 highlighted the global community’s efforts in tackling the climate crisis and emphasised the changes needed for future prosperity. 12 December 2023 Memorandum of Agreement (MoA) Signing with AWARIS Bank Islam signed a MoA with Amanah Warisan Berhad (AWARIS) to enhance service accessibility and raise public knowledge on estate planning and administration. Bank Islam will serve as a distribution channel for AWARIS’ inheritance management solutions, benefiting both Muslim and non-Muslim customers. 11 October 2023 Bank Islam Investor Day Bank Islam hosted our inaugural Investors Day to engage with key analysts and provide updates on the Bank’s current financial standing and strategic plans moving forward. The event, attended by numerous investment analysts and fund managers from Kuala Lumpur, featured presentations aimed at providing insights into the Group’s direction. Dato’ Mohd Muazzam presented on the Bank’s direction in a session titled “Driven by Purpose,” followed by a presentation from the GCFO, Azizan Abdul Aziz, on Bank Islam’s financial performance and sustainability. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 14

November 25 October 2023 Launch of Ihsan Sustainability Investment Account (ISIA) Bank Islam introduced the Ihsan Sustainability Investment Account (ISIA), offering an indicative 4.5% p.a. return over 24 months. Designed for high-net-worth individual and non-individual investors, ISIA focuses on ESG and SDG themes such as renewable energy and clean transportation. 26 October 2023 Raising Awareness on Financial Scams As part of Bank Islam’s efforts to raise awareness on banking and investment scams, Dato’ Mohd Muazzam was featured as a panellist at Forum Perdana Ehwal Islam held live from JAKIM in Putrajaya. 25-26 October 2023 3rd Annual Islamic Fintech Leaders Summit Bank Islam actively participated in the Islamic Fintech Leaders Summit, a prestigious forum bringing together leaders in Islamic finance to discuss the latest developments in Fintech. The event provided a platform for insightful discussions on how Fintech is shaping the future of Islamic finance. Bank Islam’s Board member, Mohd Yuzaidi Mohd Yusoff, moderated a discussion session and facilitated valuable exchanges among industry players and experts. 8 November 2023 Bank Islam Integrity Run 2.0 Bank Islam organised the Integrity Run 2.0 for our staff, aiming to promote and raise awareness about the importance of upholding integrity while carrying out their duties. This event encouraged our employees to embody the values of honesty, transparency, and ethical behaviour in their work. 11 November 2023 ‘BITIZEN Conquers Everest Base Camp (EBC)’ Expedition 13 climbers from Kelab Bank Islam Athletics (BIA) embarked on the BITIZEN Conquers Everest Base Camp (EBC) expedition and successfully achieved their mission of reaching the EBC. Trekking to an impressive altitude of 5,364 meters, reaching the base camp signifies their determination, grit, athleticism, and spirit of adventure. This accomplishment reflects the team’s resilience and passion for exploration. 15 1 2 3 4 5 6 7 8 9 www.bankislam.com OVERVIEW OF BANK ISLAM

We reaffirm our pledge to uphold these values. We are confident that our growth will align with the broader progress and sustainability of the societies we serve, and we look forward to continuing our journey of innovation and service excellence for many years to come. REFLECTING ON 2023 During the financial year, the global economy exhibited resilience, growing by 3.0% despite facing significant headwinds. This growth was primarily fuelled by the robust performance of the US economy and a notable recovery in the services sector, particularly tourism, which benefited from accumulated pandemic savings and increased spending. Despite a global trend toward tight monetary policies to address inflation, resilient labour markets supported sustained consumer spending. Malaysia’s economic landscape reflected these global trends but was also marked by its unique challenges and opportunities. Tied closely to global trade, Malaysia sought to leverage the recovery in international trade and tourism. However, the Ringgit experienced notable depreciation against the US dollar, reflecting broader economic pressures. Dear Stakeholders, In 2023, Bank Islam proudly celebrated its 40th anniversary of dedicated service. Since our inception, we have remained steadfast in our mission to build a financial ecosystem that is accessible and beneficial for all. Our commitment has seen us navigate through decades of transformative changes across Malaysia, and we find ourselves at a critical juncture where technological innovation intersects with pressing global challenges. As a forward-thinking organisation, we recognise that adapting to change is imperative to meet the evolving needs and expectations of our customers and stakeholders. Digital innovation is at the forefront of our evolution, and we are committed to leveraging it to provide solutions that respond to the immediate demands of our times. Our foundational principles remain unwavering, and we continue to contribute to the prosperity and wellbeing of the communities we serve. TAN SRI DR ISMAIL HAJI BAKAR Chairman ‘’In the name of Allah, the Most Compassionate, the Most Merciful All praise is due to Allah, the Lord of the Worlds, and peace and blessings be upon the Prophet Muhammad, whom Allah send as mercy to the universe, which Allah make him a guiding and a rightly guided man, and an illuminating lamp. And peace and blessing on his family and companions, and those who followed them benevolently until the Day of Judgment and then after. May Allah’s peace, mercy and blessings be upon you.’’ Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 16 Chairman’s Letter

On the fiscal front, Malaysia responded proactively, issuing RM185.9 billion in Government Securities and Investment Issues, signalling strong financial management amid fluctuating markets. The demand for these instruments highlighted investor confidence and the resilience of Malaysia’s financial markets in a turbulent global context. Digital transformation within the banking sector has also intensified, underscored by rising customer expectations, ESG challenges, and enhanced risk management amid the rapid spread of automation. Digital adaptation has become the norm in this context, setting a benchmark for future advancements. In response, we accelerated our digitalisation initiatives, enhancing customer empowerment with digital tools like GO by Bank Islam and Be U by Bank Islam, fostering innovation through employee hackathons, and improving operational efficiency with IT system categorisation. We organised DIGIT23 to stay up-to- date with the latest developments and celebrate our achievements in digitalisation within the Group and future-proof ourselves in the evolving financial landscape. These actions align with our LEAP25 strategy, signalling our commitment to digital progress and industry leadership. Furthermore, our formidable capital adequacy and liquidity are vital pillars enabling us to navigate this evolving landscape adeptly. Through strategic foresight, we are resolutely focused on reinforcing our sustainability frameworks, refining our digital banking platforms, and strengthening our resilience to meet and exceed customer and stakeholder expectations consistently. STRONG GOVERNANCE & LEADERSHIP A key achievement in this area of ethical governance was Bank Islam securing the ISO 37001 Anti-Bribery Management System (ABMS) certification from ABAC Center of Excellence Sdn Bhd (ABAC). As the first full-fledged Islamic financial institution in Malaysia to receive this accreditation, it acknowledges our strong anti-corruption practices and firm commitment to zero-tolerance for bribery and corruption. This distinction reinforces Bank Islam’s reputation as an ethical and responsible entity, further solidifying our position within the industry. Strong corporate governance has been critical to Bank Islam’s long-term success and growth. In 2023, our Board of Directors and leadership team focused on reinforcing our governance framework against rising ESG concerns, particularly our response to climate change. This focus reflects the critical need to align our business practices with emerging global sustainability standards and the growing imperatives of climate-related financial risks. In response to the rapidly evolving ESG landscape, Board education emerged as a critical area of focus, underscoring the necessity for our directors to be wellversed in the latest sustainability trends and governance best practices. This year, we implemented comprehensive training programmes to deepen our board members’ understanding of ESG factors, equipping them to make informed strategic decisions that reflect current realities and future imperatives. One of the programmes organised by the Group is the 2023 Directors’ Conference where all directors within the Bank Islam took part in this event. With governance and sustainability as the theme, the 2023 Directors’ Conference “Harmonising Talent and Governance: Leveraging ESG for Sustainable Retention” served as the platform for providing meaningful engagement and collaboration among directors, providing them with a dedicated space to exchange ideas, insights, and best practices, thereby cultivating a culture of collective learning and continuous improvement in governance practices. Amongst the topics covered were: (i) the alignment of Islamic Finance with ESG; (ii) an overview of the ESG regulatory landscape and the impact on the Group; (iii) integrating leadership with Islamic Digital transformation within the banking sector has also intensified, underscored by rising customer expectations, ESG challenges, and enhanced risk management amid the rapid spread of automation. 17 1 2 3 4 5 6 7 8 9 www.bankislam.com KEY MESSAGES

Indeed, these diversities allow for different perspectives and knowledge to be considered in decision-making. EMBEDDING SUSTAINABILITY INTO OUR CORE At Bank Islam, our commitment to sustainability is rooted in our Islamic banking principles, emphasising societal well-being. This foundational ethos has naturally guided our transition toward enhanced sustainability practices, aligning seamlessly with emerging standards and regulations and reinforcing our ambition to be sustainable banking leaders. Our strategic approach to sustainability is encapsulated in our ambitious LEAP25 agenda, targeting RM4 billion in green financing to bolster the green economy by 2025. I am pleased to report that we have surpassed our Shariah-ESG asset target of RM4 billion ahead of schedule, demonstrating our proactive and effective implementation of sustainability initiatives. values and sustainability; and (iv) succession and retention of talents. In addition to the in-house training, our Board also consistently enhances their understanding by attending training organised by external parties on ESG covering the areas of sustainability, climate-related issues, and other relevant areas. Recognising the instrumental role of diversity in fostering innovative leadership and effective decisionmaking, we have actively pursued a more inclusive Board composition. We believe that a truly diverse and inclusive Board will leverage differences in thought, perspective, knowledge, skill, industry experience, age and gender, all of which will ensure that Bank Islam retains its competitive advantage. Our Board is committed to maintaining diversity and inclusion in its composition and decision-making process. Achieving a 30% female representation on our Board this year marks a significant milestone, reflecting our commitment to enhancing the diversity of perspectives, expertise, and experiences at the highest levels of our organisation. As of 31 March 2024, our female representation at the Board level was at 33%, exceeding our 30% target. In terms of age diversity, our Board maintains two distinct age categories, 50 to 60 years and 61 to 70 years, with a balanced mix between the two. We also maintain a good mix of skills and expertise in the current Board composition. The Board’s diverse skill set and areas of expertise allow us to collectively bring a wide range of experience to bear in areas such as finance and accounting, risk management, actuarial science, banking, treasury, technology, and legal matters. Furthermore, in October 2023, we introduced the Ihsan Sustainability Investment Account (ISIA), a pioneering financial product to foster positive social and environmental outcomes alongside attractive financial returns. This account garnered RM1.1 billion in investments, offering clients a stable, short-term investment vehicle that mitigates the volatility typically associated with equities and fixed-income markets. Our partnership with a third party for ESG rating enhancement further underscores our dedication to rigorous sustainability standards. This collaboration will refine our financing framework, enabling a deeper understanding of potential clients’ environmental and social practices before extending financial support and ensuring alignment with our sustainability criteria. We also continued to strengthen our social financing efforts. Through the iTEKAD microfinancing initiative, we have empowered 285 beneficiaries in 2023, driving social upliftment and financial inclusion. We aim to transition zakat recipients to zakat contributors, reflecting our broader goal of creating sustainable economic pathways for the underbanked and asnaf communities. VALUE CREATION FOR STAKEHOLDERS Our approach to a stakeholder economy focuses on delivering tangible value across our network, recognising each stakeholder group’s distinct needs and contributions. Our ethical practices aim to address the expectations of our shareholders, employees, and communities, while placing strong emphasis on the Bank’s financial performance. Exceeded initial target of RM4 billion in green financing to bolster the green economy by 2025 18 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 Chairman’s Letter

For shareholders, delivering robust returns is paramount. We maintain our commitment to deliver sustainable and strong returns to our shareholders. In this regard, we are pleased to report that Bank Islam has declared two (2) interim dividends for the financial year ended 31 December 2023. The first and second interim dividend was declared on 30 November 2023 and 28 February 2024, respectively. We view employees as the backbone of the Group and we take responsibility in creating a fair and engaging work environment. We introduced BITI-Friend in 2022, a pioneering platform designed to enhance employee well-being. This initiative facilitates access to peer support and promotes a culture where mental health is prioritised and seeking assistance is normalised, as evidenced by our positive Employee Engagement Index of 78%. For the communities we serve, the expectation is for Bank Islam to contribute meaningfully beyond financial transactions. Our community engagement is exemplified by the Sadaqa House Orphan Fund, aiming to support orphan education. In 2023, we focused on enriching the lives of these children, not just financially but also through personal interaction with our employees actively participating in mentorship and engagement activities. The fund’s impact is quantifiable, with RM1.6 million (RM1,599,939) raised last year, directly benefiting 71 individuals and demonstrating our integrated approach to community support and development. LOOKING AHEAD As we enter 2024, the global economic landscape presents a mixed picture of cautious optimism and lingering uncertainties. The International Monetary Fund (IMF) projects modest global growth. IMF is forecasting a deceleration from 3.0% in 2023 to around 2.7% to 2.9% in 2024, with many economies grappling to balance growth momentum against inflationary pressures and tight monetary policies. This global backdrop, particularly the stabilisation in services and potential recovery in technology sectors will influence financial markets worldwide, impacting banking sector dynamics from lending rates to investment flows. In Malaysia, the economic outlook is more buoyant, with GDP growth anticipated to reach up to 4.7%, supported by a vibrant tourism sector and improving trade conditions. The Malaysian financial sector is expected to mirror this positive trajectory, capitalising on increased consumer spending and investment inflows. However, the banking sector must navigate the risks associated with global economic fluctuations and domestic policy adjustments, suggesting a year of strategic vigilance and adaptability. Our approach will integrate diligent market analysis with innovative customer-focused products and expand our digital banking services. This strategy is aimed at responding effectively to the evolving needs of our customers and exploiting the positive growth trajectory projected for Malaysia. By doing so, we aim to not only navigate the challenges ahead but also emerge stronger, securing sustainable progress for our stakeholders and reinforcing our commitment to excellence in an uncertain economic climate. APPRECIATION & ACKNOWLEDGEMENTS On behalf of the Board, I sincerely appreciate those who have contributed to our progress this year. We thank Encik Azizan Ahmad for his dedicated service and wisdom, which have supported our Board’s efforts. We also acknowledge Dr Yasmin Hanani Mohd Safian for her valuable input to our Shariah Supervisory Council. As they depart, we welcome Tuan Syed Hamadah Syed Othman and Associate Professor Dr Nurul Aini Muhamed, anticipating their contributions to our governance and oversight. Finally, we extend our profound thanks to all our stakeholders for your unwavering support. Your trust and collaboration inspire our journey forward, and together, we look to a future filled with promise and potential. TAN SRI DR ISMAIL HAJI BAKAR Chairman 19 1 2 3 4 5 6 7 8 9 www.bankislam.com KEY MESSAGES

DATO’ MOHD MUAZZAM MOHAMED Group Chief Executive Officer Dear Stakeholders, As we commemorate the 40th anniversary of Bank Islam, it is a moment of introspection and gratitude – a time to contemplate the very essence of our existence amidst a landscape teeming with banking institutions. The question arises: Why does Bank Islam exist? Our answer transcends the conventional success metrics; we aim to integrate profitable growth with meaningful value and purpose. We are committed to ensuring inclusivity, ensuring that our benefits reach everyone as an Islamic bank should and that no one is left behind. This past year has showcased our commitment and resilience. Faced with a confluence of challenges – market volatility, escalating regulatory demands, and the imperative to integrate Environmental, Social, and Governance (ESG) considerations into our core strategies – we have not only sustained but thrived. I am pleased to report that Bank Islam has demonstrated commendable performance, achieving both profitability and growth. OPERATING ENVIRONMENT In 2023, Bank Islam navigated a challenging and unpredictable financial landscape, particularly regarding Malaysia’s Overnight Policy Rate (OPR) expectations. At the end of 2022, forecasts indicated a potential rise in the OPR for early 2023, prompting the banking sector, including us, to adjust deposit rates in anticipation. Contrary to these forecasts, the OPR remained unchanged in the early months of 2023, leading to an increased cost of deposits and, consequently, a reduction in our Net Income Margin (NIM) from 2.28% in 2022 to 2.06% in Q1 2023. This unexpected development required a strategic and prompt response to align our funding costs with the prevailing rates, thereby protecting our profitability. Through targeted adjustments to our funding profile, we managed to mitigate the impact of the static OPR. These efforts resulted in a sequential improvement in our NIM to 2.11% in Q2, 2.17% in Q3 and further sustain the momentum to achieve a NIM of 2.13% in Q4, resulting in overall NIM of 2.12% for 2023. The strategy addressed the immediate challenge and reinforced our financial stability, showcasing our ability to respond effectively to market dynamics. ‘’In the name of Allah, the Most Compassionate, the Most Merciful All praise is due to Allah, the Lord of the Worlds, and peace and blessings be upon the Prophet Muhammad, whom Allah send as mercy to the universe, which Allah make him a guiding and a rightly guided man, and an illuminating lamp. And peace and blessing on his family and companions, and those who followed them benevolently until the Day of Judgment and then after. May Allah’s peace, mercy and blessings be upon you.’’ Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 20 From the Desk of the GCEO

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