KUALA LUMPUR (May 30): Bank Islam Malaysia Bhd's net profit rose 11.5% to RM118.09 million for the first quarter ended March 31, 2023 (1QFY2023), from RM105.92 million a year earlier, led by a jump in investment income.

Net income rose 14% to RM541.9 million from RM475.19 million, which more than offset higher personnel and overhead expenses, it showed in a bourse filing on Tuesday (May 30).

Quarterly earnings per share rose to 5.33 sen, from 4.95 sen previously, Bank Islam added.

The group, which is primarily focused on retail banking, said its gross impaired financing ratio stood at 1.37%, “which remained better than the industry average of 1.75%”.

In the latest filing, Bank Islam said the jump in investment income was led by income derived from investment of depositors’ funds, which jumped to RM802.13 million, up 36.5% from RM587.63 million in 1QFY2022.

Total distributable income rose 43% to RM1.04 billion as a result, from RM726.03 million a year ago.

“Gross financing grew by 10.7% year-on-year (y-o-y) to RM66.2 billion, while customer deposits and investment accounts stood at RM77.8 billion, with a y-o-y increase of RM9.7 billion or 14.3%,” Bank Islam said.

Compared to a quarter ago, investment accounts rose to RM20.5 billion from RM14.46 billion, which more than offset the decline in deposits from customers to RM57.28 billion from RM60.71 billion.

The annualised return on equity stood at 7%, it said, compared with 7.5% recorded at end-2022. Meanwhile, the group’s total capital ratio stood at 21.2%, up from 19.39% at end-2022.

“As at the end of March 2023, total assets stood at RM92.1 billion, with a y-o-y growth of 14.4%, driven by growth in both financing and investment securities,” Bank Islam chief executive officer Mohd Muazzam Mohamed said in a statement.

“Our healthy capital and liquidity position reflects that our growth momentum and fundamentals remain strong,” he added.

On Malaysia’s economic prospects, Bank Islam said although economic growth in the upcoming quarters is anticipated to come in lower, “it is believed that several upside risks could counterbalance the second-half growth headwinds”.

This includes the positive spillover from China’s economic reopening, further improvement in the labour market, and the continuation of megaprojects, it said.

Shares in Bank Islam have retreated by 33% this year, leading the 7.3% decline in the Bursa Malaysia Financial Services Index in the same period, amid jitters in the global banking sector in recent months, as well as some concerns over Malaysia’s economic prospects this year.

Bank Islam settled down 1.08% or two sen at RM1.83 at Tuesday's noon market break, ahead of the results announcement.