DATO’ SRI ZUKRI SAMAT - Bank Islam Malaysia PERFORMING HUMAN CAPITAL : BANK ISLAM EXPERIENCE DATO’ SRI ZUKRI SAMAT Managing Director Bank Islam Malaysia Bhd 6 November 2012 Strategic

HIGH PERFORMING HIGH PERFORMING HUMAN CAPITAL : HUMAN CAPITAL :

BANK ISLAM BANK ISLAM EXPERIENCEEXPERIENCE

DATO’ SRI ZUKRI SAMATManaging Director

Bank Islam Malaysia Bhd

6 November 2012

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About Bank Islam

Pre 2006 – what went wrong?

Turnaround plan

The results of turnaround plan

Lesson learnt

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Introduction to Bank Islam

Financial Position (1H FY2012)Financial Position (1H FY2012)

BackgroundBackground

Malaysia’s Pioneer Islamic Bank formed in 1983

3rd largest Islamic Bank in Malaysia

Major shareholders:o BIMB Holdings Berhad 51.0% (Major 

shareholder is Lembaga Tabung Haji at 51.6%)o Lembaga Tabung Haji 18.5%o Dubai Financial Group  30.5%

Total Assets : RM33,846 million

Total Deposits : RM28,700 million

Profit before tax : RM281.5 million

Shareholders’ funds : RM2,970 million

Network strength in MalaysiaNetwork strength in Malaysia

125 branches,  1,153 ATM & CDM 

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About Bank Islam

Pre 2006 – what went wrong?

The results of turnaround plan

Lesson learnt

Turnaround plan

FY2005 and FY2006: What went wrong?

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Profit before tax (in million)

Note : Shareholders’ Funds of RM(277.8) million as at 30 June 2006

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The root cause of the problem

Post mortem revealed: o Losses largely the result of high non‐performing financing (non‐robust credit evaluation process, and insufficient depth and breadth in processing loans, risk management frame was not properly established)

o Poor working culture and attitude o The bank was no longer a going concern

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About Bank Islam

Pre 2006 – what went wrong?

Turnaround plan

The results of turnaround plan

Lesson learnt

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Post FY2006: Turnaround plan

Appointment of new management teamImplementation of five‐component turnaround plan in 2006 to drive Bank Islam’s recovery which included vigorous re‐brandingexercise for instance, the change of logo.

BANKING FOR ALL

BANKING FOR ALL

BANKING FOR MUSLIMS

BANKING FOR MUSLIMS

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Rationale behind the change of logo:o To change the mindset i.e. general and non‐Muslims’perception and the working culture

o Corporate logo which signifies the bank’s unwavering commitment to Shariah principles in all its products and services

o New branch look to attract younger generation and non‐Muslim customers

Corporate Re-branding: Change in mindset

Bank Islam: What it was before

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Bank Islam: New banking experience

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Recruitment of new management team

New Managing Director came on board on 9 June 2006.Introduction of some non‐Muslims in the management team to fill the void in expertise and promote cross culture for key positions such as Risk Management and IT. 

Turnaround plan (cont'd)

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Reorganisation of the bank

Change of Business Model: Branches as profit centresrather than service outletsEstablishment of Risk Management DivisionDedicated Recovery TeamEstablishment of Corporate Investment Banking (CIB)Enhancement of Treasury Division

Introduction of performance culture across the bank

Introduction of performance management Reward given based on performanceRemuneration package introduced

Turnaround plan (cont'd)

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Process re-engineeringCentralisation of processingIntroduction of credit scoring for consumer financingImprove process to reduce turnaround timeAutomation Revamped procurement policy to reduce leakages

"Simplicity means the achievement of maximum effect with minimum means“ – Albert Einstein

Turnaround plan (cont'd)

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Encourage Business Innovation

Product Innovation:o Payment Holidayo No payment during constructiono TAP Mobile Bankingo Sinar LetrikUniversal license also enables new product offerings all under one roof:o Advisory services on Initial Public Offerings (IPO) and 

Mergers & Acquisitions (M&A) by CIBo Ar‐Rahnu or Islamic pawn brokingo Bereau de Change

Turnaround plan (cont'd)

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Human capital development

In FY2011, total spent on training was RM7.16 million (or 2.58% of total staff remuneration). Specialised Training Programme for:o Support staffo Junior managemento Middle managemento Senior managementSuccession planning – an exercise carried out to reduce the gap between the successor and what is required of him.

“Make me redundant”– Dato’ Sri Zukri Samat

Turnaround plan (cont'd)

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About Bank Islam

Pre 2006 – what went wrong?

Turnaround plan

The results of turnaround plan

Lesson learnt

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The outcome of the turnaround plan

336

On annualised basis

*18 months Financial Period ended 31 December 2010.

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The outcome of the turnaround plan (cont’d)

FY2007 Year‐to‐dateNo. of branches 90           125                        No. of ATM & CDM 301         1,153                    Customer base (million) 1.7          5.1                         

Network strength and customer base

Awards & recognition

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Best Islamic Bank in Malaysia 2011 – IFN Award

Rated 4th Strongest Bank in Malaysia by The Asian Banker (Part of Financial Times Group)

Ranked 53rd – Asia Pacific 500 Strongest Bank by The Asian Banker

Ranked 24th Largest Islamic Financial Institutions in the world by The Banker

Awarded Readers’ Digest Platinum Award’s “Most Trusted Brand for Islamic Financial Service” for fourth consecutive year 

Awarded Brand Laureate Award for Best Brand in Islamic Banking by the Asia Pacific Brands Foundation for two consecutive years

Awarded the “Anugerah Inovasi Islam Peringkat Kebangsaan 2011 bagi InovasiKewangan Islam” by MOSTI for TAP Mobile Banking‐i product

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About Bank Islam

Pre 2006 – what went wrong?

Turnaround plan

The results of turnaround plan

Lesson learnt

Lesson learnt

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With the right people, you can move mountains

Change the mindset is the most difficult

Innovation is the key to stay relevant

The world is full of uncertainty. Change is the only constant

The way forward for Bank Islam

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Continue to strengthen the domestic presence. 150 branches in 2015 from the current 125

Merger, if there is a right partner

Inorganic growth. Indonesia is where we want to gain a foothold. ASEAN eventually

Be the best in class. “Whatever you are, be a good one” ‐Abraham Lincoln

“When you do something, do it properly or don’t bother at all”– Dato’ Sri Zukri Samat

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