KUALA LUMPUR (Oct 12): Bank Rakyat, Malaysia's largest Islamic cooperative bank, recorded a profit before tax and zakat of RM867.65 million in the first half of the year ended June 30, 2019 (1HFY19), up 17.8% from RM735.46 million in the previous year's corresponding period.

The higher profit came despite challenges faced by the bank in net profit margin due to the reduction of the overnight policy rate or OPR, and weaker consumer sentiment amid the current economic situation, the bank said in a statement.

The bank attributed its good performance to an increase in core operating income, which was contributed by financing and treasury activities, while controlling its operational costs.

As such, its return on shareholders' fund was at 10%, which the bank is among the highest in the industry. It achieved this while keeping its cost to income ratio low at 34.2%, compared with the banking industry's average of 45%.

"With strong fundamentals and a focus on becoming a sustainable bank, the group has sucessfully kept its position as the most profitable cooperative bank and second largest Islamic financial institution in Malaysia," it said.

The bank also shared that its zakat allocation totalled RM23.45 million for the year ended Dec 31, 2018, whereby RM14.66 million of that was distributed to State Islamic religious councils, while the balance RM8.79 million was distributed to the asnaf.

"Up until Sept 30, 2019, Bank Rakyat had approved a zakat allocation of RM7.7 million to be distributed to the asnaf," it said, adding that RM397,600 of that was for subsistence and the construction of homes for families identified to be poor and extremely poor.

Bank Rakyat's acting managing director Datuk Rosman Mohamed said Bank Rakyat, as a sustainable bank, is committed to support the 3Ps of people, planet and progress by integrating sustainbility into its business strategy.