KUALA LUMPUR (May 25): Bank Islam Malaysia Bhd (KL:BIMB) posted an 8.9% decline in net profit for the first quarter, weighed by higher operating overheads, increased finance costs and weaker non-fund-based income.

Net profit for the quarter ended March 31, 2026 fell to RM115.03 million from RM126.27 million a year earlier, translating into earnings per share of 5.08 sen, according to the group's bourse filing on Monday. The annualised return on equity stood at 6.0%.

No dividend was declared for the quarter.

The bank’s net income eased slightly to RM666.1 million, as non-fund-based income dropped 18.1% to RM109.4 million. The decline was attributed to lower investment and foreign exchange income, softer fee and commission earnings, as well as a higher comparative base in the corresponding quarter, which included a one-off gain from a property disposal.

Total overhead expenses rose 7.7% year-on-year to RM414.9 million, reflecting strategic investments in talent and technology aimed at strengthening customer service capabilities and supporting long-term business resilience.

Despite the weaker earnings, Bank Islam saw an improvement in asset quality, with net allowances for impairment on financing and advances declining 32% or RM25.5 million to RM54.2 million, mainly due to higher recoveries during the quarter.

Consequently, financing credit cost improved to 0.29%, while the gross impaired financing ratio stood at 1.02% as at end-March, below the industry average of 1.40%.

Bank Islam’s gross financing grew 5.9% year-on-year to RM76.1 billion during the quarter, supported by expansion in both retail and institutional banking segments, which recorded growth of 5.5% and 7.1% respectively.

Customer deposits and investment accounts rose 9.2% to RM88.1 billion, supporting financing growth. Current, savings and transactional investment accounts amounted to RM30.3 billion, representing 34.4% of total deposits and investment accounts.

The bank’s capital position remained strong, with common equity Tier 1 and total capital ratios at 13.6% and 18.4% respectively as at end-March.

Group chief executive officer Raja Datin Paduka Teh Maimunah  Raja Abdul Aziz said Bank Islam remains focused on accelerating digital adoption as it advances towards a more mature shariah-based digital ecosystem.

She said the group is also working to diversify revenue streams, strengthen its institutional banking franchise and improve efficiency through disciplined cost recalibration and a scalable group-wide technology architecture.

“We are encouraged by the strong openness and readiness across the organisation to build a stronger, more forward-looking group, firmly grounded in shariah values,” she said.

Shares of BIMB closed unchanged at RM2.27 on Monday, giving the bank a market capitalisation of RM5.15 billion. The stock has declined 7% over the past 12 months.