KUALA LUMPUR (Aug 26): Bank Islam Malaysia Bhd (KL:BIMB) saw its second-quarter net profit rise nearly 10% as stronger income and marginally lower overheads more than offset a sharp increase in impairment allowances and higher financing costs.

Net profit for the three months ended June 30, 2026 (2QFY2026) rose to RM139.12 million from RM126.69 million a year earlier, while revenue increased 6.3% to RM1.36 billion from RM1.28 billion, according to a filing with Bursa Malaysia on Wednesday.

Group chief executive officer Raja Teh Maimunah said Bank Islam’s latest performance showed the strength of its fundamentals, while acknowledging that the bank would need to continue changing how it operates to sustain growth.

"While we have made progress, we recognise that achieving sustainable growth requires us to continuously rethink how we serve our customers and how we work," she said in a statement accompanying the results announcement. 

She added that Bank Islam’s strategic renewal would focus on simplification, automation and digitalisation, alongside investments in talent and technology.

The bank’s filing sets out six strategic priorities, including diversifying revenue through new lines of business, recalibrating its cost structure, rationalising support functions, improving organisational agility and developing a five-year core banking framework with greater cloud adoption and enhanced digital platforms.

Bank Islam did not announce a new dividend with the latest results.

Its 2QFY2026 earnings showed the group net income increased 10.8% to RM767.20 million, thanks to higher net fund-based income, fees and commission income, as well as gains from foreign exchange and the revaluation of financial assets measured at fair value through profit or loss (FVTPL).

Total overheads were marginally lower year-on-year, helped by RM3.7 million lower personnel expenses and RM2.7 million lower personnel expenses. These were partly offset by RM5.5 million higher establishment expenses and a RM500,000 increase in marketing expenses.

Its net allowance for impairment on financing and advances, however, more than doubled to RM88.8 million. Finance costs on subordinated sukuk and capital securities also increased during the quarter by 32.3%, following sukuk issuances over the period. 

Looking ahead, Bank Islam said it will continue expanding sustainable financing and social-finance initiatives as part of efforts to diversify its businesses, while maintaining its focus on Islamic financial solutions. 

For the six months ended June 30, 2026 (1HFY2026), Bank Islam’s net profit edged up just 0.5% to RM254.15 million, while revenue increased 4.2% to RM2.61 billion.

As at end-June, its total assets had grown 7.2% to RM106.7 billion, supported by growth in financing and investment securities. Gross financing increased 7.5% to RM77.9 billion, while customer deposits and investment accounts rose 5.1% to RM86.9 billion.

Current and savings accounts and transactional investment accounts — collectively referred to as Casatia — stood at RM31.8 billion, accounting for 36.6% of total customer deposits and investment accounts.

Gross impaired financing stood at RM765.88 million, equivalent to 0.98% of gross financing, compared with 0.97% at end-2025.  

The group’s common equity Tier 1 (CET1) capital ratio stood at 13.11%, while its total capital ratio was 17.80%. Both were slightly lower than 13.58% and 18.33% respectively at end-2025.

Shares of Bank Islam were unchanged at RM2.11 at Wednesday’s midday break, giving the bank a market capitalisation of RM4.78 billion. The counter has fallen 7.5% year to date.