Page 190 - Bank Muamalat_AR24

188 BANK MUAMALAT MALAYSIA BERHAD

DIRECTORS’ REPORT

BUSINESS REVIEW 2024 (CONT’D.)

The net income for the financial year ended 31 December 2024 decreased by 7.0% due to an increase in income attributable
to depositors, which has increased by RM262.5 million or 31.6% as compared to the previous corresponding financial year end,
consistent with other industry players due to high deposit market rate, which leads to high funding costs and compression in
margin. While allowance for impairment losses was higher by RM170.2 million mainly due to additional impairment incurred on
non-retail financing accounts.

Total operating expenses for the year recorded an increase of RM101.3 million or 20.5% to RM596.2 million. The increase was
due to higher personnel expenses by RM47.2 million attributable to an increase in cost related to the staff collective agreement,
staff medical expenses due to the inflation in the medical industry and increase in information technology expenses.

Finance Cost increased by 4.8% from RM82.2 million in the financial year ended 31 December 2023 to RM86.2 million recorded
in the financial year ended 31 December 2024 which was mainly contributed by the additional financing sold to Cagamas.

The Group’s total assets recorded a double digit annual growth of 11.8% for the financial year ended 31 December 2024, to stand
at RM43.7 billion, largely spurred by growth in financing.
Gross financing to customers grew by RM4.0 billion or 14.1 % to RM32.6 billion for the year under review mainly from the growth
in Retail segment, while customer deposits and investment accounts stood at RM36.7 billion, an increase of RM3.7 billion or
11.1 % as compared to the previous corresponding financial year end.

The Group continues to maintain its internal and minimum regulatory capital adequacy requirement, with the CET 1, Tier 1
and Total Capital Ratio standing at 11.04%, 12.41 % and 16.74% respectively.

PROSPECTS AND FORECAST
In 2024, the Malaysian economy demonstrated notable resilience and steady progress, building on its robust recovery
trajectory from previous years. Throughout the year, GDP growth averaged 5.1 %, an acceleration from 3.6% from the previous
year, bolstered by strong domestic consumption and a surge in both private and public investments. In certain quarters of
the year, both private and public investments saw strong growth, highlighting ongoing efforts by businesses and the government
to enhance future productivity through capacity expansion. These developments are expected to bolster the economy’s potential
in the near term.
In addition to strong real economy indicators, the Malaysian ringgit showed favorable performance in 2024, appreciating by
2.9% against the US dollar and earning recognition as the best-performing currency among emerging markets for the year.
Meanwhile, the FBMKLCI index rose by 13.0% in 2024 after three consecutive quarters of declines, reflecting renewed investor
confidence in Malaysia’s economic prospects, supported by the implementation of structural reforms designed to enhance
growth potential over the medium to long term.
Looking ahead to 2025, projections indicate that Malaysia is well-positioned to sustain its growth momentum. Following the
October tabling of Budget 2025, the government indicated its 2025 GDP growth forecast of 4.5% to 5.5%. On the supply side,
the services sector is expected to uphold its position as the main driver of growth, supported by a recovery in tourism, sustained
export demand, and the acceleration of !CT-related activities. On the demand side, growth will be buoyed by strong private
sector expenditure and stable global trade. In line with this, Bank Negara Malaysia (“BNM”) is expected to maintain an
accommodative monetary policy stance to support domestic demand while ensuring price stability. With inflationary pressures
remaining manageable and fiscal consolidation efforts continuing, a supportive policy environment will encourage business
investment and household spending, reinforcing economic resilience in the year ahead.
Premised on the above financial landscape, the Bank is expecting a better performance for 2025 and will continue to focus
on delivering sustainable shareholders’ return by growing its revenues through its strategic initiatives across its operations.
Concurrently, the Bank will selectively grow its financing book whilst continuing to defend its low-cost funding base. The Bank also
aims to enable Islamic banks for all through customer base diversification and continue to expand its digital propositions.