KUALA LUMPUR: BIMB Holdings Bhd (BIMB) will complete internal restructuring of its subsidiary Bank Islam Malaysia Bhd by end of August this year, prior listing the latter on the main board of Bursa Malaysia.
Chief executive officer Mohd Muazzam Mohamed said BIMB's restructuring via private placement of new shares to raise about RM795.5 million in gross proceeds would mainly be utilised to pay outstanding sukuk repayment between RM920 million and RM960 million.
"The bulk of the sukuk repayment will be sourced from the capital raising exercise and the remaining will be from internally generated fund.
"The sukuk settlement will reduce the group's finance cost of about RM55 million per year, and the sukuk redemption is expected in the second quarter (Q2) of 2021," he said at a media briefing here today.
Mohd Muazzam said warrant settlement amounting to RM162 million will be paid to over 427 million outstanding warrants, subsequently after the sukuk repayment.
The warrant settlement is slated to be paid in Q2, depending on the Kuala Lumpur High Court's sanction.
He said Bank Islam will then acquire existing subsidiaries namely BIMB Securities Holdings Bhd, BIMB Securities Sdn Bhd and Syarikat Al-Ijarah Sdn Bhd.
Upon completion of the restructuring exercise, Bank Islam will be a pure-play Islamic bank listed entity on the main board of Bursa Malaysia.
BIMB's new shares was oversubscribed by more than 1.7 times with demand from both existing shareholders and new investors.
Major shareholders are Lembaga Tabung Haji (TH), the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB).
BIMB had completed the placement with 222.22 million new shares issuances, representing about 12 per cent of its issued share capital at an issue price of RM3.58, about 9.4 per cent discount to BIMB's volume weighted average price of RM3.9521.
Mohd Muazzam said Bank Islam will then focus on reinforcing its financial standing and revenue, increase fee-based income activities, wealth management, wholesale banking and green financing.
"We hope to surpass RM100 billion asset size by 2025 through organic growth," he said.
Bank Islam is also the only Islamic bank in Malaysia that upholds social finance.
"We also want to reduce the bank's cost-to-income ratio from 53 per cent to less than 50 per cent in the next five years via automation, optimisation and cost management as well as enhancement in income.
"We expect to contain our current cost structure and uplift our revenue to achieve the desired target of cost-to-income ratio," he said.
Mohd Muazzam said the exercise will also allow Bank Islam to offer a compelling business proposition for sustainable banking while adopting new ways of doing business.
"Islamic banking has been mainstream in Malaysia. The challenges will not be too different from the conventional bank at this point in time.
"Islamic banking financing penetration rate is about 41 per cent of the Malaysian banking industry. But it is high in retail segment with more room for Islamic banking to grow in non-retail segment such as businesses and enterprises.
"We are hopeful for growth opportunity for Islamic Bank in new areas," he said, adding that Bank Islam would focus on its financing business to companies with higher environment, social and governance (ESG) standards.
"We want to focus on ESG segment financing and to be specialised in this area. We have sufficient credentials but we are not going for broad-based approach," he said.
This in turn would likely reduce credit risk in the longer term as businesses would be more sustainable.
"This can help us build and support businesses that uphold ESG standards," he said.
On the digital bank aspiration, he said Bank Islam would utilise this platform as a means to target new different customers locally and beyond, while offering new products and services via digital banking.
"We expect to launch digital bank within this year," Mohd Muazzam said.