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Our Performance Sustainability Statement Governance Our Numbers Other Information

OThEr STATuTOry INFOrMATION (CONT’D.)
(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve (12)
months after the end of the financial year which will or may affect the ability of the Group or of the Bank to meet their
obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial
period and the date of this report which is likely to affect substantially the results of the operations of the Group and of
the Bank for the financial year in which this report is made.

COMPLIANCE wITh BANk NEGArA MALAySIA’S GuIDELINES ON FINANCIAL rEPOrTING
In the preparation of the financial statements, the directors have taken reasonable steps to ensure that the preparation of the financial
statements of the Group and of the Bank are in compliance with the Bank Negara Malaysia’s Guidelines on Financial Reporting for
Islamic Financial Institutions and the Guidelines on Classification and Impairment Provisions for Financing.

BuSINESS rEvIEw 2020
The Group recorded a profit before zakat and taxation of RM174.8 million for the financial year ended 31 December 2020, from
RM140.3 million in the previous 9-month period ended December 2019. Period-on-period comparison for the twelve (12) months’
result, showed a decline of 23.7% from a profit before tax of RM229.0 million registered in the previous corresponding period ended
31 December 2019 (the Group changed its year-end from March to December in FY2019). The lower profit before zakat and taxation
registered in financial year ended 31 December 2020 was mainly the impact from modification loss incurred by the Bank arising
from the financing payment moratorium, higher pre-emptive allowance for impairment on financing and impact of cuts in overnight
policy rate on revenue margin.

Nevertheless, the Group has registered growth in total assets, which has expanded by 13.2% to RM25.8 billion, as compared against
RM22.8 billion in the previous financial period. This was largely contributed by the RM2.3 billion increase in the financing to
customers, mainly from the consumer banking section. The Group has continued to improve its asset quality with a Gross Impaired
Financing positioned at 1.07% as at 31 December 2020 as compared to 1.31% registered as at 31 December 2019.
Regarding capital position, the Group’s Common Equity Tier-1 Ratio and Total Capital Ratio remain stable, closing at 15.49% and
17.96%, respectively; well above regulatory requirements.

PrOSPECTS

Overall, the World Bank expects the global economy to contract by 4.3% in 2020 (World Bank’s Global Economic Prospect report
released in January 2021). In line with this forecast, Malaysia’s Gross Domestic Product (GDP) shrank by 5.6% in 2020, as indicated in
the Bank Negara Malaysia (“BNM”) Quarterly Report (Q4 2020).
Notwithstanding internal and external headwinds, the Malaysian financial sector is expected to remain sound and supportive of
the domestic economy in 2021. The overall banking system’s capitalisation level remains strong and robust. The Ministry of Finance
(MOF) in its Economic Outlook 2021 report, forecast Malaysia’s GDP is to grow in the range of 6.5% to 7.5%. The projection not only
reflects the low base effects but also an ongoing normalisation in economic activity, expected to be supported by an expansionary
government spending totalling an estimated 21% of the GDP. The availability of vaccines by end of February 2021 is deemed positive
and an upside risk to the 2021 GDP forecast.