Transcript The Beginning - 5R Strategic Consultancy Sdn Bhd

The 1st Asean Regulators/Senior Government Officials Of CoOperatives’ Meeting
Bank Rakyat:
The Success Stories
5th July 2012
Presentation by:
Tuan Hj. Mustafha Abd Razak
General Manager Finance
Bank Secretary
Bank Rakyat:
The Success Stories
1954
1960
28 September 1954
The establishment through
Cooperative Ordinance 1948
The Beginning
1970
1980
1990
2000
1960
• Name changed to Bank Kerjasama Malaysia Berhad.
• 1967 - Change in Undang-Undang Kecil Bank Rakyat
Bank Agong (Apex Bank)
established
allow creation of subsidiary company.
• Business Model: Cooperative
Movement
• Core Product: Agriculture based
financing (financing to poor farmers)
• Customer Segment: members only
– Cooperatives & Individuals
Bank Rakyat:
The Success Stories
1954
1960
1971
Registrar of Corporative.
• Gained approval for equity
participation in private
corporation.
o Use own capital.
o Initiated by government
under Tun Abdul Razak.
1972
• JV with Chase Manhattan.
 Involved in financing
agriculture projects,
trading and industrial
The Year of Diversifications
1970
1980
1990
2000
1973
• Changed name to Bank
Kerjasama Rakyat Malaysia
Berhad ( Bank Rakyat).
• The new name inspired by
Tun Abdul Razak.
• Rakyat Corp Sdn Bhd
established (with paid-up
capital of RM5 mil).
Under New
Economic
Policy (NEP)
Project launched:
o Teruntum Complex, Kuantan
Pahang (RM30 mil).
o Mix housing development, Alor
Star
o Tanjung Kling Hotel (RM10 mil).
o 10-story building, including
shopping complex and office
tower in Kuala Lumpur.
• Business Model: Cooperative
Movement
• Core Product: Credit facility,
financing businesses and
manufacturing activities.
• Customer Segment: members
only – Cooperatives &
Individuals
Bank Rakyat:
The Success Stories
1954
1960
The Year of Diversifications
1970
1980
1990
2000
1974
Bank Rakyat involved in equity participation:
i. United Manufacturers
ii. Holiday Inn
iii.General Ceramic
iv.Ladang Dunlop
v. First National City Bank (US)
Bank Rakyat First National City Bank
(55%)
(45%)
Business Model:
• Financing facility to business
sector.
Rakyat First
Merchant
Bankers
Berhad
After two (2) years of
operation the company
recorded net profit of
RM204,376
• Provide capital for development
project in Malaysia under the
New Economic Policy
(NEP)
Bank Rakyat:
The Success Stories
1954
1975
1960
Rationalisations by The Government
1970
1980
1990
2000
Bank Rakyat became insolvent due several factors such as:
i. No transparency in management
ii. No compliance in guidelines
iii. Lack of competency and expertise
iv. Management imprudence
Total loss in 1977: RM34.6 mil
Government initiatives
Bank Kerjasama Rakyat Malaysia Berhad
Act 1978 (Special Provision 202).
-Tabled in the parliament.
-placed under the purview of the ministry
that responsible for cooperative
movement- The Office of The Director of
Co-operation
•The Government provided a loan of RM155
million.
•The Government guaranteed deposits and
members contribution
Major Effects to Bank Rakyat:
•Tighten control of the bank – appointment of the
BOD, credit issuance & dividend payment.
•Restore customer and members confident.
Bank Rakyat:
The Success Stories
1954
1960
1970
The Turning Point
1980
1990
2000
1983
New Managing Director (MD) appointed: Dato’ Anuar Jaafar
Immediate Action Plan taken
Net Profit (RM’000)
• Cash flow monitored closely.
18,520
• Management re-structured.
13,170
5,855
• Customer retention (especially corporate
depositors).
• Introduced financing to government servant.
Immediate
impact
• Sold of unproductive assets.
• Prepared 5-years Corporate Plan.
(31,188)
1984
1981
1982
1983
1984
• 5-years Corporate Plan introduced and approved in the general meeting
•The Bank received continued support from the Government with deposits from
statutory bodies.
Bank Rakyat:
The Success Stories
1954
1960
1970
Prosperity Shared
1980
1990
1990
Bank Rakyat was fully
2000
Dividend
recovered
and be able to pay dividend to its
20%
members
20%
20%
20%
i. Payment of dividend to members –
22% (1978 to 1988, 2% dividend
declared every year)
ii. 10% cash dividend paid in 1989
10%
10%
10%
10%
10%
10%
10% 10%
5%
1990 and 1991
Bank Rakyat declared highest
dividend in history:
i. 20 % bonus share and 10% cash
dividend.
1989
1990
1991
1992
Cash
1993
Share
1994
1995
Bank Rakyat:
The Success Stories
1954
1960
1993
• Business Model: Retail
Cooperative Bank offering
shariah compliance products
and services
Bold Strategy
1970
1980
1990
Embarked on Islamic banking:
i. On 5th May 1993, Islamic banking operation
launched.
ii.Ar-Rahnu scheme introduced in 27th October 1993
• Core Products:
• Saving Account
• Investment Accounts
• House Financing
• Personal Financing
• Pawn Broking (Ar-Rahnu)
• Customer Segment:
members & non-members
2000
Financial performance 1989 to 1993
Bank Rakyat:
The Success Stories
1954
1960
1970
Bold Strategy
1980
1990
2000
Financial performance 1989 to 1993
CAGR
15.4%
Bank Rakyat:
The Success Stories
1954
1960
1970
Bold Strategy
1980
1990
2000
1994 - 1999
Profit above RM100 mil, history created:
i. In 1994, profit recorded RM113.9 mil, with the
assets stood at RM3 billion.
ii.1997 – became the second full fledged
Islamic Bank in Malaysia
• Business Model: Cooperative
Bank offering shariah compliance
products and services
• Core Products:
Market expansion:
• Saving Account
i. Market coverage expanded to Sabah and
• Investment Accounts
Sarawak
ii.56 branches nationwide
• House Financing
• Personal Financing
• Pawn Broking (Ar-Rahnu)
iii.54 units of ATM services offered at branches
• Customer Segment: members &
non-members
Bank Rakyat:
The Success Stories
1954
1960
Strengthening Corporate Governance
1970
1980
1990
2000
2002
• The Bank was placed under the supervision of
Development Financial Institutions Act
2002.
• Advantages to Bank Rakyat such as:
i. Better strength, further grow bank’s portfolio
ii. More government agencies placed deposit with
Bank Rakyat.
iii. In line with deposits growth, it gave
Development &
Financial
Institution Act
2002
opportunity for the Bank to achieve higher
financing growth.
iv.Better governance.
By Law
Bank Rakyat:
The Success Stories
1954
1960
1970
RM 1 billion Mark Achieved
1980
1990
2000
2008
Profit above RM1 bil, another
history recorded:
i. In 2008, profit recorded RM1.23
billion, with assets stood at
RM41.27 billion.
Market expansion:
2010
2009
> RM 1 bil
profit
2008
i. Market coverage expanded to
Sabah and Sarawak
ii.56 branches nationwide
iii.54 units of ATM services offered
at branches
2007
2006
RM Mil
0
500
1,000
1,500
2,000
Bank Rakyat:
The Success Stories
1954
1960
Income Diversifications Through ICT
1970
1980
2003 - 2011
Among products and services offered:
i. Introduction of Internet banking to smooth the Bank’s
services (i-rakyat)
ii. Offered remittance services to ease customers send/
transfer money internationally
iii.Introduced phone banking services for customers
pleasure
iv.Officially launched Bank Rakyat Credit Card as to
support the financing growth
v. Tabung Haji services
vi.Debit card offered by the Bank to suit customer
demand
vii.Co-op card launched in line with government agenda
to support cooperatives movement
1990
2000
Bank Rakyat:
The Success Stories
1954
1960
Awards & Accolades
1970
1980
1990
2000
ICA
Development
Global
Top 500 Islamic
Financial
Institutions (by
assets size)
Top 1000 World
Banks (TIER-1
Capital Ratio)
Global Islamic
Largest Banks
(by profits)
Malaysia
100 Largest
Cooperatives
AA2 rating by
RAM Ratings
Services
Bank Rakyat:
The Success Stories
• To
Conclusions
be successful, Bank Rakyat believes in practising and maintaining a high standard of :
i.
Transparency
ii.
Accountability
iii.
Integrity and
iv.
Adopt best practices
• To sustain the success, Bank Rakyat must
i.
Stay innovative.
ii.
Adapt to change.
iii.
Always looking for new business areas or opportunities.
iv.
Always response to market
• Having great
needs.
staff and management capabilities allows Bank Rakyat to stay ahead in the
industry.
• Initiatives
and supports by the government plays an important role to Bank
Rakyat success story.
Thank You