Monday, May 4, 2009

HSBC Amanah expects flat growth: BT

HSBC Amanah Malaysia Bhd, the local Islamic banking arm of Europe's biggest bank, expects flat to marginal growth in its business this year as a result of the global economic downturn.
"I don't think we'll shrink. It'll be flat growth or better, helped by new products, although it may not be fantastic. The business is new anyway, so the comparative figures are not big," its new chief executive officer Musa Abdul Malek told Business Times (May 5, 2009) in an interview in Kuala Lumpur.
Although HSBC started Shariah banking here through a window in 1994, the standalone Islamic banking unit only started last August after receiving a licence from Bank Negara Malaysia, the report said.
The report goes on:
The unit earned RM22.7 million in the 10 months to December 31 2008, from February 26 when it was incorporated.
Islamic banking asset makes up about 12 per cent of HSBC Bank Malaysia's total asset.
Malaysia has yet to see the worst environment despite the global financial meltdown and amid the sharp recessions already faced by other open economies in the region, Musa said.
"Our worry is how long this (slowdown) will persist. The concern is that more consumers may be affected," he said. About 65 per cent of its assets now are from corporate loans, mostly trade financing.
Nevertheless, HSBC Amanah has taken steps to ensure the quality of its assets remains strong.
"It's not time to say no to business, but we prefer to assist the old customers first. We'll look at good business and make sure we only book good quality assets," he said.
The sukuk, or Islamic bond market, is "very challenging" now due to the extremely widened mismatch of expectation between investors and issuers, he said.
"At this juncture, borrowers tend to like temporary bilateral arrangements. There are a lot of bridging loans coming up for periods ranging from six months to a year, depending on their view on how soon the market will return," he added.
Musa believes that despite the increasing debate of its merit, syariah banking will remain a niche industry from a global perspective, unless there are more Islamic financial centres emerging in the world.
A business graduate from the US, Musa joined HSBC 30 years ago and has covered areas like branch management, corporate relationship and debt origination in Hong Kong in his long career with the bank. He took helm of HSBC Amanah last November.
Musa said the unit is in the process of reviewing the number of "touchpoints" it needs to reach its customers.
This includes standalone branches and offsite automated teller machines (ATMs).
HSBC Amanah has two standalone branches now. Plans are afoot to add two to three more this year, including one in the Klang Valley. It may also apply to have offsite ATMs.
It will also continue to ride on the 40 conventional bank branches to service its Islamic customers.

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