Monday, August 24, 2009

Industry players are upbeat: The Star

THE Islamic financial industry in Malaysia has bloomed over the years and with 17 stand-alone Islamic banks, the country is poised to become one of the biggest Islamic financial hubs in the world. The sector is also expected to see further stimulus following the liberalisation of the financial sector, which allows for an increase in foreign equity ownership of up to 70% in Islamic banks, investment banks and insurance companies, reports The Star (Aug 8, 2009).
According to the Association of Islamic Banking Institutions Malaysia, the country’s Islamic financial system started from the establishment of the Malaysian Pilgrims Fund Board (Tabung Haji) to the setting up of the country’s first Islamic bank, Bank Islam Malaysia Bhd, which commenced business in 1983.
The report quoted Maybank Islamic Bhd executive vice-president and acting chief executive officer Ibrahim Hassan as saying Islamic financing assets grew at a compounded annual growth rate (CAGR) of 15% between 2004 to 2008 compared to conventional banking loans and advances, which grew at a CAGR of 10% during the same period.
“Going forward, most banking analysts are optimistic over the positive outlook and growth prospects of the Islamic banking industry in the medium-term.
“Bank Negara anticipates syariah-compliant assets will continue their double-digit growth momentum in line with continuing efforts and promotions to make Malaysia the world’s leading international Islamic financial centre,” he said.
Maybank Islamic’s total financing stood at RM23.4bil last year compared with RM21.7bil in 2007, while total Islamic deposits stood at RM18.8bil in 2008 compared with RM16.8bil in 2007.
Another comment came from HSBC Amanah Malaysia Bhd executive director and CEO Musa Abdul Malek. He said Islamic finance growth remained on an uptrend as Bank Negara continued to focus on providing conducive regulatory framework to accommodate the growth and development of the industry.
“This includes human capital development to position Malaysia as an international Islamic financial hub coupled with the industry players’ active participation by introducing innovative products and upgrading their service platform. Currently, Islamic finance represents about 17% of the whole banking industry compared to 6% in 2000,” he said.
The ringgit sukuk market for corporate bonds, according to Musa, accounted for over 68% of all corporate bonds issued in the Malaysian market last year.
OCBC Al-Amin Bank Bhd is in the process of enhancing further its Shariah-compliant assets building capacity and investment banking in Malaysia, its director and chief executive officer Syed Abdull Aziz Syed Kechik told the newspaper, adding that the bank was poised for further growth based on the potential of the Islamic capital market going forward.
“We hope to close several sukuk issues by year-end. We’re also exploring initiatives to expand the sukuk issuer base to the regional market,” Syed Abdull Aziz said.
OCBC Al-Amin, which started operations on Dec 1, 2008, has a total asset size of RM3.7bil.Its customer deposits and outstanding financing stood at RM2.7bil and RM2.2bil respectively as at Dec 31, 2008.

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