CIMB Islamic to double assets by end-2009

By Jason Ng
CIMB Islamic Bank Bhd, the Islamic banking arm of CIMB Group Holdings Bhd, expects to double its total assets by this year-end from RM18.65 billion recorded at the end of 2008. Such a 'big growth' is not new, as CIMB Islamic's assets have grown 87% in 2007 and 107.5% in 2008, according to its CEO Badlisyah Abdul Ghani, anticipating the same rate by the end of this year as the division grew locally and internationally.
"We expect the same pace this year as the momentum focus now, thanks to the problems within conventional banking, resulting in the demand for Islamic banking facilities," he told The Malaysian Reserve in an interview recently.
The Islamic finance industry which is estimated to be worth more than US$1 trillion (RM3.41 trillion) is presently mainly dominated by the issuance of sukuk, or Islamic bonds.
CIMB Islamic is the world's top arranger presently commanding one-fifth of the market share in terms of the issuance amount. CIMB Islamic anticipates that it would surpass the US$2.6 billion worth of deals arranged in 2008 by this year end.
"(We have) several more exciting deals in the pipeline (to be concluded) before the year's end," Badlisyah said.
He declined to name the clients CIMB Islamic is talking to. CIMB Islamic has already secured 62 deals worth US$2.3 billion as of August 2009, according to the Bloomberg Global Sukuk Lead Manager League Table.
With Islamic law forbidding elements of interest (riba) paid by conventional bonds, sukuk are asset-based securities generating profit to be distributed to investors.
The industry itself is expected to grow at a double digit rate globally and plough through without a slowdown, Badlisyah said, as new interest from new jurisdictions vying for a share of the Islamic finance would propel the industry ahead. On the local front, government incentives in the form of a 20% stamp duty exemption from all Islamic transactions pushed consumers to demand for Islamic finance spur r ing new growth, Badlisyah said.
"Since every player in the market is spending money on marketing material, consumers are bombarded by marketing material, creating an awareness for Islamic finance within the market over the last few years. "The cumulative effect from the marketing exercise from the last two years is creating an impact now for the growth of CIMB Islamic's business," he said.


(This story appeared in The Malaysian Reserve on Nov 2, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)