CIMB Islamic sees more deals to be secured

The reviving sukuk market augurs well for Islamic banks involved in the debt capital market as more issuances are expected in the second half of the year. With sukuk market conditions improving better and faster in the international market than the conventional bond market, CIMB Islamic, a leading player in the global sukuk market sees more deals to be secured and done in the second half of this year.

Its CEO Badlisyah Abdul Ghani is confident as the bank has managed to secure deals even at the height of the recent sovereign credit crisis.

"The global financial crisis did not directly affect our businesses and has insignificant impact on activities in our domestic markets. Our global businesses were affected a little bit but we managed accordingly based on the situation. In fact, we successfully closed a sovereign sukuk deal for the Government of Malaysia at the height of the crisis," he said.

Despite the slowdown in the first part of the year, CIMB Islamic has to date done 37 sukuk issuances in the Malaysian market alone.

"We are comfortable with how the market is now. We expect more deals coming in the second half. We are confident that we will do well in the sukuk market as we have done in the past.

"In some years, we did less number of deals but bigger ticket size per deal, and in some years, we did more deals but smaller ticket size. So long as we maintain our leadership position in the market, we are quite happy," he told The Malaysian Reserve in an interview.

In sync with the bank's aspiration to become the world's valued global Islamic bank, CIMB Islamic is now enhancing its Islamic consumer banking value proposition not just in Malaysia but also in all markets that CIMB Group has a presence.

"Currently, CIMB is the fastest growing Islamic bank with assets growing at an average growth rate of 100% per annum. Our focus in building our infrastructure to better serve our customers has made us the biggest Islamic bank in the world by branch network with more than 800 branches across South-East Asia.

"Although our competitors have been in the market for far longer, since we started in 2003, we have grown from a very, very small player to become the second largest Islamic consumer bank in Malaysia and the biggest Islamic investment bank in the world,"he said. For the first quarter of this year, he said CIMB Islamic has secured the top position for Islamic financing for nonresidential property and is ranked at No 2 for Islamic financing for residential property.

"We believe our growth is attributable to our principle of meeting our customers' need with the best Shariahcompliant products and services and our intention of course is to be better at what we do in meeting the demands of customers in t he ma rke t s t h at we serve," he said.

Now that Malaysia business is fairly developed, he sees the bank expanding and entrenching itself as a leading Islamic bank across all market segments in South- East Asia in the next five years. This is in line with the overall CIMB Group's vision to be the most valued universal bank in the South-East Asia. In contributing towards this vision, CIMB Islamic has charted a five-year strategy for its overseas expansion so that it could edge its competitors and capture market shares in the markets where CIMB Group has presence.

For the immediate term, the bank wants to focus building up the business in South-East Asia, predominantly in Indonesia and Singapore.

Badlisyah said: "We are focusing in South-East Asia at this moment and although CIMB group has established a joint venture in Bahrain where we are also doing Islamic investment banking activities, the business there is mostly to bridge Middle East investor's foray into South-East Asia."

The Islamic banking group is aiming for a higher contribution from the bank's operations to the group's revenue for the current financial year from the 10% recorded in 2009. However, he said the CIMB group is also growing very fast and hence, the contribution rate from CIMB Islamic may remain at the same level in the short term. As far as revenue contribution by Islamic banking businesses outside of Malaysia is concerned, he said it is still insignificant and will continue to be so due to the relative newness and smallish size of the business.

(This story, written by By Dalila Abu Bakar, appeared in The Malaysian Reserve on June 28, 2010. 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)