Business

Tuesday November 17, 2009

Local Islamic finance industry to grow further

BY DALJIT DHESI


PETALING JAYA: The domestic Islamic finance industry, which has enjoyed positive growth momentum over the past few years, is set to continue growing next year, driven by Bank Negara initiatives and a recovering economy.

According to the latest survey by The Banker, in collaboration with HSBC Amanah, Malaysia remains the largest Islamic finance player outside the Middle East, accounting for 10.5% of the total global Islamic finance market.

The issuance of two Islamic banking licences, which are being processed, is expected to boost competition in Islamic banking.

Yahya Ibrahim expects major contributions from the consumer segment

Despite rising competition for a larger slice of the Islamic banking cake, banks are generally upbeat about growth prospects going forward.

As of June, Alliance Islamic Bank Bhd’s profit had risen by more than 20% year-on-year and the bank is hopeful of continuing growth into next year, according to its chief executive officer Yahya Ibrahim.

Alliance Islamic is a subsidiary of Alliance Bank Malaysia Bhd. For 2010, he said, Alliance Islamic was expected to contribute at least 15% to Alliance Financial Group’s revenue.

Yahya expects major contributions from the consumer segment for the growth of its Islamic banking business.

Alliance Bank currently has 99 branches nationwide.

He said Alliance Islamic would leverage on existing conventional banking sales and distribution channels to market and promote its products and services.

This would enable the group to explore opportunities for strategic tie-ups to introduce new Islamic banking and financing products for sustainable long-term growth, Yahya said.

For example, it scored a first with Alliance Islamic Debit MasterCard, linked to the profit-bearing Alliance Hybrid Account with profit rates of up to 1.8%, one of the highest rates currently offered in the market.

Moving forward, Yahya said product innovation would be one of the key drivers of growth for Alliance Islamic.

In its first year of operation since April 2008, Alliance Islamic grew its financing assets by more than 15%.

OCBC Al-Amin Bank Bhd director and CEO Syed Abdull Aziz Syed Kechik said he expected the group’s Islamic banking business to grow, driven by a new product range.

He said the bank would make announcements on the new range of products in due course.

OCBC Bank started its Islamic window 14 years ago with only RM2.8mil in deposits and RM5.9mil in total assets at the end of its first year. As at December last year, its deposit base surged to RM2.7bil and total assets reached RM3.7bil.

Abdull Aziz said as part of the bank’s growth strategy, OCBC Al-Amin would increase its branch network from three now to five by year’s end.

  • E-mail this story
  • Print this story