Banking, Finance & Takaful

Islamic banking industry seeking additional growth drivers

Many challenges remain for the Islamic banking sector despite its strong growth in recent times, which includes Singapore as well. — AFP picMany challenges remain for the Islamic banking sector despite its strong growth in recent times, which includes Singapore as well. — AFP pic

Many challenges remain for the Islamic banking sector despite its strong growth in recent times, and the industry must push for better cross-border connections in order to sustain its momentum and make further headway into new global markets.

This is the consensus of many of the industry’s leaders who will gather this week in Singapore to discuss key issues during the fifth annual World Islamic Banking Conference: Asia Summit (WIBC Asia).

“We as an industry still face many challenges of a new kid on the block,” said Mr Badlisyah Abdul Ghani, chief executive of CIMB Islamic and one of WIBC Asia’s high-profile participants. “There is a need to build international linkages … to further accelerate its development as a public good that delivers true economic value.”

Agreeing, chief executive of the Islamic Bank of Asia Toby O’Connor said: “To cater to the evolving needs of end-users and to build new capabilities, it is essential for the Islamic finance industry to develop new financial products and services that support both mature and new markets.”

Despite these concerns, the latest WIBC Asia will come at a time when the industry is showing no sign of a slowdown. That momentum is particularly strong in Asia, Standard Chartered global head of Islamic banking Wasim Saifi told TODAY.

“In Malaysia, Islamic banking has already reached 25 per cent market share and is on track to hit 40 per cent; in Indonesia, while the share is still low at 5 per cent, the growth rate is more than twice the rate of conventional banking, and market share could reach 15 per cent in the next seven to eight years,” he said.

“Additionally, we continue to see progress in Brunei … and the Hong Kong government has taken initiatives to facilitate sukuk issuance.”

Against this bullish backdrop, the region’s established players such as Maybank have enjoyed strong returns from the business. In the quarter ended March, the Malaysian bank saw its Islamic banking income increase by 30.5 per cent to RM808.4 million (S$315.6 million), driven by a 53.9 per cent jump in fund-based income.

Said Mr Muzaffar Hisham, head of Maybank’s Islamic banking and another participant at WIBC Asia: “Despite uncertainty within the global financial markets over the last 12 months … the Islamic banking industry has seen yet another bumper year in terms of growth and resilience. However, in order to support and ensure sustainable growth within the non-natural markets internationally, there must be more emphasis on cohesion, consistency, transparency and international linkages via increased cross-border capital market transactions.”

Amid these dynamics, Singapore as a key Asian financial hub will also ride the growth of Islamic banking in the region.

“We believe there are substantial opportunities for Singapore, particularly in the area of Islamic wealth management,” Standard Chartered’s Mr Saifi said. “Fund managers in Singapore can create Syariah-compliant wealth products for distribution not only to clients in Asia but also in the Middle East.”

Source: The Malay Mail


0 comments on “Islamic banking industry seeking additional growth drivers

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: