Harimau Capital

NEW FOCUS: Bank wants to see increased cross-border transactions, especially in wholesale banking

MAYBANK Islamic Bhd (MIB), already the region’s largest Islamic bank by asset size, is pursuing an aggressive stance to further strengthen its pres-ence in Indonesia and Singapore.

Chief executive officer Muzaffar Hisham said after giving priority to its domestic operations in the last few years, MIB will be focusing more on growing its regional business this year.

“We want to deep-dive into key markets especially Indonesia and Singapore,” he said in an interview with Business Times, adding that Maybank group’s acquisition of Singapore’s bro-kerage firm Kim Eng has opened opportunities for MIB too.

Muzaffar said MIB wants to see increased cross-border transactions going forward especially in its wholesale banking and both Singa-pore and Indonesia are the markets with the most prospect.
Last year, its wholesale banking business in Singapore was somewhat affected by the euro-zone and the US debt crises as MIB took a cau-tionary stance but “this year we hope to pick it up”.

Indonesia also offers tremendous growth potential in the retail banking as currently only 2 per cent of the country’s total banking assets are Islamic.

“There is huge potential for us there and we want to take a look at the kind of products and services that we can tap into,” he said, adding that MIB projects at least a 25 to 30 per cent growth a year for Indonesian Islamic banking industry in the next five years.

Currently, 95 per cent of MIB’s business is in Malaysia, while the rest comes from some cross-border transactions in Indonesia, Singa-pore, Bahrain, Saudi Arabia and the UK.

MIB, as at December 31 2011, has an asset size of RM74.01 billion and the bank, which made a gross profit of RM516 million for the July-December period last year, aims to hit the RM1 billion-mark in the current financial year ending December 31 2012.

Muzaffar said the growth areas this year would come from all sectors which MIB is already a leading market player like auto finance, mortgages, credit cards and deposits.

Looking at the state of world economy and rising oil prices, he is cautiously optimistic of the RM1 billion pre-tax profit target.

“However, the first three months of this year, we seemed to be on track and domestically, with the various steps taken by the authorities, we are quite confident that the market can be sustained,” he said.

Muzaffar added that MIB has been performing well over the past few years and is confident that it is on track of achieving Maybank group’s target of one-third Islamic financing contribution to the group’s total domestic loans and advances by 2015.

For the 2011 second half period, MIB saw sustained financing growth of 10 per cent with total financing at RM52.4 billion. Deposits grew to RM58.7 billion whilenet impaired financing stood at 1.03 per cent from 1.90 per cent in December 2010.

Last year, MIB contributed 28.5 per cent of the total domestic loans to the Maybank group from 26 per cent in 2010.

Published: 2012/03/14
Read more: Business Times