Malaysia

Banks' lending activity remains robust

According to CIMB Group Holdings group CEO Tengku Datuk Seri Zafrul Aziz, banks are doing as much as they can to balance lending to customers with responsible financing. He said commercial banks would want to grow their loans to maximise returns, but that must always be balanced against the banks’ risk metrics. To promote financial inclusivity, CIMB Bank Bhd and CIMB Islamic Bank Bhd have set aside at least RM12bil for the B40 group to access to facilities such as home, automotive, Amanah Saham Bumiputra and personal financing from 2019 to 2020. CIMB Bank and CIMB Islamic’s are assisting the B40 segment via the lowest-in-market financing rate of 2.9% per annum, under Bank Negara’s RM1bil Fund for Affordable Homes, to help those in the B40 group buy their first residential property. Based on data from Bank Negara, the industry’s loan growth rebounded slightly to 4.6% year-on-year in May from 4.5% in April, ending a five-month downtrend.

#Malaysia’s Islamic fund manager BIMB signs UNPRI to incorporate ESG into investments

Malaysian Islamic fund manager BIMB Investment has become an official signatory of the United Nations-supported Principles for Responsible Investment (UNPRI). BIMB Investment is the only bank-backed Islamic asset manager in Malaysia to be a UNPRI signatory. The UNPRI group works to understand the investment implications of environmental, social and governance (ESG) factors and supports its network in incorporating these factors into their decisions. BIMB Investment CEO Najmuddin Mohd Lutfi said that the company has integrated more than 250 ESG metrics in its investment process since 2015. The company currently manages over 1 billion Malaysian ringgit of ESG assets. At the moment there are around 2,300 signatories to the UNPRI. Other signatories from Malaysia include Xeraya Capital, Navis Capital Partners, the national retirement fund KWAP, sovereign wealth fund Khazanah, and Corston-Smith Asset Management.

Virtual banks can attract more millennials to Islamic banks

According to Professor Datuk Dr Azmi Omar, President of the International Centre for Education in Islamic Finance (INCEIF), it is necessary to address millennials, as they constitute a significant proportion of the Malaysian population. Therefore, Islamic banks must be smart enough, in either that they create another subsidiary, a virtual bank, or roll out more of their services in terms of virtual applications. He added that virtual Islamic banks will attract millennials, but not everyone will go for digital banking. It is an alternative. In March this year, BNM governor Datuk Nor Shamsiah Yunus said the central bank had had some preliminary discussions with a few banks, with virtual banks overseas. In its report on Islamic Banking Moody's noted that Malaysia planned to issue new virtual banking licenses by end-2019. This could increase competition for deposits, especially among Islamic banks with weaker deposit franchises.

#Malaysia’s MIDF, Al Rajhi Bank #merger hangs in balance

The planned merger of Malaysian Industrial Development Finance (MIDF) and Al Rajhi Banking and Investment Corp (Al Rajhi Malaysia) is now uncertain as the shareholders have missed the June 27 deadline. The shareholders of the two companies have sent a request to Bank Negara Malaysia (BNM) seeking more time to further negotiate the merger plan. In March 2019, BNM had already granted three months’ additional time for the proposed merger. Al Rajhi Bank is likely to stay on as a shareholder in the proposed merged entity while PNB would remain its largest shareholder. After the completion of this merger process, MIDF is expected to become an Islamic bank. The merger plan, if it succeeds, would lead to a financial services entity with a combined asset value of MYR 14.09 billion.

Islamic banking industry continues to offer financing to eligible Malaysians: Aibim

The Association of Islamic Banking and Financial Institutions Malaysia (Aibim) has ensured that its member banks will continue to provide access for Islamic finance banking products. Aibim’s president Datuk Adissadikin Ali assured that customers who are eligible will not be deprived from access to financing. He added that customers should also recognise the need to make sound decisions based on their own affordability and in line with their financial conditions. Last year, Islamic banks approved a total of RM37.7 billion, representing 36.7% from the total financing for the purchase of residential properties. They also approved RM12.4 billion of personal financing and supported RM1 billion funding for the small and medium enterprises (SMEs).

HSBC #Malaysia launches ESG Islamic structured product

HSBC has launched its first environmental, social and governance (ESG) Islamic structured product in Malaysia. The product offered by HSBC Amanah provides customers the opportunity to invest in a product that matches their values when it comes to environmental and social causes. It pays fixed coupon of 3.90% per annum (three years tenor) and 4.50% per annum (four years tenor) in the first two years of the investment. Payout at the end of third and fourth year is subject to Hang Seng Corporate Sustainability Index performance. Hang Seng Corporate Sustainability Index tracks the performances of Hong Kong listed companies that excel in corporate sustainability. The CEO of HSBC Amanah Malaysia Arsalaan Ahmed said the introduction of the ESG Islamic Structured Product clearly demonstrates HSBC’s pioneering strength in Islamic finance, particularly with regard to product innovation.

Maybank Islamic wants to link up Gulf Cooperation Council with Asean

Maybank Islamic wants to be the bridge for the Islamic banking sector between the Gulf Cooperation Council (GCC) and the ASEAN region. CEO Datuk Mohamed Rafique Merican expressed confidence that the company would be able to play the role in facilitating the trade, as well as flow of funds for financial activities between the two regions. Last year, MIB announced that it might receive regulatory approvals to set up its Dubai branch in the first half of 2019. Maybank Islamic has strong footprints in Islamic finance, particularly in Malaysia, Indonesia and Singapore. Being the largest Islamic bank in Malaysia, Maybank Islamic has about RM225 billion worth of assets as at Dec 31, 2018 (FY18). Its total gross financing for FY18 advanced 8.1% year-on-year to RM176.8 billion and its Islamic financing contributed 58.7% to the group's total financing.

Ethis Group Comments on Receipt of Islamic Equity #Crowdfunding License in #Malaysia

The Securities Commission Malaysia revealed updated regulations as well as the approval of 8 new "Regulated Market Operators" serving the investment crowdfunding market. Best known for its impact investing in Indonesia, Ethis Ventures launched last year its Global Sadaqah platform and expects to launch its new Ethis Equity platform in Malaysia in Q1 2020. Ethis Group Chief Investment Advisor Maritz Mansor said they are very excited to have this chance to open up a new asset class to all levels and types of investors. Umar Munshi, Managing Director of Ethis Ventures, said SMEs and startups in Malaysia had few avenues for raising funds. He added that the Shariah-compliant alternative was missing and Ethis Equity aims to fill the gap. In Ethis Equity the minimum investment will be low which means that ordinary people can invest alongside professional investors.

Najib's SRC trial: Interesting use of Islamic banking facilities, inter-posed charitable trusts to break-up cash flows into discrete unconnected packages -evidence can prove problematic for ANZ's Shayne Elliot

Two diagrams published by the Malay Mail illustrate the cash flows relied on by the prosecution to prove the charges against Najib Razak. The diagrams reveal the use of Islamic banking facilities and inter-posed charitable trusts to break-up what can appear to be simple linear flows into discrete seemingly independent packages. These arrangements create problems for many, but especially the ANZ Banking Group whose management oversaw these transactions. ANZ CEO Shayne Elliot continues to distance himself from the problem, claiming that he was not a member of the AMBank board of directors when these transactions were executed, but in fact he was.

At fintech meet, Guan Eng says only Pakatan provides the tolerance needed for innovation to thrive

Malaysia's Finance Minister Lim Guan Eng said the country finally gained the tolerance element needed for digital innovation when Pakatan Harapan (PH) became the federal government. In his speech at the Securities Commission Fintech Roundtable 2019 the minister also cited a 2018 World Bank report that described Malaysia as having produced some of Southeast Asia’s most successful digital startups. He added that the government had also committed RM50 million towards a co-investment fund for ECF and P2P investments. ECF and P2P are two relatively recent developments in Malaysia that have opened up additional avenues of funding for microbusinesses and startups that may not yet qualify for traditional loans from commercial banks.

Alliance Islamic Bank launches social #crowdfunding platform

Alliance Islamic Bank launched its first social crowdfunding platform to create greater socioeconomic impact for the financially disadvantaged. The new platform is named SocioBiz and targets individuals seeking to raise funds to start or expand a business or learn a new life skill to earn a living. Alliance Islamic Bank had signed a memorandum of collaboration with Islamic fintech venture builder, Ethis Ventures Malaysia, and beneficiary partners, Yayasan Kebajikan Negara, Yayasan Noor al-Syakur and Pertubuhan Kebajikan Islam Malaysia. SocioBiz targets to identify and promote at least two recipients each month on the platform. So far SocioBiz has rolled out six campaigns and raised over RM23,000 through its platform.

Malaysia leads global sukuk issuance

Malaysia continued to maintain the leadership as the largest issuer of sukuk globally with a total of US$13.9 billion in the first three months of 2019. This means a market share of 35.2% from the overall issuance of US$39.5 billion during the period. This also represented an increase of 54.4% compared with US$9 billion that Malaysia issued in the first quarter of 2018.

SC sees good year ahead for #sukuk

Malaysia could see more Islamic capital market funds raised this year as sukuk activity has picked up in the first quarter of 2019. According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, sukuk issuances are picking up over last year’s level. The government recently announced the revival of the East Coast Rail Link and the Bandar Malaysia projects, brightening investor sentiment which has been dampened lately. According to SC data, Malaysia’s Islamic capital market was valued at RM1.88 trillion or 61% of the nation’s overall capital market as at end-2018, down from RM1.9 trillion the year prior. Malaysia is the world’s largest sukuk issuer, having accounted for 51.6% of global outstanding sukuk as at endJune 2018.

Islamic finance has prominent role in financial #inclusion, says SC chairman

According to Securities Commission Malaysia chairman Datuk Syed Zaid Albar, Islamic finance has a prominent role in helping to address unmet needs of the world's Muslim population. He delivered a keynote speech at the SC-World Bank- IOSCO Asia Pacific Hub Conference 2019 and he underlined that Shariah-based financial contracts could be utilised for financial inclusion. World Bank Group representative to Malaysia and country manager, Dr Firas Raad, said Islamic finance could play a role in addressing the high levels of poverty in Organisation of Islamic Cooperation (OIC) countries. Meanwhile, touching on the Malaysian bond, ringgit and equity markets, he said the country's economy has strong fundamentals that could cope with any economic shock that might come its way.

Bank Islam continues to focus on affordable housing segment

Bank Islam Malaysia expects its home financing business model will continue to help the bank to grow and boost its assets. Malaysia’s oldest Islamic lender has been growing organically over the years, despite the crowded market. Bank Islam CEO Mohd Muazzam Mohamed said the bank is already adopting the right model to support this affordable segment. He added that the Islamic bank will continue with its current business model which is in line with the governments’ directive. Bank Islam has already allocated RM300 million to be utilised until 2021 as part of its digitalisation directive. Mohd Muazzam said the bank aims to increase its financing for small and medium enterprises (SMEs) by RM200 million in 2019. The bank also plans to increase its investment fund to RM800 million under its Al-Awfar product, which has been refreshed since its establishment in 2009.

PM: Islamic banking players must invest in technologies

Malaysian Prime Minister Tun Dr Mahathir Mohamad said Islamic banking and finance players must be intensely invested in technologies. He said the application of smart technology has positively disrupted the industry, however, the potential disruptions to traditional Islamic finance should not be underestimated. The disruptions can swing both ways. Dr Mahathir delivered his speech at the 15th Kuala Lumpur Islamic Finance Forum 2019. He said that Malaysia had spearheaded a number of innovative developments in Islamic finance, such as the issuance of the first Sustainable and Responsible Investment Sukuk and Green Sukuk, as well as the launch of the Investment Account Platform. He believes that Islamic finance can be a catalyst for the growth of green developments globally.

BIMB sets aside RM300m for digital roadmap

BIMB Holdings, the parent company of Bank Islam Malaysia, has allocated RM300 million for investment under its three-year (2018-2020) digital roadmap. Bank Islam CEO Mohd Muazzam Mohamed said digital investment was the group's future focus and it already had a few products in the pipeline. He added that the bank's digital journey includes improving customer service touch points and business efficiency through upgrading back-end processes. Mohamed also said the bank currently had 500,000 Internet banking users, which had been doubling annually, supported by the bank's mobile application. BIMB Holdings was incorporated in Malaysia on March 20, 1997 and was listed on the Bursa Malaysia Securities Main Market on Sept 16 in the same year.

World’s first ESG #sukuk #fund another step forward for #Malaysia’s responsible finance

Malaysia’s Shariah-compliant BIMB Investment Management launched the world’s first environmental, social and governance (ESG) sukuk fund on August 1. BIMB’s ESG Sukuk Fund is the company’s fifth ESG-focused fund as a result of its partnership since 2015 with London-based Arabesque Asset Management. BIMB Investment CEO Najmuddin Mohd Lutfi said the company plans to launch more ESG that incorporates fintech like artificial intelligence, machine learning, big data, data analytics. The next investment focus could be in U.S. equity and multi-asset funds.

Creating footsteps in Kuwait’s Islamic banking sector

Kuwait Finance House (KFH) has embarked on a digital transformation journey. Kuwait and Bahrain have each launched their respective digital banking platforms and soon, Malaysia will have its own. By the end of 2018, a seamless digital customer experience is expected to be publicly available. In Malaysia the KFH is active in the infrastructure financing front, supporting the third light rail transport system (LRT 3) and the second Mass Rapid Transit (MRT 2) projects through the provision of Islamic financing facilities. The project is expected to benefit the local communities through the promotion of real estate developments around the proposed train stations. Furthermore, the project is expected to generate more than 2,000 jobs during the construction phase.

Cagamas issues RM825m 1-year bond and #sukuk

The National Mortgage Corp of Malaysia (Cagamas) has issued a RM825 million 1-year bond and sukuk comprising RM800 million Conventional Medium Term Notes (CMTN) and RM25 million Islamic Medium Term Notes (IMTN). Proceeds will be used to fund the purchase of mortgage and Islamic home loans. With this move the aggregate primary issuance by Cagamas has reached RM9.3 billion for 2018, marking a 24% increase in the company's primary supply as compared to 2017's year-to-date total of RM7.5 billion. Cagamas CEO Datuk Chung Chee Leong said the CMTN issue was concluded via reopening of an existing bond tranche which marked the company's second reopening exercise for the year.

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