Maybank today announced the establishment of its Islamic banking subsidiary, Maybank Islamic Berhad effective 1 January 2008, and reaffirmed the Group’s focus on three key strategic businesses - International Currency Business unit, Islamic investment banking and Islamic wealth management to further grow its leadership in Islamic banking in Malaysia and compete more aggressively in the global Islamic market.

Maybank is the largest Islamic financial services provider in the Asia Pacific region and is set to further reinforce its leadership with the creation of its Islamic subsidiary. Ibrahim Hassan, currently Maybank’s Head of Islamic Banking, has been appointed its Acting Chief Executive Officer.

“The Group continues to compete aggressively in the challenging Islamic financing market both locally and on a global level. Moving ahead, our plan is to offer our customers more innovative products and services, as we will now be able to utilise the Musyarakah principle of equity participation as well as take advantage of the many benefits and incentives given under the Malaysia International Islamic Financial Centre (MIFC),” said Datuk Amirsham A Aziz, President and CEO of Maybank at a media briefing in Menara Maybank today.

Maybank began offering Islamic financing in 1993 through the Islamic windows operations. “Our approach at the onset has been to position Islamic banking as a viable alternative to its conventional counterparts. Over the years, we have steadily built up the assets of our Islamic banking business through strategic market positioning. It has been a rewarding journey for us in the area of Islamic banking. The seeds we sowed in the early days to build a strong platform for our Islamic banking business has borne much fruit and today we have a robust internal infrastructure to support the increasing demands of customers and competition both local and foreign,” added Amirsham.

Amirsham also said that Maybank is the country’s Islamic banking leader with an asset size of over RM23 billion, which is about 50% larger than its nearest competitor. “Over the last 5 years, we have more than doubled our total Islamic assets as well as financing and deposits, giving Maybank a clear dominance in Islamic banking. Our market share for Islamic financing for instance, stood at 25% as of end October 2007. In certain segments, our dominance is even greater. For example, in Islamic trade financing, our market share stands at 47% while in Islamic home mortgage, we have 33% market share,” he added.

To date, Maybank has 12 full fledged Islamic banking branches in addition to 376 branches and 20 private banking centres locally offering Islamic banking products and services.

Amirsham added that Maybank’s advantage lies in our ability to leverage on the vast distribution network and technology of the Group. Islamic banking products and services will continue to be made available through multiple channels of distribution, from the standard counter service and personalised encounter, to self-service terminals and online access.

“From a strategic point of view, we have identified three areas of focus for the Group. In addition to our stronghold in domestic Islamic business, we intend to capitalise on the offshore Islamic business,” he said. He also said that Maybank Islamic has obtained approval in principle to operate an International Currency Business Unit (or ICBU). The ICBU will be the platform to enable the Bank to offer a wider range of Islamic banking products at more competitive prices.

“Through the ICBU, our top priority will be to support Malaysian companies who intend to tap the international market for their fund raising particularly via Islamic instruments,” he added.

“The second area of focus for Maybank’s Islamic business is in pursuing growth opportunities domestically in the Islamic investment and capital market. Our investment banking arm, Aseambankers has consistently ranked among the top three locally in the debt capital market. We believe there are tremendous opportunities to further expand in this area given the appetite locally for such issues.”

He also stated that Maybank Islamic will be focusing on Islamic Wealth Management locally and at targeted overseas markets. The potential of Islamic wealth management cannot be over-emphasized. Globally, Shariah-compliant financial products have attracted more than USD250 billion, with an annual growth of 23.5% per annum over the last five years. “Indeed, Maybank is looking beyond the shores of Malaysia in the area of Islamic wealth management in view of the tremendous amount of excess liquidity generated given the surge in oil prices.”

Amirsham said that it was within the Group’s plans in the short to medium term to see its Islamic banking business expand in terms of geographic frontiers. “We see our growth path to be both organic and inorganic and will continue to look out for value creation opportunities by way of strategic alliances or through mergers and acquisitions. For the current financial year, we expect Islamic financing and deposits to grow by 15% respectively. Portfolio growth is anticipated to be at least RM2.5 billion driven by Islam term loan for business contributing 40%, and hire purchase and Islamic mortgage contributing about 27% respectively.”

28 December 2007