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Bank Islam Malaysia Capitalize on Sukuk

14/07/2014 0 93 views

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Kuala Lumpur – “ASWAQ”

Bank Islam Malaysia recently announced a MYR 1 billion plan to fund organic growth. According to the announced plan, the bank will sell Islamic bonds for about USD 311.24 million.

Dato’ Sri Zukri Samat, the managing director of the bank, explained the capital to be raised will be used for expansion, which will be through an acquisition. The bank has been researching the Indonesian market for a suitable acquisition since last year, but Zukri only revealed they have identified the potential candidate.

Although in Indonesia, foreigners are only allowed a maximum of 40% shares in banking entities, Zukri explains that this could be enough for them as long as there is an opportunity to grow together.

The capital raised is to be used in issuing MYR 300 million worth of Sukuk during this year, while the rest is expected to finance the acquisition.

Currently, Bank Islamis planning to transform into a mega Islamic bank, in line with Malaysia’s national bank (Bank Negara) objectives.

The promising Islamic bank has 134 branches across Malaysia. However, it is working to increase this number to 150 by the end of 2015. Most of the bank customers are consumers with corporate customers forming only 25%. Zukri explained they target this year to “achieve a 70:30 ratio,” that is consumer to corporate ratio.

Last March, Bank Islamreported 22% growth in their net financing year-over-year. While the bank’s revenue was up 8.5% from a year earlier.

Bank Islam Malaysia Berhad has been in operation in Malaysia since July 1983. It is partially owned by Dubai Investment Group LLC (DIG), which controls 49% of its shares since 2006. Bank Islam is considered the oldest Islamic bank in Malaysia.

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