KUALA LUMPUR, Jan 6 — Malaysia’s international Islamic banking assets are expected to grow to more than US$390 billion (RM1.27 trillion) by 2018 from US$125 billion (RM410 billion) in 2012, says the Ernst & Young World Islamic Competitiveness Report 2013-14.
Ernst & Young Malaysia’s Country Managing Partner and Islamic Finance Leader Datuk Abdul Rauf Rashid said the introduction of the Islamic Financial Services Act 2013 has set Malaysia apart from other markets by providing greater regulatory clarity to the industry.
“Malaysia is considered one of the key reference centres and is expected to provide leadership for the next phase of the industry’s progress,” he said.
He said the on-going liberalisation of the financial sector is creating opportunities for partnerships between Malaysian and global banks, particularly those in the Middle East.
“This may become a key driver for East-to-East linkages, promoting trade and increasing the size of the global Islamic finance industry,” he added.
Abdul Rauf said with 91 per cent of Malaysians multi-banking, banks are expected to embark on further customer segmentation and investment in customer loyalty schemes.
“Bridging the gap between the strategy, sales and product teams will be necessary to build a collaborative management model focused on improving profitability through cross-selling,” he said.
According to the report, rapid growth markets (RGMs) Qatar, Indonesia, Saudi Arabia, Malaysia, United Arab Emirates and Turkey, recently known as “Qismut”, are expected to see their collective Islamic banking assets reach an estimated US$1.6 trillion in 2018.
The report said with expanding economies and a fast-growing customer base for financial services, Qismut is fast becoming an attractive prospect for any bank looking to grow its revenues, having commanded 78 per cent of the international Islamic banking assets in 2012 and growing at a five-year compound annual growth rate of 16.4 per cent.
By 2018, it said, these RGMs are also envisaged to represent GDP of US$4.8 trillion with a mostly young population of around 419 million, making them the drivers of the next wave of development for the industry.
Ernst & Young Global Islamic Banking Centre Leader Ashar Nazim said these markets are vital to the future globalisation of the Islamic banking industry.
“They’re home to 17 of the top 20 Islamic banks and to the global standard-setting bodies. They also hold the largest pool of financial and intellectual capital that will drive development across Islamic banking’s existing and new markets,” he said.
He said the future success of Islamic banks in diversifying to build regional and global brands will be measured less by growth of assets and more by quality of growth.
“Excellence in customer focus, operational transformation and expanding international reach is key to moving from merely providing a service to long-term, sustainable growth,” he said. — Bernama
