Whetting the appetite for Islamic investments

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Muzaffar Bin Hisham, CEO of Maybank Islamic Berhad and Head Islamic Banking Group

Maybank is Malaysia’s largest financial services group and has a strong regional presence in Southeast Asia. The group’s Islamic banking arm is expanding rapidly and encourages investors to take a look at their expertise. Inside Investor talked to Muzaffar Bin Hisham, CEO of Maybank Islamic Berhad and Head Islamic Banking Group.

Q: Could you give a brief overview on the main banking group and how the Islamic bank fits in, and when it was formed?

A: Maybank Islamic is a wholly owned subsidiary of Maybank Group. It was established in 2008, but the business has been going on since 15 years through the Islamic banking window operation of Maybank. As we progressed, business was growing in line with government aspirations. We are one of the key business segments for Maybank. Of course, Malaysia is the key market for us, as about 90 per cent of our profitability comes from this market. After the realignment of Maybank’s business in 2010, Islamic banking now cuts cross all of Maybank’s business pillars, and we are trying to see how to further grow this sector, for example through community financial services,on the retail and business banking side. Then we have the wholesale business, which are investment banking and all the sukuk issues and cross-border transactions. And we have insurance, which is Etiqa Insurance Berhad, focusing on takaful.

Q: Can you break down your services from retail to corporate?

A: Basically, we are a little bit like a mirror of the Group in the sense that we offer universal Islamic banking. We provide consumer financial services, and also wholesale business. In terms of consumer business, we are the largest Islamic bank in ASEAN by assets. By market share in Malaysia, we are also number one across all market segment, across financing and deposit products. Our wholesale business is also growing healthily,  over the past few years we were constantly amongst the top in the sukuk sector.

Q: In terms of growth, how has it been going in the last three years?

A: Wholesale has been growing faster because of the ‘huge’ infrastructure development in Malaysia. Overall, our annual growth in assets over the last three or four years was about 20 to 25 per cent. Because of our size, we expect growth to temper down a little bit, but we would still foresee double digit growth.

Q: Where are the sukuk investments going to?

A: Well, Malaysia is focused on infrastructure development and property on the sukuk side. For our bilateral transactions, a lot of investment is actually a mixture of dollar flows into cross-border transactions, and other business such as mergers and acquisitions and private investments. It is in line with the economic activities in the country. We have a very robust local currency bond market in Malaysia. The liquidity is here, and once a company raise a financing via sukuk, the company automatically opens up to two sets of investors, the Shariah funds and the commercial funds.

Q: How do you assess the opportunities of people or banks from the GCC coming here to invest?

A: I think liquidity is there in the GCC, it’s a growing region. We now look into liberalisation in Islamic banking in Malaysia, that’s what the central bank is aiming for. I am definitely pro-competition, I think we’ve got to open up that space, and it’s clear that this is part of the bridge between Asia Pacific and the GCC. We need to make sure that the link between the GCC and the assets here is effective.

Q: Do you see an effect of the European crisis here?

A: We are monitoring this, and we see that the  situation in Europe has not been fully sorted out. The good thing is that we don’t have much exposure to Europe, but of course the contagion is going to slow down the economy. However, we hope that it will not have too much effect on the market here. We had a great year 2011, mainly driven by the ASEAN market. If there is appetite for investment, this region is the place to look to.

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Reading Time: 3 minutes

Muzaffar Bin Hisham, CEO of Maybank Islamic Berhad and Head Islamic Banking Group

Maybank is Malaysia’s largest financial services group and has a strong regional presence in Southeast Asia. The group’s Islamic banking arm is expanding rapidly and encourages investors to take a look at their expertise. Inside Investor talked to Muzaffar Bin Hisham, CEO of Maybank Islamic Berhad and Head Islamic Banking Group.

Reading Time: 3 minutes

Muzaffar Bin Hisham, CEO of Maybank Islamic Berhad and Head Islamic Banking Group

Maybank is Malaysia’s largest financial services group and has a strong regional presence in Southeast Asia. The group’s Islamic banking arm is expanding rapidly and encourages investors to take a look at their expertise. Inside Investor talked to Muzaffar Bin Hisham, CEO of Maybank Islamic Berhad and Head Islamic Banking Group.

Q: Could you give a brief overview on the main banking group and how the Islamic bank fits in, and when it was formed?

A: Maybank Islamic is a wholly owned subsidiary of Maybank Group. It was established in 2008, but the business has been going on since 15 years through the Islamic banking window operation of Maybank. As we progressed, business was growing in line with government aspirations. We are one of the key business segments for Maybank. Of course, Malaysia is the key market for us, as about 90 per cent of our profitability comes from this market. After the realignment of Maybank’s business in 2010, Islamic banking now cuts cross all of Maybank’s business pillars, and we are trying to see how to further grow this sector, for example through community financial services,on the retail and business banking side. Then we have the wholesale business, which are investment banking and all the sukuk issues and cross-border transactions. And we have insurance, which is Etiqa Insurance Berhad, focusing on takaful.

Q: Can you break down your services from retail to corporate?

A: Basically, we are a little bit like a mirror of the Group in the sense that we offer universal Islamic banking. We provide consumer financial services, and also wholesale business. In terms of consumer business, we are the largest Islamic bank in ASEAN by assets. By market share in Malaysia, we are also number one across all market segment, across financing and deposit products. Our wholesale business is also growing healthily,  over the past few years we were constantly amongst the top in the sukuk sector.

Q: In terms of growth, how has it been going in the last three years?

A: Wholesale has been growing faster because of the ‘huge’ infrastructure development in Malaysia. Overall, our annual growth in assets over the last three or four years was about 20 to 25 per cent. Because of our size, we expect growth to temper down a little bit, but we would still foresee double digit growth.

Q: Where are the sukuk investments going to?

A: Well, Malaysia is focused on infrastructure development and property on the sukuk side. For our bilateral transactions, a lot of investment is actually a mixture of dollar flows into cross-border transactions, and other business such as mergers and acquisitions and private investments. It is in line with the economic activities in the country. We have a very robust local currency bond market in Malaysia. The liquidity is here, and once a company raise a financing via sukuk, the company automatically opens up to two sets of investors, the Shariah funds and the commercial funds.

Q: How do you assess the opportunities of people or banks from the GCC coming here to invest?

A: I think liquidity is there in the GCC, it’s a growing region. We now look into liberalisation in Islamic banking in Malaysia, that’s what the central bank is aiming for. I am definitely pro-competition, I think we’ve got to open up that space, and it’s clear that this is part of the bridge between Asia Pacific and the GCC. We need to make sure that the link between the GCC and the assets here is effective.

Q: Do you see an effect of the European crisis here?

A: We are monitoring this, and we see that the  situation in Europe has not been fully sorted out. The good thing is that we don’t have much exposure to Europe, but of course the contagion is going to slow down the economy. However, we hope that it will not have too much effect on the market here. We had a great year 2011, mainly driven by the ASEAN market. If there is appetite for investment, this region is the place to look to.

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