Islamic Banking
CIMB targets higher revenue from Islamic banking products
By Business Times
Jan 25, 2007, 16:35

CIMB Group targets to increase revenue contribution from its Islamic banking consumer products to 20 per cent within the next three years.

Group chief executive officer Datuk Nazir Razak said it plans to achieve the target by introducing more Syariah-based products in the market.

Currently, the company has a total of 63 conventional banking products and eventually hopes to come up with an Islamic version for each of these products.

"Revenue contribution from Islamic banking products is still small at the moment. (That's because) we are still new in this business.

"Going forward, we hope to introduce more of such products in the market. Hopefully, the availability of more of such products would contribute towards spurring demand for Islamic banking products," he told reporters at the launch of CIMB's Islamic All-Stars Global Restricted Mudharabah Structured Investment-i (Islamic All-Stars Global) in Kuala Lumpur yesterday.

CIMB's Islamic All-Stars Global combines 100 per cent capital protection if held to its five-year maturity period with returns linked to the performance of 20 global blue-chip multinationals including Nestle, Nike, Colgate-Palmolive, Samsung Electronics, PepsiCo, Procter & Gamble and Microsoft.

Targeted to achieve RM350 million from investors within the three-week sales campaign, this is the first product to be launched simultaneously in Malaysia and Singapore, and is for the mass affluent.

The indicative gross profit rate in the first year is 8 per cent while for the second to the fifth year, the gross annual profit rate is estimated at between 8.5 and 10 per cent.

The minimum investment amount is RM250,000 in Malay- sia, while in Singapore, there is no minimum limit set. However, CIMB Islamic has set the amount at S$10,000 (RM22,800).

Nazir, in his speech, highlighted that Malaysia's Islamic banking and Takaful assets have enjoyed an annual growth of between 19 per cent and 25 per cent over the past five years.

Asset-wise, he said Islamic banking and takaful assets stand at RM122 billion and RM6.6 billion respectively, which rank Malaysia's assets among the largest in the world.

Malaysia also accounts for 70 per cent of total global Islamic bonds in issue and 40 per cent of global Islamic unit trust asset.

On another issue, Nazir said CIMB is not considering any new merger and acquisition plans at the moment and is focused on the integration of Southern Bank Bhd, which it acquired last year.

Nevertheless, he acknowledges the need for consolidations among other local banks in preparing for a more liberalised banking sector in Malaysia, which would soon see the entry of more global players.

"Banking is about scale, and compared with global banks, we are still sub-scale. It would be difficult for local banks to compete with full-fledged global banking groups if they continued to remain small," he added.


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