Malaysian Islamic banks set to sustain Islamic financing growth

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MG News | February 12, 2024 at 02:20 PM GMT+05:00

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February 12, 2024 (MLN): Fitch Ratings expects the growth of Malaysian Islamic banks to continue to outpace that of conventional banks in the medium term, after financing reached $190 billion in 2023, cementing the country’s Islamic banking market as the third-largest globally.

The share of Sharia financing rose to 42% of domestic banking system loans, from 41% at end-2022, as banks continued to champion an 'Islamic First' strategy.

The sector's financial performance was relatively steady in 2023, despite the higher rate environment, and we expect the trend to be sustained in the near term on a stable local policy rate and an economy that we forecast will expand by more than 3% in 2024.

Malaysia will see the entrance of its first Islamic digital bank in 1H24, which will cater to the country’s underserved banking population.

The new entrant is likely to compete aggressively for deposits as it builds its franchise, but we do not expect this to change the industry's competitive dynamics in the near to medium term.

Copyright Mettis Link News

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