Islamic banking market share target of 20% close

By Lee Cherng Wee
Malaysia is close on the heels of meeting Bank Negara Malaysia's (BNM) target for Islamic banking assets to carve a 20% market share of the banking industry in 2010, after achieving 19% at end-June this year.
Prime Minister Datuk Seri Mohd Najib Razak said by the end of the second quarter this year, the Islamic financial service sector accounted for close to 19% of total banking assets.
"I believe Islamic finance is a strategically vital element of the world's recovery from a financial crisis that has shaken both our finances and our faith in banking institutions.
"With conventional financial institutions still reeling from huge losses, the fast growing sector of Islamic finance is attracting growing global attention," Mohd Najib said in his opening speech at the 6th Annual Kuala Lumpur Islamic Finance Forum in Kuala Lumpur yesterday.

In its Financial Sector Master Plan outlined in 2004, BNM targeted to grow Islamic banking assets to 20% of the total banking assets in the country by 2010.
Mohd Najib added that total Islamic financing of RM115 billion currently constitutes 15.5% of the total financing portfolio of the banking industry while net non-performing financing remains low at 2.4%.
"Malaysia's Islamic capital market reached RM803 billion as at end-August, representing 54% of Bursa Malaysia's market capitalisation," he said.
Sukuk, he added, has maintained its dominance in the Malaysian bond market, accounting for 58% of the total bond market, while the takaful sector saw a 19% growth in fund assets within the first half of this year.
On the Malaysian economy, Mohd Najib said the outlook for positive growth within the third quarter appears to be bright, following the slowdown in economic contraction to -3.9% in second quarter from -6.2% in the first quarter.
The government’s fiscal stimulus package totaling RM67 billion, representing almost 10% of gross domestic product, has helped the economy through a global recession and generated much-needed economic activity to make up for a slowdown in the private sector demand, he said.

(This story appeared in The Malaysian Reserve on Nov 4, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh) Any source