Moody‘s Expects Continued Growth in Malaysia’s Islamic Finance Sector
Moody’s Investors Service predicts a sustained growth trajectory for Islamic finance in Malaysia over the next 12 to 18 months. The country’s robust Islamic banking sector has outpaced conventional banks in recent years, benefiting from government initiatives and digital banking advancements.
According to financial institutions group analyst Chong Jun Wong, Malaysia’s Islamic banks have thrived due to the government’s value-based intermediation (VBI) framework, digital enhancements in smaller Islamic banks, and the “Islamic First” strategy implemented by major banking groups. These factors have propelled Islamic finance’s share to approximately 40% of total financing in Malaysia, one of the highest proportions globally.
The issuance of five digital banking licenses last year, specifically allocated to Islamic finance, further supports the growth of the sector. Additionally, the Halal Industry Master Plan 2030 and the Financial Sector Blueprint (FSB) are expected to drive demand for Islamic products by promoting the development of the Halal economy.
The Islamic First strategy, adopted by major banking groups, has also contributed to the sector’s success. By prioritising Islamic products, banks are committed to expanding their Islamic banking businesses and catering to customers’ needs. Furthermore, Islamic banks in Malaysia offer a comprehensive range of products and services, including trade finance, to support the growing halal economy. They have also implemented programs to assist small and medium-sized enterprises (SMEs) with halal certification and training, fostering the adoption of Islamic finance among halal-certified companies.
With strong policy support and an extensive suite of offerings, Moody’s anticipates the continued penetration and growth of Islamic finance in Malaysia’s thriving financial landscape.
Read more about this topic here: https://www.thestar.com.my/business/business-news/2023/05/17/moody039s-expects-malaysia039s-strong-islamic-finance-growth-to-continue-for-next-12-to-18-months
