AmIslamic Bank may tap Indonesia’s syariah retail market and expand into Australia and the Philippines as it seeks growth in non-traditional Islamic markets.
“It’s easier to penetrate the markets outside the GCC (Gulf Cooperation Council),” Zaini said in an interview. “It’s a lot easier to educate and approach those markets where they have not even heard of Islamic banking. The GCC market is a bit saturated.”
The country’s third-largest Islamic lender, with about US$2.94bil assets, was also considering a move into Vietnam although the country’s recent economic developments had made it slightly wary, said chief executive officer Ahmad Zaini Othman.
The Middle East has been a magnet for Islamic lenders looking to ride on the industry’s boom, due to its vast reserves of oil earnings and large Muslim population.
In contrast, neighbouring Indonesia is a late bloomer in the US$1 trillion Islamic finance sector, with syariah banks having less than 5% of Indonesia’s domestic banks’ total assets.
AmIslamic is part of AMMB Holdings Bhd, Malaysia’s fifth-largest banking group in terms of assets.
Australia and New Zealand Banking Group Ltd owns a 20% stake in AMMB which, according to Reuters data, was the world’s third-largest Islamic bond manager last year, with US$3.6bil of deals – nearly a tenth of the total market.
Zaini said many Australian energy and resource companies were keen to sell Islamic bonds, or sukuk, offering AmIslamic a platform to enter the market.
“If you look, in this day and age, at the present liquidity issue, if it’s new money coming into the country and a viable option, why not?” he said, but declined to elaborate on potential sukuk issuers.
Australia, where an estimated 1% of the population are Muslims, has a nascent but growing Islamic finance industry.
National Australia Bank was reported last month to be planning a US$35mil investment in a syariah-compliant listed industrial property trust.
AmIslamic is also considering the Islamic retail and commercial business in the Philippines and the syariah-compliant property market in Vietnam, Zaini said.
However, Zaini said, the industry lacks longer tenure products, with investors generally reluctant to commit to Islamic products long term, as syariah instruments cannot offer some of the guarantees given by their conventional peers.
“In the simple fixed deposit for instance, versus the Islamic general investment account, we can’t really promise a return because it’s based on the profit and loss sharing determined at the tail end,” Zaini said.
He said the industry was also grappling with a lack of global uniformity in legislative and syariah principles.