As the top arranger for the global sukuk market, CIMB Islamic is positioning itself to boost profitability by targeting core areas.
After strengthening for the last 2½ years, the Islamic banking franchise of CIMB Group now wants to focus on key areas which would take it to the next level of growth.
Currently, more than 95% of CIMB Bank’s total customer transactions are performed via digital or self-service platforms. Rafe added that continuous efforts would be placed to enhance its digital offerings in line with evolving consumer demands.
In the digital space, Rafe said this includes the usage of mobile apps. For example, the instant approval of mortgage and car financing as well as the bank’s First (finance, insure, returns, save, transact) proposition, which is driven by artificial intelligence.
CIMB First provides financial solutions that is tailor-made for individual customers based on their life priorities.
Rafe said that more data-driven initiatives would be developed to better analyse customer needs when rolling out a product or service. Forming strategic partnerships would be another area of importance, he noted.
By forging partnerships with takaful providers, CIMB Islamic could focus on bancassurance for a stronger reach for its takaful products, etc. The bank would be forming another partnership with a large asset manager in the country next month, which would be a shot in the arm for CIMB Islamic in terms of an earnings boost.
From December 2015 to June 2018, the bank’s gross financing grew by 65% to about RM67bil and its assets expanded by 68% to RM92bil during the same period. In terms of its compounded annual growth rate, gross financing saw a 22% hike, while assets rose by 23% for the period under review.
Currently, over 60% and 80% of CIMB’s home financing and auto financing are done via Islamic banking. In terms of the global sukuk market, as of August this year, CIMB Islamic was the top arranger of sukuk worth US$3.6bil. The total size of the world sukuk market for the period stood at US$30.78bil.
In a bid to further penetrate and command a stronger market share in the lucrative halal business, Rafe said CIMB Islamic is in a position to help companies forge business tie-ups with suppliers as well as providing them with financing.
“Forty per cent of the Asean population is Muslim and Malaysia is strategically located to serve them. Currently, the total volume of the global halal trade is estimated at US$6.4 trillion. Due to the attractiveness of the halal business, we view this as an important area of growth. Given our vast banking network, we can help companies link up with halal business suppliers and provide them with financing. China is a huge market for the halal business estimated at US$1 trillion. We can help companies which are keen on the halal business to tap the Chinese market at the same time,” he said.
SME banking would be another area which the bank would further tap on. With huge potential in this segment, Rafe said he expects the bank to raise its financing to the SME segment. Currently, 10% of CIMB Islamic’s total financing is catered to the SME segment, while the bulk is still in the retail and wholesale business.
With more than 95% of business establishments in the country comprising of SMEs and 18% of exports generated from this segment, there is vast potential for the bank to capitalise on this segment for future growth.
CIMB Islamic is actively advocating and embracing the values of responsible banking, in line with the group’s focus on embedding sustainability in its next mid-term growth plan.
Last month, CIMB Group announced that it was the first banking group in Malaysia and Asean to champion the UN’s responsible banking principles, which would help transform global banking practices to ensure the industry creates a positive impact on the planet and not just economically.
On the upcoming Global Islamic Finance Forum (GIFF) 2018, Rafe, who is also the chairman of the event, stressed that banks should look beyond profitability.
He said this was in line with this year’s GIFF theme, Beyond Profit, as banks need to be mindful of the environment and its impact on society.
“In Malaysia, the Islamic banking space has progressed beyond providing syariah-compliant products and services towards a more holistic value proposition through the adoption of value-based intermediation, introduced by Bank Negara in 2017. This presents a unique opportunity to start embracing VBI principles, as well as to craft a fresh narrative on how Islamic products and services can offer value, while also ensuring a positive impact on societies and the environment. In this forum, all the key issues facing banks will be discussed and solutions provided for banks to venture beyond the profitable realm,” he said.
The event, which will be held on Oct 3-4 in Kuala Lumpur, will see Islamic finance leaders, policy decision-makers and renowned sustainability experts worldwide discuss the latest developments, challenges and prospects of sustainable banking in the global Islamic finance industry.
Source: The Star