Middle-Eastern banks here to stay despite tough Islamic banking competition

Middle Eastern-based Asian Finance Bank (M) Bhd (AFB) and Kuwait Finance House (M) Bhd (KFH Malaysia) indicated their commitment to growing their Malaysian Islamic banking operations despite a competitive backdrop here. The Edge Malaysia business and investment weekly (Edge Weekly) reported in its latest February 22 to 28 issue that AFB and KFH Malaysia's commitment was despite market talk that these banks were struggling against tough local rivals, such as CIMB Group Holdings Bhd and Malayan Banking Bhd (Maybank). AFB told The Edge via email: "We wish to state very clearly that there are no such plans (to exit Malaysia), and the current shareholders of the bank are committed to grow the bank within the economic and business environment in Malaysia." KFH Malaysia said its parent company in Kuwait was focused on the group's Malaysian expansion. "Our parent company in Kuwait is committed to the growth of business at KFH Malaysia. With that in mind, we are working closely with them to ensure the business aspirations and goals are met," KFH Malaysia told The Edge via email. The Edge Weekly, quoting industry observers and sources, reported that it had been about 10 years since Malaysia opened up its Islamic banking sector to foreign players. But the Middle Eastern financial services providers which arrived here first made little headway. "Industry sources put this down to a combination of factors. A key one is that these standalone banks find it hard to compete with local banking groups like CIMB and Maybank that have Islamic banking operations backed up by larger balance sheets – allowing them to take on the bigger financing deals and cough up relatively more products. "The local players also have more branches and have invested much more heavily in technology and infrastructure, which are vital for reaching out to retail customers," The Edge Weekly reported. For a better understanding on the Malaysian Islamic banking sphere, pick up the latest The Edge Weekly issue. – The Edge Weekly, February 20, 2016.]]>