PETALING JAYA: United Overseas Bank (M) Bhd (UOB Malaysia), the biggest locally incorporated foreign bank in terms of asset size and branch network, is beefing up its Islamic banking business and eyeing regional opportunities.
Being a late entrant to the Islamic banking space, has not deterred UOB Malaysia from competing with the bigger players for a slice of the growing Islamic banking business.
UOB Malaysia acting head of Islamic banking Amir Alfatakh Yusof told StarBiz that besides Malaysia, its Islamic banking operations in the country would serve as a platform to meet regional demand for Islamic banking.
“At the moment, customers across three markets – Singapore, Thailand and Indonesia – have shown interest in Islamic banking. We want to build our capabilities and support our franchise in countries where customers have expressed an interest in Islamic banking products and services.
“We are supporting the UOB group by providing syariah advisory services and expertise through our syariah committee at UOB Malaysia,” he said in an interview.
Amir added that UOB Malaysia would consider incorporating a full-fledged Islamic banking subsidiary over the next couple of years as the bank’s Islamic banking business grows. The bank, which is the latest entrant in Islamic banking, started Islamic banking operations in July last year.
According to Amir, the bank is identifying what areas it needs to build and develop should it decide to become a subsidiary in the future. Some of its Islamic banking structures are already in compliance with the requirements needed for a subsidiary.
Another area of expansion and focus would be in relation to products and services, he said.
The bank has basic syariah-compliant products, but will launch more innovative and sophisticated products to meet regional and local needs.
While UOB Malaysia’s Islamic banking window offers retail and wholesale products, the initial growth driver stems from its wholesale customers, especially small and medium enterprises seeking alternative sources of funding to tap new sectors and markets.
UOB Malaysia expects its Islamic financing and deposits to grow between RM3bil and RM5bil over the next few years.
Amir remained optimistic despite the challenges and competition in Islamic banking from bigger players, as UOB Malaysia has an advantage of being a small player.
The bank has the flexibility to roll out products into the market that meet clients’ needs faster.
On the prospects of the Islamic banking industry, Amir said it has a great potential, partly due to Bank Negara’s vision to make Malaysia a global Islamic banking hub.
“The central bank has implemented sound regulations and laws. It has also aligned banking practices with those of international standards. This has facilitated more foreign players to come into the local banking scene and this augurs well for Islamic banking.”
As of the first quarter of this year, UOB Malaysia’s total assets stood at RM103bil, the highest among locally incorporated foreign banks in the country.
There are 16 Islamic banks and five Islamic windows operating in Malaysia.