PETALING JAYA: Al Rajhi Bank Malaysia outgoing chairman Datuk Seri Dr Nik Norzrul Thani Nik Hassan Thani said his successor would continue with the plan to expand the bank’s operation into the region, targeting neighbouring markets like Singapore and Indonesia.
The Malaysian unit of the world largest Islamic bank, he said, is in the process of seeking regulatory approvals to realise its regional ambition.
In an exclusive interview with StarBiz, Nik Norzrul said regional expansion was a natural progression for the group seeking to diversify its market base.
“We cannot just depend on the Malaysian market to grow. We need to tap into new markets in the region to enhance our earnings,” he said.
He reckoned there were significant growth opportunities for the Islamic banking industry in Asean, particularly in the neighbouring countries of Malaysia such as Singapore and Indonesia.
Indonesia is Asean’s biggest economy and has the largest number of Muslim population in the world.
“Islamic finance is becoming increasingly mainstream on the global stage... here in South-East Asia, we see tremendous business opportunities being presented in several markets, besides Malaysia, where Islamic finance is already mainstream as a result of Government-driven initiatives over the years,” Nik Norzrul noted.
While Nik Norzrul will step down as chairman of Al Rajhi Bank Malaysia by the end of this month, he pointed out that the group’s regional expansion efforts would continue to thrive under the leadership of his successor, whose name will be announced in due course.
Nik Norzrul has been with Al Rajhi Bank since the Saudi Arabia-headquartered Islamic bank established its wholly-owned subsidiary in Malaysia in 2006.
The world’s largest Islamic financial institution is one of the earliest Middle Eastern groups to set up operations in the country after Bank Negara liberalised the Islamic banking sector by allowing the participation of foreign players.
Nik Norzrul, who has been a board member of Al Rajhi Bank Malaysia since 2006 and its chairman since 2015, has been instrumental in driving the growth of the bank over the years.
“One of the most biggest challenges we face when we set up operations here is reconciling the syariah principles as practised in Saudi Arabia with that as practised and interpreted in Malaysia,” Nik Norzrul said, as he reminisced the process of establishing Al Rajhi Bank Malaysia a decade ago.
“It took a lot of negotiating with one another, understanding and compromise to find a common ground from which we can grow the institution,” he pointed out.
The numbers speak for themselves.
Today, Al Rajhi Bank Malaysia has assets worth a total of RM9bil, compared with RM291mil in 2006.
“We pride ourselves as a ‘progressive’ and modern Islamic financial institution, offering niche products and solutions that appeal not only to Muslims but also non-Muslims as well,” Nik Norzrul said.
In the retail segment, for instance, Al Rajhi Bank Malaysia continues to see growth in the demand for current account/savings account services from new and existing customers, thanks to the group’s multi-segment deposit strategy.
Because of the bank’s link to Saudi Arabia, its offering of customised products for hajj/umrah preparation particularly appealed to Muslim consumers in the retail segment, Nik Norzrul said.
In the corporate segment, Nik Norzrul said Al Rajhi Bank Malaysia was working on strengthening its presence targeting owner-led enterprises as well as SMEs. The group will leverage on its relationship with business owners and company directors to grow its corporate banking segment, he noted.
On the onslaught of financial technology (fintech) disruption, Nik Norzrul said: “We don’t see fintech as a threat. We see it as an opportunity.”
“To us, it’s just about getting the right approach that help us widen our outreach,” he explained, adding that the group will continue to leverage on technology as a resource multiplier to overcome its network constraints and client reach.
Al Rajhi Bank Malaysia returned to the black with a net profit of RM2.2mil for the second quarter ended June 30, 2017, compared with a loss of RM5.9mil in the previous corresponding quarter.
During the period in review, the group’s total revenue improved 18.7% year-on-year to RM113mil.
For the first half of 2017, Al Rajhi Bank Malaysia’s net profit stood at RM415,000, compared with a loss of RM4.9mil in the previous corresponding quarter.
The bank’s non-performing financing ratio improved to 0.4% as at end-June 2017 from 0.7% at end-2016. This is better than the industry average of 1.2%.
Al Rajhi Bank Malaysia revealed that a voluntary separation scheme introduced recently has helped the bank achieve a 10% reduction in its headcount. This is part of an effort to optimise operational efficiency and ensuring long-term sustainability of the bank’s business.
Nik Norzrul said although he will leave Al Rajhi Bank Malaysia by the end of this month, it will not be the last of him in the local banking industry.
“I will remain in the banking industry because this is my passion,” he says.
Besides being a board member of Al Rajhi Bank Malaysia, Nik Norzrul is also chairman of T7 Global Bhd, formerly known as Tanjung Offshore Bhd, and Chin Hin Group Bhd. He is also a director of several public listed companies, including Ranhill Holdings Bhd, Fraser and Neave Holdings Bhd, MSIG Insurance (M) Bhd and Amanah Saham Nasional Bhd. He is also chairman of the Capital Market Compensation Fund Corp (a corp set up by the Securities Commission of Malaysia) as well as the chairman of Malaysia-Singapore Business Council.