Fitch: Islamic banking financing growth to beat conventional loans

The reorganisation would see Bank Islam taking over the listing status of BIMB, a structure similar to that of Affin Bank Bhd and RHB Bank Bhd.

KUALA LUMPUR: Financing growth in Malaysia's Islamic banking sector is likely to continue to surpass that of conventional loans as banks prioritise offerings of Islamic banking products over conventional ones, says Fitch Ratings.

Nevertheless, Fitch believes it will be a challenge to meet Bank Negara Malaysia's Islamic financing mix target of 40% by 2020. The financing mix was 32% at end-2018. 

In its report, "2019 Malaysian Islamic Banking Overview" released on Thursday, the rating agency also expects some mild asset-quality pressure amid a likely slower economic environment in 2019. 

“Islamic banks are subject to prudential banking requirements that are broadly similar to that of conventional banks,” Fitch said.