Moody’s: AEON Bank to spur Islamic banking sector

PETALING JAYA: Moody’s Investors Service anticipates that AEON Bank Bhd will act as a driver for further growth in Malaysia’s Islamic banking sector, due to the strong awareness and interest in digital Islamic banking.

On Jan 8, 2024, AEON Bank announced that it had obtained regulatory approval to commence an Islamic digital bank business in Malaysia and it will release its roll-out plan in the first half of 2024.

Moody’s said the approval was credit-positive because it would support the growth of the Islamic banking sector in Malaysia by providing accessible, inclusive and syariah-compliant digital banking services to potential customers who are unable to or have limited access to services offered by incumbent banks.

“It will also strengthen Malaysia’s strong position in the global Islamic finance industry. AEON Bank holds one of the two Islamic digital banking licences awarded by Bank Negara in 2022,” the rating agency said in a note yesterday.

Moody’s said there remained opportunities for the Islamic banking sector to grow as the proportion of individuals who are unable to or have limited access to services offered by incumbent banks accounted for 55% of the population as of 2019.

These potential customers include the self-employed who provide products and services online.

Moody’s noted that incumbent banks historically avoid lending to these segments because they cannot provide verifiable salary income.

“We expect AEON Bank to tap into the customer pool and use the underwriting expertise of Aeon Credit,” it added. —Bernama

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