PT Bank Mandiri, Indonesia’s largest bank by assets, plans to list its Islamic finance unit in 2020 as demand for Shariah-compliant products surges in the world’s most populous Muslim-majority nation.
PT Bank Mandiri Syariah may sell shares in an initial public offering as it wants to expand the business to meet growing demand for Shariah banking products, Mandiri’s president director Kartika Wirjoatmodjo said in a recent interview in Jakarta. The Islamic bank is seeing 16% to 17% growth in savings, triple the pace at conventional banks, he said.
Shariah financing accounts for just about 5% of Indonesia’s banking assets as its growth is constrained by a lack of investment products. Authorities are nudging commercial banks to widen the pool of Shariah-compliant products for the nation’s more than 260mn people and the government is aiding the efforts by selling sovereign sukuk.
“The growth in people who want to put their savings in Islamic products is actually huge,” Wirjoatmodjo said. “But the challenge is that asset products are still limited.”
With assets of about 93tn rupiah ($6.4bn), Mandiri Syariah is Indonesia’s largest Islamic finance company and Wirjoatmodjo expects the pool to top 100tn rupiah by the end of this year. Total assets at Indonesian Shariah banks were 426tn rupiah at the end of May, compared with 7,673tn rupiah for conventional banks, data from the Financial Services Authority show.
Mandiri Syariah is tweaking its conventional banking products such as mortgages and car loans to make them Shariah-compliant and focusing on gold pawning in addition to exploring financing of infrastructure projects and state-owned electricity producer PT Perusahaan Listrik Negara, Wirjoatmodjo said.
The Indonesia Shariah Stock Index, consisting of stocks considered Shariah-compliant, is down 5% this year after advancing 29% in the previous two years.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
'Think-Lab' discusses introduction of new principles into QFC employment rules
Strong buying interest helps Qatar shares settle near 10,400 levels
Manateq set to offer new industrial lands in December
QCB may track Fed rates amid currency peg: Fitch Solutions
Erdogan, Putin celebrate key step in Russia-Turkey gas pipeline
Cyber security vital for Qatar’s sustainable growth, say banks
MCI wins ‘Legal Department of the Year’ award
Qatar Chamber discusses investment prospects with S African delegation
QFBA signs MoU with public accountants group