KUALA LUMPUR: The outlook for Islamic banking in 2024 remained promising supported by a mature ecosystem that promoted social and financial inclusion.
The Ministry of Finance (MoF) in its Economic Outlook 2024 report released today said Islamic banking and capital market thrived amid resilient economic growth.
“Islamic banking continues to support economic and social needs in line with principles of value-based finance via diverse and innovative Shariah-compliant solutions.
“As at end-July 2023, the total assets of Islamic banking’ expanded by 8.1 per cent to RM1.293 trillion, accounting for 36.4 per cent of the market share,” it said.
Meanwhile, it said the total Islamic financing outstanding grew by 9.1 per cent to RM844.1 billion as at end-July which outpaced the growth trend in the conventional banking sector.
The MoF said the demand for household financing remained strong, accounting for the largest share of 63.1 per cent of the total financing, mainly for residential properties and passenger cars.
It said the Islamic banking ecosystem encapsulated regulations enacted by the Islamic Financial Services Act 2013 (Act 759), diversified and innovative products and services, resilient industry players, progressive digitalisation strategy as well as strong foundation in value-based intermediation (VBI) financing.
Additionally, it said Malaysia’s strong commitment to the social finance agenda is reflected in the anticipated third cohort of the VBI financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guides to be released by the year-end that integrated environmental, social and governance (ESG) risk considerations in financing and investment decisions.
The integration of VBI and social finance would further position the nation as a frontier in addressing sustainability goals through Shariah-compliant financing that balances social and environmental needs with economic development, it added. -Bernama
