KUALA LUMPUR, June 2 Malaysia's Bank Islam plans
to raise 1 billion ringgit ($311.24 million) by selling Islamic
bonds to fund organic growth as well as a potential acquisition
in Indonesia, two people involved in the sale told Reuters on
The country's oldest and largest Islamic-only bank is wholly
owned by BIMB Holdings Bhd, which last month said
competition in the Islamic banking sector has narrowed profit
margins and brought about the need to raise funds for growth.
Bank Islam aims to maintain the annual growth rate in the
amount of money it lends at 20 to 25 percent by selling in July
300 million ringgit worth of Murabahain under a 30-year sukuk
programme, one of the people said.
The sale of the Basel-III compliant Tier 2 sukuk is awaiting
approval from the central bank by next week ahead of the final
green light from the Securities Commission, said the person who
declined to be identified as the matter was not yet public.
Bank Islam then plans to raise another 300 million ringgit
in 2016 for organic growth, that person said.
In addition, the bank aims to raise 400 million ringgit in
2015 to buy a business in neighbouring Indonesia, said the
second person without identifying the target.
The bank is waiting for the outcome of Indonesia's July
presidential election before finalising acquisition plans, the
Rivals Malayan Banking Bhd (Maybank) and CIMB
Group Holdings Bhd earn up to a third of their income
in Indonesia thanks to rapid corporate loan growth there as well
as increased custom from a burgeoning middle class.
Bank Islam earns all of its income at home, offering over 70
percent of loans to retail consumers. The bank lent out a record
683 million ringgit last year, 21.7 percent more than the year
prior, boosting net income by 5 percent to 1.5 billion ringgit.
In Islamic deposits, the bank put its local market share at
16 percent in 2013, behind Maybank and ahead of CIMB, Public
Bank Bhd and AmIslamic Bank Bhd.
Last month, parent BIMB reported a 67 percent rise in
January-March net profit of 123.5 million ringgit, largely
thanks to Bank Islam's earnings.
BIMB completed the purchase this year of the 49 percent of
Bank Islam it did not already own from pilgrimage fund Tabung
Haji and the Dubai Group for $884 million.
($1 = 3.2130 Malaysian Ringgit)
(Reporting by Al-Zaquan Amer Hamzah; Editing by Christopher