EONCAP Islamic Bank targets 20% growth

By YEOW POOI LING

lingyp@thestar.com.my 

KUALA LUMPUR: EONCAP Islamic Bank Bhd anticipates earnings growth of 20% in the year ending Dec 31, 2008 (FY08), said chief executive officer Fozia Amanulla.  

“We achieved Bank Negara's target of 15% of EON Bank Group's total loans, financing and advances in FY06,” she said in an interview recently.  

She said EONCAP Islamic's performance in the first six months ended June 30, 2007 showed that Al-Ijarah Thumma Al-Bai' and home financing comprised 38% and 27% respectively of the total financing.  

This, Fozia said, was an indication of the market's understanding and acceptance of Islamic banking products. 

Fozia Amanulla

“This proves the huge potential of this market as well as the competitiveness of Islamic financing vis-a-vis the conventional market.”  

Malaysia stood at an advantage, given its long established Islamic financial market with skilled resources far ahead of others.  

As reported by the Securities Commission, in 2006, the sukuk issuances amounted to some RM42bil, or 55.41%, of total bonds approved. A similar trend is expected for the current year.  

EONCAP Islamic has its competitive advantage in its hire-purchase business as well as a strong foothold in home financing.  

“Bank Negara recently accorded EONCAP Islamic with microfinancing status to offer microfinancing products to our customers, mainly the armed forces,” Fozia said. 

In addition, the bank was now poised to aggressively pursue more investment banking activities, given that it had received approval from the central bank to introduce Mudharabah products and set up an Islamic currency banking unit (ICBU), she said.  

The ICBU would allow the bank to offer non-ringgit financing and deposits while receiving tax incentives from the transactions.  

“We just need to get our infrastructure ready before rolling out the products, which we believe will attract investments from the Middle East into Malaysia,” Fozia said, adding that the bank could also leverage on the expertise of its sister company, MIMB Investment Bank.  

Fozia said EONCAP Islamic was also keen to introduce products that were based on Musyarakah and Mudharabah contracts, which could benefit from the tax incentives given by Bank Negara under the Malaysia International Islamic Financial Centre.  

“We're in the midst of securing approval from Bank Negara for Ijarah and Musyarakah products.  

“By year-end, we should have one of the contracts in place,” she said, adding that the bank would focus on fee-based activities like sukuk, funds establishment and advisory services.  

By year-end, it expects to launch two more products, including a general personal financing and debit card for retail consumers.  

EONCAP Islamic presently has five branches – in Kota Bahru, Kuala Terengganu, Alor Star, Putrajaya and Kuala Lumpur.