Banks race to tap into RM46 trillion in Islamic wealth

Islamic-wealthKUALA LUMPUR: Muslim individuals, institutions and governments hold about USD11.5 trillion (RM46 trillion) in wealth, and wealth managers are racing to tap into this.

Asset management units of Malaysia’s RHB Bank Bhd and Indonesia’s PT Bank Mandiri, according to a Bloomberg report, are among those planning new Islamic funds to draw some of this money.

The amount of money held by the Islamic world has lured global money managers from BNP Paribas SA to Schroder Investment Management Ltd in the past year, according to Bloomberg.

The Malaysia International Islamic Financial Centre estimated in February that about USD9.5 trillion of Islamic wealth still remained outside the shariah finance industry,

The centre has forecast that the global Islamic asset management industry will grow to USD77 billion by 2019 from USD58 billion at the end of 2015.

RHB Group Asset Management will offer at least four shariah-compliant vehicles in 2017 that will invest in private equity, property, sukuk and shares, according to Managing Director Eliza Ong.

RHB Group Asset Managament, which oversees RM54 billion, according to the Bloomberg report, will offer the new Islamic funds in Malaysia but may make some of them available in Brunei, Indonesia, Singapore and the Middle East.

The investment plans were part of an effort to increase the portion of Islamic assets to a quarter of the company’s assets under management by 2020 from 8 per cent now, it quoted Ong as saying.

Meanwhile, Bloomberg said, Jakarta-based PT Mandiri Manajemen Investasi would set up as many as four Islamic funds within the next year after establishing its first US dollar shariah-compliant investment in August.

It quoted Mungki Ariwibowo Adil, head of product development and management, as saying  Mandiri’s new funds would only target investors in Indonesia.

The report said shariah-compliant money managers were seeking more Islamic investments as the amount of sukuk issuance remained dwarfed by assets.

Worldwide sales of debt complying with Islam’s tenets climbed 18 per cent to USD27.2 billion so far this year, after reaching USD35.6 billion for the whole of 2015, according to data compiled by Bloomberg.

Islamic banking assets in Malaysia totalled RM685.4 billion as of end-December while those in Indonesia reached 211.4 trillion rupiah (USD16 billion) in May, official data show.