The different types of banking

Islamic banking

With a 12.2per cent market share in terms of assets in the overall banking system, the Islamic banking sector in Malaysia has emerged as a competitive component, operating in parallel with the conventional banking system. It has experienced rapid development over the last ten years, including the increased diversity of players and a broader range of Islamic financial products and services available today. This sector has seen the entry of new foreign players and the creation of more Islamic banking subsidiaries in the provision of Islamic banking services.

There are currently, more than 60 Islamic banking products available in the market. The emergence of these new innovative products and financial instruments, conforming to globally accepted Syariah principles, has enhanced the role of the domestic Islamic banking sector within the financial system.

Growth

With government measures to make Malaysia an international Islamic financial centre, the influx of foreign Islamic banking institutions looks set to promote greater competition and stimulate innovation in Islamic banking products and services. At the same time, they would also complement the domestic players in tapping into strategic growth areas such as investment banking and wealth management. It is projected that this would thus drive the Islamic banking business to greater heights of performance.

Islamic banks

Local Islamic banks	Foreign Islamic banks	Banks with Islamic windows
Affin Islamic Bank Berhad	Al Rajhi Banking & Investment Corporation (M) Berhad	Public Bank Berhad
AmIslamic Bank Berhad	Asian Finance Bank Berhad	Alliance Bank Berhad
Bank Islam Malaysia Berhad	Kuwait Finance House (M) Berhad	Malayan Banking Berhad
Bank Muamalat Malaysia Berhad		HSBC Bank Malaysia Berhad
CIMB Islamic Bank Berhad		OCBC Bank Malaysia Berhad
EONCAP Islamic Bank Berhad		Citibank Berhad
Hong Leong Islamic Bank Berhad		Standard Chartered Bank Malaysia Berhad
RHB Islamic Bank Berhad

Investment banking

The emergence and formation of investment banks in the financial system will enhance the potential for them to not only support the economic transformation process but also to be resilient in the changing domestic and international economic environment. Basically, investment banks help companies and governments issue securities, help investors purchase securities, manage financial assets, trade securities and provide financial advice.

Investment banks

1. Affin Investment Bank Berhad
2. Alliance Investment Bank Berhad
3. AmInvestment Bank Berhad
4. Aseambankers Malaysia Berhad
5. CIMB Investment Bank Berhad
6. Hwang-DBS Investment Bank Berhad
7. KAF Investment Bank Berhad
8. Kenanga Investment Bank Berhad
9. MIDF Amanah Investment Bank Berhad
10. MIMB Investment Bank Berhad
11. OSK Investment Bank Berhad
12. Public Investment Bank Berhad
13. RHB Investment Bank Berhad
14. Southern Investment Bank Berhad

Commercial banking

There are currently nine domestic banks and 13 foreign banks operating in Malaysia. Most of them have two major arms: consumer banking and corporate banking.

a) Consumer banking The focus of this specific arm of commercial banks is on the consumers. Providing services from credit cards, personal loans, savings, fixed deposits and current accounts, commercial banks offer many of these services from their bank branches nationally.

Apart from the usual banking services, consumers are helped in managing their entire financial situation from protection or growth of current assets to retirement financial planning and the passing on of wealth to future generations. Those working in this sector have to be able to manage finances creatively, build personal relationships with clients as well as be confidential and discreet.

b) Corporate banking Providing similar services as the consumer banking arm, corporate banking however focuses on organisations. These can range from large conglomerates to small medium enterprises (SMEs) and even micro enterprises.

•SMEs financing With the SMEs being identified as a new area of growth for the Malaysian economy, efforts have been undertaken to further develop the SMEs to enhance their contribution to economic growth and these include greater access to financing for SMEs.

•Microfinance An institutional framework has been set up to promote financial inclusion thus ensuring that all segments of society, including micro enterprises and small businessmen, have improved access to adequate financial services.

Growth

The financial products and services offered by commercial banks continue to be transformed, led by increased competitive pressures, technological developments and regulatory reforms. A more extensive range of products and services are now available to meet the needs of consumers, whose affluence has been growing in line with the strong economic performance, such as wealth management. On top of that, more services such as corporate advisory are available to meet the growing needs of businesses. These have thus also increased the contribution of fee-based income to the profitability of the banking sector in recent years.

Commercial banks

Domestic Banking Institutions	Foreign Banking Institutions
Affin Bank Berhad Alliance Bank Malaysia Berhad AmBank (M) Berhad CIMB Bank Berhad EON Bank Berhad Hong Leong Bank Berhad Malayan Banking Berhad Public Bank Berhad RHB Bank Berhad	ABN AMRO Bank Berhad Bangkok Bank Berhad Bank of America Malaysia Berhad Bank of China (Malaysia) Berhad Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad Citibank Berhad Deutsche Bank (Malaysia) Berhad HSBC Bank Malaysia Berhad J.P. Morgan Chase Bank Berhad OCBC Bank (Malaysia) Berhad Standard Chartered Bank Malaysia Berhad The Bank of Nova Scotia Berhad United Overseas Bank (Malaysia) Berhad

© GTI Specialist Publishers. Reproduced with permission.