ISLAMIC BANKING | Staff Reporter, Malaysia

Islamic banking's share of Malaysia's total banking system hits 29%

It grew from just 16.8% in 2010.

Islamic banking's share of the total banking system has been steadily increasing and now stands at approximately 29% of the total banking system (versus 16.8% in 2010).

Analysts at BMI Research expect the Islamic banking sector to continue growing as the government continues with its ongoing infrastructure development projects, which will lead to increased demand for infrastructure financing related sukuk. Islamic loans have been consistently outperforming overall loan growth, suggesting that the government's efforts are bearing fruit and analysts expect the new initiatives to provide further support for the sector.

"Indeed, Islamic bank loans have remained on a gradual uptrend, coming in at 11.2% y-o-y in June and 11.6% y-o-y in July, versus overall loan growth of 6.6% y- o-y and 5.6% y-o-y over the same period. The continued expansion of the Islamic banking sector will be supportive of overall loan growth in the country, and we maintain our forecast for loan growth to expand by 6.5% y-o-y in 2017 and 2018 on the back of strong economic growth," added BMI Research.

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