BNM: ISLAMIC FINANCE EXPANDS TO RM1.13 BLN IN 2024, TAKAFUL GROWTH MODERATES ON RISING COSTS

KUALA LUMPUR, March 24 (Bernama) – The Islamic banking and takaful industries continued to record positive growth in 2024, with the Islamic banking industry’s share of total financing in the financial system increasing to 46.6 per cent last year from 45.6 per cent in 2023.

Bank Negara Malaysia said in its Annual Report 2024 that the takaful industry’s share of total net contribution increased to 23.9 per cent in 2024 from 23.4 per cent in 2023.

“Islamic banking and takaful institutions remained resilient and well-capitalised, with the value of Islamic financing growing to RM1.13 billion in 2024 as compared with RM1.04 billion in the previous year.

“The resilience of the Islamic financial institutions has enabled the industry to continue meeting the funding needs of businesses, including small and medium enterprises (SMEs), and households, as well as providing financial protection,” the central bank said. 

However, BNM highlighted that although the total takaful net contributions grew steadily, the family takaful market penetration has moderated slightly in 2024.

“This was due to the decline in sales of new certificates relating to investment-linked and medical and health products during the year arising from challenges relating to medical cost inflation and general cost of living pressures,” it said.

BNM said for the year under review, it continued to advance Islamic finance in collaboration with key stakeholders, with efforts remained focused on enhancing the Islamic finance sector’s contribution to economic developments, sustainability, and financial inclusion. 

“We strengthened the regulatory environment to promote value-based finance and innovative financial instruments, while on the global front, BNM actively collaborated with the industry to strengthen Malaysia’s thought leadership in Islamic finance and position the country as an international gateway for Islamic finance,” it added. 

This includes enhancing cross-border linkages, enhancing clarity in Shariah understanding and application in modern financial activities, promoting Shariah mutual recognition and exchanging insights and best practices through various international fora. These efforts are aligned with development priorities set out in the Financial Sector Blueprint 2022–2026.

Meanwhile, for 2025, the central bank’s strategic priorities for the year are to further develop the Islamic finance ecosystem, enabling the industry to adapt and grow sustainably in a fast-changing environment. 

Focus would be on three key areas to drive the future of Islamic finance; BNM would strengthen the ecosystem to support both economic and social development while sustaining growth, ensure an enabling regulatory environment and Shariah framework that support innovation, and adapt to the evolving needs of the industry.

“We would also focus on positioning Malaysia as an international gateway far Islamic finance through stronger global ties, business linkages, and market growth. 

“This includes advancing the role of Islamic finance in supporting regional funding needs including climate projects, green transition, and social finance during Malaysia’s ASEAN Chairmanship,” BNM said.

-- BERNAMA