INDONESIA: Indonesia’s
largest private bank by assets, Bank Central Asia (BCA), has bolstered the
capital base of its Islamic arm as the lender looks to capture greater
opportunities in the domestic Shariah banking sector.
Raising the capital base of BCA Syariah by IDR400 billion (US$28.2 million)
through the issuance of 400,000 shares, BCA has effectively elevated its
Shariah unit to become a tier-2 category bank – institutions with core
capital of between IDR1-5 trillion (US$70.5-352.5 million). This new status
grants the Islamic financier greater autonomy in conducting foreign
currency transactions as well as limited treasury activities including spot
transactions.
“In line with the strategic plan of the bank in strengthening relationships
with customers, the bank continues to improve the provision of services and
financial products more comprehensively across its subsidiaries, including
BCA Syariah,” said Inge Setiawati, the bank’s corporate secretary, in a
statement.
Since acquiring BCA Syariah in 2009 (it was previously Bank Utama
Internasional Bank), BCA has been steadily growing its Islamic offerings
and standing in the Indonesian banking landscape. From 2010-14, the Shariah
unit registered a 49% cumulative annual growth rate in credit extension to
IDR2.1 trillion (US$148.05 million), while its total assets increased by
36% to IDR2.9 trillion (US$204.45 million) as at the end of 2014. The
Islamic financier also recently expanded its branch network to 47 by
opening a main office in Yogyakarta, as the bank forges ahead to grab a
larger market share in an ostensibly competitive environment. BCA’s
aggressive Shariah focus is in line with the country’s Financial Services
Authority (OJK)’s ambition to boost Islamic finance holding of the total
domestic finance market by at least 15% by 2023, triple from the current
5%.
Despite boasting the world’s largest Muslim population, the development of
Indonesia’s Islamic banking and finance industry has lagged behind
neighboring Malaysia. With a dozen fully-fledged Islamic commercial banks,
163 Shariah rural banks and 22 Islamic windows, the Indonesian Islamic
banking landscape is highly fragmented and face development challenges on
multiple fronts including in distribution and regulation among others.
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