Islamic finance is a fast-growing industry that caters to the specific needs of Muslims as well as those seeking the benefits of Shariah-compliant and sustainable banking and financial solutions. CIMB Islamic Bank Bhd is at the forefront in providing innovative solutions — from wealth management to business financing — with the aim of delivering intended outcomes of Shariah that generate positive and sustainable impact on the economy, community and environment.

CIMB Islamic’s position as the second largest Islamic financial services provider in Malaysia puts CIMB Group squarely in the heart of the Islamic finance industry in Malaysia, which is among the biggest and most innovative in the world. Meanwhile, CIMB Islamic’s counterpart, CIMB Niaga Syariah, is the second largest Shariah-compliant bank in Indonesia, the country with the greatest number of Muslims in the world.

As a regional Islamic finance house, CIMB Islamic understands the challenges and opportunities that are present in the markets that it operates in, from wealth management and estate planning for the purpose of managing retirement and inheritance among the Muslim community, to the need for Shariah-compliant financing and business partnerships for businesses to capture the burgeoning global Shariah-compliant or halal market.

The Muslim community in Malaysia has been grappling with wealth management and estate planning for years as the laws on inheritance in Islam are different from conventional ones. Ninety per cent of frozen assets in Malaysia are under Muslim ownership. Solutions that are tailored to the legal and religious needs of the Muslim community are very much needed to ensure that they are able to manage their wealth and grow them according to the requirements of Shariah.

The issue of wealth management and estate planning is something that must be addressed, especially as the wealth of the community continues to grow. According to the Securities Commission Malaysia’s fund management statistics, Islamic assets under management as at December 2021 amounted to RM224.80 billion. While not all of these assets belonged to Muslims, a sizeable portion did.

A major part of the financial assets owned by Muslims in Malaysia is concentrated in asset management solutions managed by Lembaga Tabung Haji and Permodalan Nasional Bhd.

As a premier Islamic financial institution in Malaysia, CIMB Islamic has a complete suite of wealth management and estate planning products and solutions that are tailored to the needs of the Muslim community.

“The biggest problem that the Muslim population in Malaysia faces is regarding estate planning. Banks and solution providers need to step up their offerings of estate planning solutions, especially with a demographic that shows a rapidly ageing population,” says CIMB Islamic CEO Ahmad Shahriman Mohd Shariff. Malaysia’s population is expected to be in the ageing category by 2030, with 15% of the population being above 60 years old.

As the population lives longer, the question of whether they have enough funds to last them through their golden years is imminent. This is another issue that is fast catching up with a lot of people today, as they seek to build up their retirement nest egg.

CIMB Islamic focuses on three aspects of wealth management — protection in the form of takaful, estate planning and diversification of investment opportunities.

Among its varied takaful products underwritten by Sun Life Malaysia Takaful Bhd (SLMT) is Sun Enrich-i, a limited pay universal takaful plan that provides death benefit, total and permanent disability (TPD) benefit, accidental death, and final benefit, together with cash payout to the takaful participant. It is designed for consumers to financially prepare for the future and ensure that their savings are invested and maximised.

Another key product underwritten by SLMT is Sun Inspirasi, which is a hibah (gift of love) product that provides high takaful coverage starting from RM250,000 per contract, which will be payable upon the contributor’s death or total and permanent disability. This product allows you to leave behind your legacy to your loved ones and the takaful benefits will be distributed according to your wishes under a conditional hibah nomination in takaful. This hassle-free inheritance process is not subject to Faraid law that applies to Muslims in Malaysia.

“We will soon be partnering with one of the dedicated Islamic estate planning companies so that we can offer other comprehensive estate planning solutions to our customers,” says Shahriman.

On top of that, CIMB Islamic continues to expand its Islamic investment solutions to capture the growing demand for Shariah-compliant investment products, namely unit trust funds, sukuk, Islamic negotiable instruments and investment accounts. “We aim to become the bank of choice for emerging and affluent clients by providing personalised and trustworthy advice, with insights backed by our experienced wealth planning experts,” says Shahriman.

Growing halal and green industries

Apart from Islamic wealth management, CIMB Islamic is also focusing on the halal economy, says Shahriman. This is because CIMB Islamic endeavours to do the right thing that has a positive impact on society, he adds.

Four years ago, CIMB Islamic launched CIMB Halal Corridor, an enhanced trade network linking halal businesses in ASEAN and across the globe. One of the programmes under the initiative is CIMB HalalBizReady, an initiative that provides customers with knowledge of the halal supply chain and access to market opportunities.

“We not only provide financial solutions to our customers, but we also provide business matching through the CIMB Trade Club Alliance to assist our customers to access overseas/international markets,” says Shahriman. The CIMB Trade Club Alliance is an exclusive digital network consisting of business communities in over 50 countries.

With the global halal market estimated at US$2.02 trillion and ASEAN being home to the world’s largest Muslim population, CIMB is able to assist businesses seeking to unlock the potential of these vibrant halal markets via its ecosystem of partners, from certification and supply to logistics and fulfilment across the value chain.

In the halal logistics and warehousing space, CIMB Islamic partners with Northport (M) Bhd, a terminal operator in Port Klang, as well as MASkargo, the air freight logistics provider of Malaysia Aviation Group.

It also partners with Serunai Commerce — a halal centre of excellence that provides new applicants of Malaysian halal certification with a halal training programme and halal consultancy — as well as SIRIM QAS International Sdn Bhd, a leading Malaysian certification body.

In the green economy, CIMB Islamic has the GreenBizReady programme, which leverages CIMB’s network and ecosystem to provide guidance and opportunities to its customers and business partners who are looking to start and progress on their sustainability journey.

Besides that, CIMB Islamic also works closely with various government agencies and trade associations, such as the Malaysia External Trade Development Corporation and the Kuala Lumpur & Selangor Chinese Chamber of Commerce and Industry to provide SMEs with increased awareness of useful solutions and opportunities for their businesses.

According to Shahriman, the bank contributes 0.2% of the portfolio average balance from its first green savings account, EcoSave Savings Account-i, to green and social causes. Recent initiatives include a sponsorship for the operation and maintenance of Taman Tugu and a conservation project in Setiu Wetlands.

CIMB Islamic has contributed RM3.5 million to date towards supporting 14 environmental projects through EcoSave Savings Account-i, says Shahriman.

“We have a number of projects with the World Wildlife Fund Malaysia (WWF-Malaysia). We are involved in the preservation and conservation of water catchment areas in Ulu Muda, and we also work with the local community in Ba’kelalan in Sarawak to promote sustainable rice farming through Systematic Rice Intensification (SRI),” says Shahriman.

Apart from projects in Setiu Wetlands, Ulu Muda and Ba’kelalan, CIMB Islamic is also working with WWF-Malaysia on securing Fraser’s Hill Forest Complex from various ecological threats through advocating the protection of the complex as a state park.

CIMB Niaga Syariah taps Indonesian market

The growing Indonesian economy has benefited CIMB Niaga Syariah, the Islamic banking arm of PT CIMB Niaga Tbk, the Indonesian subsidiary of CIMB. According to Shahriman, CIMB Niaga Syariah’s assets make up 20% of CIMB’s total assets in Indonesia.

“CIMB Niaga Syariah has been one of the success stories of our group. It is now the second largest Islamic banking business in Indonesia with Rp59.25 trillion by assets as at December 2021. It now commands 8.5% of total Islamic assets in Indonesia,” he says.

CIMB Niaga Syariah is focusing on offering more products through its digital channels, says Shahriman, and is the first Syariah bank in Indonesia to provide fully online account opening for savings accounts and fixed deposits via the OCTO Mobile application.

It also partners with many community groups in Indonesia to offer financial products dedicated to each specific community, he says, adding that these Muslim community groups are very active in economic and social programmes, such as Muhammadiyah.

Muhammadiyah, one of the largest Muslim community organisations in Indonesia, has an estimated 50 million members. It runs thousands of schools and hundreds of universities, medical clinics and hospitals across the archipelago.

CIMB Niaga Syariah has also forged strategic partnerships with other bodies to further the development of Muslim philanthropy, tours and travel, and lifestyle.

A role in social finance and community development

Besides providing Islamic financial solutions, CIMB Islamic also strives to incorporate Islamic social concepts such as zakat (alms), waqf (inalienable charitable endowment) and sadaqah (donations) into its everyday programmes.

“The concept is, teach a man how to fish, rather than give a man a fish. Instead of giving them money to survive, we use that zakat money so that they (the zakat recipients) can generate sustainable income for themselves,” says Shahriman.

He says CIMB Islamic has seen more than 400 graduates from Program Keusahawanan Taylor’s – CIMB Islamic since 2017. Through this programme, CIMB Islamic provides equipment grants to participants and helps them with their micro businesses. According to Shahriman, the programme has successfully doubled some of the participants’ incomes.

In addition, CIMB Islamic has also provided motorcycle grants and a one-year employment contract with FoodPanda to 33 beneficiaries from the B40 and asnaf communities, through the CIMB Islamic iTEKAD Rider Entrepreneur Programme.

Under the Financial Sector Blueprint 2022-2026, Bank Negara Malaysia has outlined a strategic thrust to advance value-based finance through Islamic finance leadership. One of the strategies is elevating social finance as an integral part of the Islamic finance ecosystem. Under this strategy, impact on social outcome is a key driver in the development of Islamic finance products and solutions. This is because Islamic finance is not just about commercial endeavours but also about having positive impact on the socio-economic progress of the community it serves. As a premier Islamic financial institution, CIMB Islamic is leading the industry on both fronts.