The nationwide endorsement is a significant milestone for PNB, says group chairman
by ALIFAH ZAINUDDIN / Pic by MUHD AMIN NAHARUL
Permodalan Nasional Bhd’s (PNB) “harus” (permissible) status is now approved by all religious state committees, following a recent edict issued by the Penang state mufti’s office.
Group chairman Tan Sri Abdul Wahid Omar said the nationwide endorsement is a significant milestone for the country’s largest fund management company, whose 13 million unit holders are predominantly Muslim.
“This is an encouraging development for us. It gives us the impetus to continue to ensure Shariah compliance in our investment arrangements,” Abdul Wahid told reporters after officiating the PNB-Universiti Sains Islam Malaysia (USIM) Shariah Governance and Assurance Conference 2017 in Kuala Lumpur yesterday.
Penang was last to adopt the position, after the Selangor Fatwa Committee reached a similar consensus in April that PNB’s unit investments made in Amanah Saham Nasional Bhd were permissible — in line with the decree made by the National Fatwa Council in 2008.
The fund manager does not invest in vice stocks such as gambling, alcohol or tobacco counters, but some elements of non-Shariah compliance remain in its financial securities investments. PNB owns a 48% stake in Malayan Banking Bhd (Maybank).
Syarikat Takaful Malaysia Bhd and BIMB Holdings Bhd are the only two Shariah-compliant firms under the finance segment out of a total of 33 banking firms, data from the Securities Commission Malaysia showed. The two companies represent a marginal 6% of total securities on Bursa Malaysia.
Abdul Wahid said despite the scarcity of listed Islamic financial institutions, the likes of Maybank, CIMB Group Holdings Bhd and RHB Bank Bhd attributed a sizeable portion of their business to Islamic banking.
“If you look at Maybank, 55% of Maybank’s financing in Malaysia falls under Islamic financing and they have grown to be not only the largest Islamic bank in Malaysia, but the fifth-largest in the world.
“The idea would be to continue Islamic financing activities. Today, we are at a 28% level as a country, and it is moving well towards the 40% target by 2020 set by Bank Negara Malaysia,” he said.
Last month, Abdul Wahid said PNB was considering carving out 20%, or about 2.1 billion, of Maybank shares and converting them into Islamic equity or i-Maybank.
The conversion into Islamic shares would create the single-largest Islamic equity on Bursa Malaysia, valued at RM20 billion, or almost three times larger than BIMB’s market capitalisation. Maybank currently has a market capitalisation of about RM102 billion.
Abdul Wahid said about 25% of Maybank’s group earnings are derived from the Shariah-compliant business.
The country’s largest lender had previously expressed reservations over the proposal to carve out its shares into Islamic shares.
Group president and CEO Datuk Abdul Farid Alias said PNB’s proposal will be deliberated, but it is still premature to decide on the matter.
“We think the idea is quite interesting, but we do have reservations before considering the proposal.
“The danger of going through this path (to convert into Islamic shares) is that we don’t want to create different classes of shares, neither do we want to create a subsidiary as well. We don’t intend to do that,” he added.
Abdul Farid said Maybank also has no plan to list its Islamic banking arm. Despite operating as a banking window in the group’s lending business, Maybank Islamic Bhd is the country’s largest Islamic bank based on asset.