Islamic Banking Sector in Malaysia Rises in 2020 Amidst COVID-19: Fitch Ratings

The Islamic banking sector in Malaysia continued its expansion in 2020 despite economic challenges from COVID-19, according to Fitch Ratings (Fitch). Islamic financing accounted for 37% of Malaysia’s total banking system by the end of 2020, compared to a ratio of 35% at the end of 2019. Fitch noted that Islamic financing contributed almost all of Malaysia’s banking sector growth in 2020, driven by household financing and banks that concentrated on promoting Islamic products as part of the ‘Islamic First’ strategy.

Why it matters?

Performance in 2020 is testament to the size and resilience of the Malaysian Islamic banking sector. Malaysia continues to be the largest Islamic banking, Sukuk and Takaful market amongst the Associatio...