DEPOK (eNBe Indonesia) - PT Bank Muamalat Indonesia, the pioneer of sharia banking in Indonesia, has confirmed to launch the initial public offering (IPO) this year, part of its restructuring proposal, and after turning around its financial performance.
Bank Muamalat said it aims to boost its assets to Rp73 trillion by the end of this year. Per June 2023, bank’s assets reached Rp63.9 trillion.
The IPO is interesting to watch to test appetite of the world’s investment community in sharia stocks.
Bank Syariah Indonesia (BRIS), which is a merger of sharia units of state banks, is now worth Rp75.6 trillion, 2.2 x equity. The last quoted price of BRIS reflected PE multiple 25, which is higher than some big conventional banks.
Also interesting because Muamalat failed to capitalize on its pioneer status over the years, losing market share to BRIS, which has total assets of Rp313 trillion.
Four other sharia banks listed on IDX are Bank Panin Dubai Syariah (PNBS), BTPN Syariah (BTPS), Bank Syariah Indonesia (BRIS), and Bank Aladin Syariah (BANK).
PNBS booked net profit of Rp138.34 billion in H1 this year, grew 21.97% y/y. Its assets reached Rp15.43 trillion.
BTPS booked net profit of Rp753 billion in H1 this year, while BANK booked net profit of Rp96.2 billion. Its assets reached Rp5.16 trillion.
Bank Muamalat President Director Indra Falatehan said he would slowly improve business processes, one of which was by refocusing, shifting or entering into retail consumer segment.
In the past, Bank Muamalat only focused on corporations, but now it enters the payroll business.
Indra noted that Bank Muamalat is quite aggressive in entering into retail consumer segment in line with the increasing awareness of sharia among the people of the country. That said, the growth of sharia banking reaches 15-20%, higher than national banking.
In the first half (H1) of 2023, Bank Muamalat posted a net profit of Rp26.9 billion, grew 27% year on year (y/y).
Its assets grew 6.7% to Rp63.9 trillion, driven by increased financing which grew 7.8% y/y to Rp20.4 trillion.
Bank Muamalat’s third party funds increased 5.2% to Rp47.6 trillion, of which low-cost funds or current account savings account (CASA) accounted for Rp20.7 trillion.
Indra added, Bank Muamalat also continues to improve business processes ahead of the listing of shares on the Indonesia Stock Exchange (IDX).
He revealed that good implementation of governance, risk and compliance certainly have a big impact on the company’s credibility in the market and in the eyes of stakeholders.
Governance, clearly, is the biggest challenge, because of past issues in the bank causing huge non-performing fundings.
Indra claimed that Bank Muamalat is committed to manage risk better, ensure compliance with regulations, and increase efficiency and effectiveness.
Bank Muamalat also utilizes reliable information technology which supports the evaluation and making appropriate decisions for banks.
Time will test this claim. Some wonder whether it is not too early to launch an IPO because bad governance issues are still fresh in most investors’ memory.
Bank Muamalat has implemented a number of new provisions from the Financial Services Authority (OJK), including those related to security maturity levels and digital maturity levels.
Apart from that, the governance, risk and compliance aspects are strengthened by building synergy between the board of commissioners, company directors and also the sharia supervisory board. Once again, time will tell.
Meanwhile, along with the IPO, the share ownership portion of the Hajj Financial Management Agency (BPKH) will be diluted. BPKH itself has been planning for a long time to reduce its ownership in Bank Muamalat, currently at 82.65%.
BPKH became a shareholder of Bank Muamalat after receiving share grants from the Islamic Development Bank (IDB), Bank Boubyan, Atwill Holdings Limited, National Bank of Kuwait, IDF Investment Foundation, and BMF Holding Limited in November 2021.
The portion of BPKH’s share ownership in Bank Muamalat itself is included in the direct investment portfolio.
Meanwhile, based on Government Regulation Number 5 of 2018, it is explained that the direct investment disbursed by BPKH is a maximum of 20% of the total Hajj financial investment placement.***
