Saturday, May 07, 2011

MALAYSIA - Labuan IBFC banking posts record pre-tax

KUALA LUMPUR: The Labuan International Business and Financial Centre's (Labuan IBFC) banking sector posted a record pre-tax profit for the financial year ended December 31 2010, it was disclosed yesterday.

The Labuan banking industry recorded its best ever performance in terms of pre-tax profits, which increased by 114.8 per cent to US$536.4 million (RM1.6 billion), compared with US$249.7 million (RM749 million) in 2009, said Bank Negara governor and Labuan Financial Services Authority (Labuan FSA) chairman Tan Sri Dr Zeti Akhtar Aziz. (full story)


"Higher fee-based activities, improved loan recovery and higher net interest income have contributed to the significant increase in the pre-tax profits," she said at the launch of the Labuan FSA annual report 2011, here yesterday.

The Labuan IBFC maintained its strong growth across all key business sectors, demonstrating its ability to respond to the evolving business environment by building on its new strengths and leveraging on its competitive edge.

Zeti said this has enabled the Labuan IBFC to scale greater heights and to evolve into a vibrant and progressive international business and finance centre.

Last year, she said the cummulative number of Labuan companies recorded a sustained growth of 7.8 per cent, increasing to 8,004 companies compared with 7,423 companies in the previous year, originating from close to 100 countries.

"This growth is complemented by strong expansion in other sectors, including the banking, leasing and insurance sectors," she said.

As end of 2010, she said there were 61 approved banks in the Labuan IBFC, compared with 59 in the previous year.

Zeti said the total assets of the banking industry in Labuan increased by 13.2 per cent to US$33.9 billion (RM101 billion) in 2010, driven by higher loans and advances which amounted to US$19.9 billion (RM59.7 billion) as compared with US$18.5 billion (RM55.5 billion) in 2009.

"The industry continued to exercise prudent and sound credit risk management. Gross non-performing loans remained low at 2.2 per cent in 2010. The capital position of the Labuan banking sector remained strong with a risk-weighted capital ratio of 20.5 per cent," she said.

Moving on to the insurance sector, Zeti said it continued to expand in 2010 with the total number of approved insurance entities increasing to 169 compared with 149 in 2009.

During the year, she said 22 new licences were approved, comprising nine insurance brokers, seven underwriting managers, three reinsurers, two captive insurers and one general insurer.

"The gross premium of the insurance sector continued to surpass the US$1 billion (RM3 billion) mark for the third consecutive year. The solvent margin remained strong at five times above the minimum regulatory requirement," she said.

Zeti said non-resident business contributed 52.9 per cent of the total gross premiums, in line with Labuan IBFC's strategic direction to tap out businesses.

"Total assets of the industry rose by 26 per cent to US$3.1 billion (RM9.3 billion)," she said.

Apart from these, Zeti said the year 2010 also witnessed a significant growth in the number of Labuan leasing companies, which saw an increase of 29.4 per cent to 176 companies, while the amount of assets leased grew by 14.2 per cent to US$25 billion (RM75 billion) compared with US$21.9 billion (RM65.7 billion) in 2009.

"The leasing sector was primarily driven by leasing transactions in the oil and gas, shipping, aviation and telecommunication activities," she said.

The trust industry in Labuan also showed growth, where the total number of trust companies registered in Labuan IBFC as end of 2010 increased to 23.

"The trust companies recorded an aggregate operating income of US$15.4 million (RM46.2 million), an increase of 18 per cent from US$13 million (RM39 million) recorded in 2009," Zeti said.

On Islamic finance, takaful and the retakaful industry, she said the total Islamic banking assets grew 63.6 per cent to reach US$1.3 billion from US$794.7 million (RM3.9 billion from RM2.3 billion) in 2009, resulting in a larger market share of 3.8 per cent against the total assets of the Labuan banking industry.

"As at end 2010, there were six full-fledged Islamic banks and nine Islamic windows established in the Labuan IBFC. The takaful and retakaful industry continued its uptrend with the industry's gross contributions rising by 27 per cent to US$297.3 million (RM892 million)," she said, adding there were seven full-fledged retakaful companies and nine retakaful windows conducting business in Labuan.

As for Labuan FSA, Zeti said it recorded an operating income of RM22.9 million, while its total reserves stood at RM28.1 million during its financial year ended December 31 2010.

She noted the impact of the new legal and regulatory framework that have been put in placed since last year on Labuan IBFC.

"This new legal and regulatory framework further widened the spectrum of products and services that are offered through the Labuan IBFC," she said.

Labuan FSA director general Datuk Azizan Abdul Rahman said arising from these new laws, the authority has seen a lot of interest in many of the new products and services such as setting up of foundations, whereby at least two companies have approached Labuan FSA to apply to set up foundations.

"We have also registered two new trust companies, including from India, paving a new market for us," he said.

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