KUALA LUMPUR (Mar 11): Bank Negara Malaysia said Malaysia’s Islamic banking segment expanded 12% in 2014, accounting for 25.6% of total assets in the domestic banking system.

In its latest financial stability and payment systems report, the central bank said the domestic Islamic banking segment had grown as foreign currency assets and takaful fund assets
increased.

Bank Negara said foreign currency assets in the sector increased to RM27.7 billion from RM19.3 billion a year earlier. The regulator said this reflected the growing importance of cross-border transactions in Islamic finance.

For the takaful or Islamic insurance sector, Bank Negara said total assets of takaful funds increased to RM22.7 billion as at end-2014 from RM20.9 billion in 2013.

Total net takaful contributions accounted for 13.3% of total net premiums and contributions in the conventional insurance and takaful segments.

Malaysia continued to be the preferred destination for the issuance of sukuk or Islamic bonds. According to Bank Negara, 65.6% of new global issuances originated in Malaysia in 2014.

Of significance, the central bank said the year saw the first yen-denominated sukuk issued in Malaysia.

"In 2014, 65.6% of new global issuances of sukuk, amounting to US$77.9 billion (RM288 billion) was originated in Malaysia.

"Latest available data places the share of all global outstanding sukuk which originated in Malaysia at just over 57%," Bank Negara said.