Australia’s “big four” banks are planning to increase Islamic finance offerings to the 500,000 Muslims living in the country. It is particularly beneficial for the banks to target this fast-growing population, as the 2011 census showed a 42 percent increase from the population five years prior.
The four banks, singled out from their counterparts due to the size of their market share, were recently discovered to be the most profitable banks in the world, making about 20 percent more than their counterparts in other nations.
And now, National Australia Bank (NAB), Commonwealth Bank, Westpac, and Australia and New Zealand Group (ANZ), will be offering Islamic financing tools and opportunities to individuals who are interested in an effort to widen their customer base.
As it has not been announced yet when these new Islamic banking services will be launched, Australians interested in sharia-compliant banking will have to rely on Crescent Wealth’s first Islamic cash management trust, launched earlier this month.
Managing director Talal Yassine explained why he expected the fund would be able to reach its goal of attracting $100 million in the next few years: “Islamic Australians and institutions have had little choice so far but to put their cash reserves in non-compliant trusts.” He also said, “Australia’s Islamic community, about 500,000 strong, is relatively small compared to France’s or Britain’s but the compulsory saving system here makes it a potentially large market.”
As part of a partnership, funds will be passed from Crescent to HSBC’s Kuala Lampur-based Amanah, the sharia-compliant vehicle, which will then invest the Australian-dollar denominated Islamic term deposits. Due to the prohibition of riba (interest), the trust will pay a fixed profit of around 3 or 4 percent annually.
The connection with banking in Malaysia makes sense on many different levels. It is one of the most predominant arenas for Islamic banking, and the chief executive of HSBC Amanah, Mukhtar Hussain, claims that around 43 percent of wealthy Malaysians have family in Australia.
However, with the “big four” announcement, Crescent Wealth might soon have some competition.