Risk Management of Full-Fledged Islamic Banks versus Islamic Subsidiaries of Conventional Banks in Malaysia: The Sustainable Growth within Restricted Minimum Requirements

Fauzias Mat Nor
Amir Shaharuddin
Norhaziah Nawai
Ainulashikin Marzuki
Universiti Sains Islam Malaysia
W Zainuddin Wan Abdullah
Universiti Malaysia Terengganu



This paper aims to analyze the risk management practices of full-fledged Islamic banks versus Islamic subsidiaries of conventional banks in Malaysia and sustainable rate of growth within restricted minimum requirements of capital adequacy, leverage and liquidity. In achieving these objectives, the paper assesses the risk management practices of full-fledged Islamic banks, i.e. Bank Islam Malaysia Berhad and Bank Muamalat Malaysia Berhad and Islamic subsidiaries of conventional banks, i.e. Maybank Islamic Berhad and CIMB Islamic Berhad. This paper uses annual reports and focus group interview to obtain the data. The results of the analysis show that the Leverage Ratio, Liquidity coverage ratio (LRC) and capital requirement ratios, such as Common equity Tier 1 Capital Ratio, Core capital Ratio (CCR) and risk weighted capital ratio (RWCR) have exceeded the minimum requirement by Basel Accord. The result of the focus group interview shows that full-fledged Islamic banks and Islamic subsidiaries of conventional banks conformed and implemented the risk management framework imposed by the regulatory agency. However, the growth rate in total asset, loan, return on assets (ROA) and net income margin has mixed growth except for loan to total asset which increase over the year, albeit of the minimum risk management requirement. These empirical and focus group results suggest an important policy on issues pertaining to how Islamic banks have to adjust the changes in the banking environment in terms of growth and its comparative advantages specifically on management efficiency.

Keywords: Islamic banks, conventional bank, risk management.

URL:  JMIFR Vol 14 No.1 Dec. 2017 - Part 1

This site is best viewed with a resolution of 1024 x 768 (or higher) and supports Microsoft Internet Explorer / Mozilla Firefox / Google Chrome
The Journal of Muamalat and Islamic Finance Research (JFIMR) , Universiti Sains Islam Malaysia (USIM), Bandar Baru Nilai, 71800 Nilai. Negeri Sembilan. Malaysia. Telephone: 606-798 6317 / 6305 / 6306  Fax: +606-798 6302  Email: This email address is being protected from spambots. You need JavaScript enabled to view it.   2018 © Fakulti Ekonomi & Muamalat (FEM), USIM