Bank Muamalat Indonesia, the country’s second-largest Shariah-compliant lender, will sell dollar-denominated Islamic bonds this year to support overseas expansion, said Hendiarto, the chief financial officer at the bank.
The sale, which may be worth $50 million to $100 million, will be the bank’s first attempt to tap international capital markets, Hendiarto said at a news conference to announce the lender’s earnings in Jakarta on Monday.
“We’re looking at a medium-term note sale of not more than five years,” Hendiarto said. “The exact amount is still being studied and will depend on our needs. We’re targeting investors in the Middle East and Malaysia.”
The bank also hopes to sell Rp 800 billion to Rp 1.5 trillion ($93.6 million to $175.5 million) of Shariah-compliant, rupiah-denominated debt to the domestic market next year, he added. Islamic bonds pay asset returns to comply with Islam’s ban on interest.
Bank Muamalat is also exploring opening branches in Hong Kong and the Saudi Arabian city of Jeddah this year or next, chief executive officer Arviyan Arifin said at the same briefing.
“The overseas offices will focus on the remittance business,” Arifin said. “It’s still in the early stages. We need to complete a detailed feasibility study as well as seek approval from our central bank and the authorities in the other countries.”
Bank Muamalat, Indonesia’s oldest Islamic bank, has almost 400 branches in Indonesia and one in Kuala Lumpur. There are 11 Shariah-compliant lenders in Indonesia and 23 other banks that offer Islamic services through so-called “window operations,” according to Bank Indonesia.