The Islamic banking and takaful industry in Malaysia continued its positive growth in 2024, with the Islamic banking sector’s contribution to the overall financial system increasing to 46.6% from 45.6% in 2023, according to Bank Negara Malaysia’s (BNM) Annual Report 2024.
Takaful also saw steady expansion, with net contributions rising to 23.9% in 2024 compared to 23.4% the previous year. However, the family takaful penetration rate remained moderate due to a decline in new certificate sales for investment-linked, medical, and health products, impacted by rising medical inflation and overall cost-of-living pressures.
“Islamic banking and takaful institutions remain resilient, with strong capital levels. Islamic financing grew to RM1.13 billion in 2024 from RM1.04 billion the previous year,” BNM stated.
The central bank highlighted that the sector’s resilience has allowed financial institutions to continue meeting business financing needs, including those of small and medium enterprises (SMEs) and households, while also providing financial protection.
For 2025, BNM aims to further develop the Islamic financial ecosystem, ensuring the industry adapts and grows sustainably amid a rapidly evolving landscape.
“BNM will focus on three key areas: strengthening the ecosystem to support economic and social development, ensuring sustainable growth with a robust regulatory and Shariah framework that drives innovation, and adapting to evolving industry needs,” it said.
Additionally, Malaysia will continue positioning itself as a global gateway for Islamic finance through international partnerships, business linkages, and market expansion.
BNM remains actively engaged with industry stakeholders to enhance Malaysia’s leadership in Islamic finance. Efforts include cross-border collaborations to strengthen Shariah understanding and application in modern financial activities, promoting mutual recognition in Shariah standards, and sharing best practices through international forums aligned with the Financial Sector Blueprint 2022-2026.
“As part of Malaysia’s ASEAN Chairmanship, Islamic finance will play a role in supporting regional funding needs, including climate projects, green transition, and social finance initiatives,” BNM stated.
