Islamic Bank of Thailand (IBank) has formed more insurance partnerships in order to strengthen the contributions it receives and drive fee-based income from its banca takaful operations.
The bank yesterday signed a memorandum of understanding with three insurers – Thai Life Insurance, South East Insurance and Muang Thai Life Assurance – to promote its takaful (long-term savings and protection) operations and provide life and non-life insurance products to clients.
IBank’s acting managing director, Kanchit Singsuwan, said the bank would focus more on driving fee income to reinforce the bottom line, given that several banks were strongly promoting products that bring in healthy fee income.
While the trend for interest income is likely to be stable, fee income from bancassurance – or banca kataful in the Islamic context – offers a brighter outlook, he said.
The deals with the three insurers are expected to generate combined contributions of Bt500million to IBank by year-end, while fee income from selling products to the three companies is expected to reach Bt30 million.
Currently, fee income accounts for 5 per cent of all IBank income, with the biggest contributor being banca kataful, he said, adding that the bank hopes the fee-income ratio will increase to 10 per cent by the end of this year as a result of the memorandum signed yesterday.
“Takaful in Malaysia is broadening significantly, and we hope to grow from this business in the long run. We are looking for more insurance partners to strengthen our goal,” said the acting MD.
South East Insurance targets a contribution of Bt200 million from takaful products.
Lakchai Sutthichujit, president of the insurer, said the company projected its premiums this year would grow by more than 10 per cent, against 9 per cent last year.
He said the economic picture in the second half would be positive for insurance business, as the private sector was confident over the formation of a functioning government.
Bancassurance in the first five months of the year contributed healthy premiums for South East Insurance and its cooperation with IBank, which is the insurer’s fifth bank partner, will help support premiums during the second half, the company president added.