This article first appeared in The Edge Malaysia Weekly on September 7, 2026 - September 13, 2026

OVER the last few years, Malaysia has seen a string of Middle Eastern Islamic banks exit the market for various reasons. Al Rajhi Banking & Investment Corp (M) Bhd (ARBM), now the sole Middle Eastern lender left in the market, says it is staying put.

According to its CEO Syahrul Ishak, the Islamic lender — wholly owned by the world’s largest Islamic bank by assets, Al Rajhi Bank of Saudi Arabia — is in for the long haul and committed to growing its business organically despite the intense competition.

“We feel strongly about our trajectory so far,” Syahrul tells The Edge in his first interview since taking the helm at the bank in May 2024.

His comments follow years of speculation that, like its peers, ARBM may retreat from the country, given that it has remained relatively low-key even after 20 years of operation. The number of its branches has dwindled to six from 22 a decade ago. Be that as it may, its net profit has grown in each of the last five years — peaking at RM159.17 million in 2025 — after having slipped into a RM62.71 million net loss in 2020 during the Covid-19 pandemic.

Syahrul rejects the suggestion that the bank is merely surviving, pointing to the lender’s improved profitability and its recent move to a centralised head office at The Intermark in Kuala Lumpur as evidence of its longer-term commitment to Malaysia.

“Based on what we have achieved so far in the past few years, the record speaks for itself: that we are not merely surviving; we are here to stay,” he says. “The recent move to consolidate all our offices shows that we want to continue to grow. And, so far, our track record demonstrates that we are on track.”

The bank had consolidated its offices from multiple sites into four floors at The Intermark’s Integra Tower, with the move completed last October.

ARBM is a relatively small player in a highly competitive market comprising 17 other Islamic banks, including two Islamic development financial institutions. ARBM had assets of about RM20.92 billion as at end-June 2026. For perspective, the country’s largest standalone Islamic bank, Bank Islam Malaysia Bhd (KL:BIMB), has an asset size of RM107 billion.

In 2020, in a bid to scale up, ARBM explored a merger with the MIDF group, but the parties backed out after months of negotiations, and MIDF was eventually acquired by the MBSB group in 2023.

“At this moment, our focus is on growing organically,” Syahrul says when asked whether the bank plans to undertake mergers and acquisitions. “But, of course, if there’s any good opportunity that comes up, we will evaluate.”

Its largest Middle East rival, Kuwait Finance House Malaysia Bhd (KFH Malaysia), is in the process of winding down its operations, following its parent’s 2024 decision to exit the Malaysian market. In its first-quarter financial statements, KFH Malaysia said its corporate performing portfolio had been off-boarded and its retail portfolios were being progressively sold or off-boarded.

Once KFH Malaysia exits, ARBM will be the only lender from that region operating in Malaysia. In 2018, National Bank of Abu Dhabi Malaysia Bhd left Malaysia after six years, and Asian Finance Bank Bhd — also from the Middle East — was acquired by the MBSB group.

Rather than try to match larger banks on balance-sheet scale, ARBM is concentrating on segments in which it believes its smaller size can work in its favour. Corporate banking remains the foundation of its business, with the focus weighted towards domestic business enterprises rather than large corporates or government-linked companies (GLCs). Of its RM10.77 billion financing portfolio as at end-June, the bulk — or RM8.73 billion — was in corporate financing, mainly for working capital.

According to Syahrul, corporate financing has been a key driver for the bank since the early 2000s, and remains so under its current three-year strategy, which runs from 2024 to 2026.

“We do have GLC customers, but the majority of our customers are the slightly larger SMEs (small and medium enterprises), more like mid-corporates,” he explains.

ARBM’s relatively small size allows it to offer a more “bespoke” service, he asserts, with relationship managers working closely with business owners and the bank able to make financing decisions relatively quickly.

“We are quite agile,” he remarks, pointing to the speed of approvals and the bank’s ability to tailor financing solutions.

On the retail banking front, ARBM’s focus is on individuals and micro-SMEs, defined as those with annual sales turnover of less than RM300,000 or with fewer than five employees. Within the individual segment, it is targeting digitally active mass-market customers as well as the affluent.

The bank is leveraging both its MY alrajhi mobile banking app and relationship managers to serve these customers. The app, a consolidation of its previous digital platforms Rize and alrajhi@24seven, was launched in June last year and now has about 70,000 subscribers, most of whom are active.

“We are very clear in terms of the customer that we want to target,” Syahrul says.

Its affluent proposition is aimed at customers who maintain at least RM300,000 with the bank, while its “diamond affluent” segment requires a minimum of RM1 million. For these customers, ARBM wants to expand beyond basic banking into wealth management, including products such as unit trusts and takaful.

“The strategic target is for us to continue growing our corporate assets while revamping retail,” Syahrul says. “We need to look at how we can extend our products and services through digital — the MY alrajhi app — for retail, bring more customer engagement through the app, as well as grow our retail financing. These are the two key objectives for 2026.”

So far, ARBM has seen little impact on its customers from higher energy prices and broader cost-of-living pressures stemming from the Middle East conflict.

The bank is not experiencing any major repayment problems with its borrowers, Syahrul says, attributing it in part to its careful selection of customers in recent years. “There’s nothing alarming at this moment,” he observes, although the bank continues to monitor its portfolio closely.

Its non-performing financing (NPF) ratio rose to 0.68% as at end-June compared with 0.55% as at end-2025, still well below the industry’s 1.3%.

The bank has relatively limited exposure to the Middle East, at just 1.5% as at end-June.

Under ARBM’s three-year plan, it aims to achieve a return on equity (ROE) of more than 10% by the end of the year, from 6.95% in 2023. It crossed that threshold last year, with an ROE of 10.05%. Maintaining an ROE above 10% remains a key objective for this year, Syahrul emphasises.

In the second quarter of the financial year ending Dec 31, 2026 (2QFY2026), ARBM reported a 12.9% year-on-year (y-o-y) drop in net profit to RM44.36 million, mainly because of higher costs and a rise in allowances for expected credit losses to RM7.9 million, from RM4.08 million. 

Total financing grew 4.3% y-o-y, following growth of 2% in FY2025 and 7.7% in FY2024. For the six months to date, net profit fell 20.8% y-o-y to RM82.41 million.

Like other banks, ARBM is facing net income margin (NIM) pressures as a result of high funding costs. It has sometimes needed to offer better pricing to defend deposits, although it was not seeking to be the highest payer in the market, Syahrul says. ARBM’s NIM fell to 2.2% last year, from 2.31% in 2024.

He points out that ARBM’s smaller physical footprint over the years was driven by changes in how customers interact with the bank. “We find that the customer interaction can be done digitally as well as through the relationship manager. Therefore, the need for the branch has become less important,” he explains, adding that the ongoing strategy is to strike a balance between physical and digital channels.

ARBM’s six branches are in Bangsar and Shah Alam in the Klang Valley, as well as Penang, Kuching, Johor Bahru and Kota Kinabalu. 

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