LABUAN IBFC INDUSTRY PERFORMANCE 2018 25 March 2019 1 28-year - - PowerPoint PPT Presentation

25 March 2019

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LABUAN IBFC INDUSTRY PERFORMANCE 2018

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28-year journey: Trust and Confidence remained in Labuan IBFC

Greater contribution to regional business growth Ensure sustainability by undertaking strategic transformation

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Evolving with international business landscape and regulatory changes Adopted midshore approach to combine regulatory upscaling with business dynamism

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Key Highlights in 2018

• Double-digit growth of

12.5% in new company

incorporations

• Labuan IBFC remains in the

radar of Far Eastern investors - Japan, China and South Korea

• Digital market - hybridisation of

FinTech solutions and conventional financial products to create more innovative offerings

• Digital exchanges, securities token,

payment system, robo-advisors

• Foreign insurance business

– major source of six-year high for gross premiums underwritten

19.1% growth in gross

premiums

67.4% of captive

premiums derived from out-

• ut business
• Lending activities by banks

recorded historical high

19.1% growth in loans 14.6% growth in total deposits

• Recovery of oil prices spur

commodity trading and leasing activities

40.4% growth in LITCs’ revenue 88.6% growth in new leased

assets value

Labuan IBFC

Sectoral Business Performance 2018

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61% 9.8% 4.5% 12.1% 12.6% Asia & The Pacific, 60.1% Far East, 12.8% Middle East, 3.8% Americas, 11.2% Europe, 12.1%

Origin of Labuan Companies

2018 2017

6,031

Labuan Companies

(2017: 5,789)

630 423 485 545 708 472 193 168 275 224 178 220 137 121 127

1,280 836 790 941 1,059

200 400 600 800 1,000 1,200 1,400 100 200 300 400 500 600 700 2014 2015 2016 2017 2018 Number of companies Number of companies

Newly Registered Companies

Trading Non - Trading Trading & Non-Trading New Incorporated/ Registered (RHS)

Labuan companies continued the growing trend

Trust companies positioned to expand service offerings

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Profitability trend improved Main source of income from secretarial services

24.6 23.6 23.5 24.6 26.2 7.4 7.9 9.1 8.0 8.4 39 43 47 52 58 10 20 30 40 50 60 0.0 5.0 10.0 15.0 20.0 25.0 30.0 2014 2015 2016 2017 2018 Number of companies USD million

Profitability

Total Income Profit Before Tax Number of Trust Companies

55.3% 12.2% 9.6% 2.9% 20.0% Secretarial, 58.5% Trustee, 8.0% Administration Support, 11.8% Professional Services, 2.1% Others, 19.6%

Source of Income

2018 2017

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65.7% 64.1% 71.9% 63.2% 60.9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2014 2015 2016 2017 2018 % USD million

Premiums and Retention

Direct General Insurance General Reinsurance Captive Lloyd's Syndicate Net Retention Ratio

Driven by significant growth in reinsurance sector Largely contributed by ASEAN markets

Insurance premiums at a six-year high

40%

Premiums by Ownership Foreign Business

65%

USD1.08bil Malaysian Business

35%

USD0.59bil 2017 2018

39% 16% 9% 6% 7% 4% 4% 15% 35% 17% 9% 8% 6% 6% 4% 15%

Premiums by Country Concentration

Malaysia Singapore Japan United Kingdom Indonesia Thailand China Others

2018 2017

455 388 342 547 622 191 173 197 173 206 68 60 65 50 59 286 325 367 92 96 999.7 945.8 970.1 862.4 982.8 200 400 600 800 1,000 1,200 2014 2015 2016 2017 2018 USD million

Profitability

Net Claims Incurred Net Commission Management Expenses Underwriting Margin Earned Premium

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Higher claims narrowed underwriting margin growth Fire business remained the largest sub-sector

37% 8% 12% 10% 33% 40% 7% 10% 8% 35% Premiums by Sector

Fire Marine Engineering Motors Misc.

2018 2017

Insurance profitability remained strong despite higher claims experience

• Total Gross Contribution: +4.4% to USD95.9 mil
• Underwriting Margin: Improved from underwriting losses USD1mil to profit USD26.2 mil

(Re)takaful Business

Driven by lending to residents

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Predominantly to oil and gas related sector

Agriculture, Hunting, Forestry and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Property Wholesale and Retail Trade Transport, Storage and Communications Financing, Insurance and Business Services Other Services Miscellaneous

Financing by Sector

2018 2017

ASEAN Europe Latin America Africa Middle East Others

Financing by Region

2018 2017

1.2 1.8 1.6 2.5 2.8 44.3 47.4 51.0 44.3 47.4 51.0 50.7 55.0

0.0 10.0 20.0 30.0 40.0 50.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 2014 2015 2016 2017 2018 USD billion USD billion

Total Loans and Assets

Loans to Non Resident Loans to Resident Total Financing (RHS) Total Assets (RHS)

Banking sector maintained its business momentum

9.1 10.8 11.2 8.3 9.5 9.1 10.8 11.2

0.0 2.0 4.0 6.0 8.0 10.0 12.0 2014 2015 2016 2017 2018 USD billion

Total Deposits

Resident Non Resident Total Deposits

Growth in deposits, however funding still primarily supported by Head Office Islamic Business

• Financing: +8.4% to USD2.7 bil
• Deposits: +10% to USD212.7 mil
• Assets: +2.4% to USD3.2 bil

Slower growth in PBT due to higher interest expenses and trading losses Interest expenses to interest income ratio grew significantly over the last 5 years

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14.0% 14.5% 0.9% 0.9% 5 10 15 20 25 100 200 300 400 500 600 700 2014 2015 2016 2017 2018 % USD million

PBT, ROA and ROE

Profit Before Tax ROE (%) ROA (%)

38.5% 39.0% 46.7% 56.2% 67.0%

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2014 2015 2016 2017 2018 % USD million

Net Interest Income

Total Interest Income Total Interest Expenses Interest Expenses to Interest Income (%)

Banks profit margin reduced due to high interest expense

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114 111 109 144 177 6 10 12 24 36 557 528 537 652 698 100 200 300 400 500 600 700 800 20 40 60 80 100 120 140 160 180 200 2014 2015 2016 2017 2018

Number of Jobs USD million

Local Spending and Employment

Local Expenditure Tax Revenue Contribution (Estimated) Employment

Labuan international commodity trading expanded in tandem with oil prices recovery

37 43 50 57 48 30.0 19.0 17.1 23.8 33.4 5 10 15 20 25 30 35 40

10 20 30 40 50 60

2014 2015 2016 2017 2018

USD billion Number of LITCs

Total Revenue

• No. of LITCs

Revenue

12 32.3 37.8 34.1 32.6 33.0 12.0 13.1 15.8 15.6 20.4 1.2 0.9 0.8 0.6 0.4 50 100 150 200 250 300 350 400 450 500 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 2014 2015 2016 2017 2018

Number of Companies USD billion

Leasing Companies and Leased Assets by Sectors Oil & Gas Aviation Others Total Number

4.1 2.2 1.0 3.1 1.6 5.3 3.7 5.8 0.0 0.0 0.0 0.0 45 36 35 18 60 143 68 165

20 40 60 80 100 120 140 160 180 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2015 2016 2017 2018

Number of Companies/ Subsequent Transactions

USD billion

New Lease Assets by sectors Oil & Gas Aviation Others Total New Companies Total New Subsequent Transactions

Leasing market rationalising under the new Labuan Tax Framework

Private Fund

• 10 new private funds (2017: 10)
• USD0.9bil approved fund size mostly served as investment

vehicles for infrastructure projects in ASEAN region Intermediaries

• FinTech help to deliver innovative solutions with cost

efficiency for better investment decisions

• 38 new foundations (2017: 29)
• Of total 162, 31 are Charitable and 131 are Non-Charitable Foundations
• Mainly from Asia & the Pacific region
• 105 Labuan trusts: 14 registered and 91 unregistered
• 9 new money brokers (2017: 7)
• Of the total 35, 37.1% are from Far East region, mainly from

Japan and Hong Kong

• Digitised platform to improve clients trade experience and

further expand on product range

• Circular on Innovative Financial Services in Labuan IBFC was

issued to facilitate FinTech-related business

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Emerging businesses continued to draw regional investors especially FinTech-based business solutions

Capital Market Money Broking Wealth Management

Employment across key industries

14 2,549 2,545 2,702 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800 200 400 600 800 1000 1200

Banks Insurance Trust Companies LITCs Banks Insurance Trust Companies LITCs Banks Insurance Trust Companies LITCs 2016 2017 2018

Malaysian Foreign Total Employment

Total Number of Employment Total Number of Employment

UPSCALE SUPERVISION AND ENFORCEMENT

Enhance supervisory and regulatory functions for market stability, business confidence and reputation

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STRENGTHEN SUBSTANCE FOR BUSINESSES

Leveraging on substance requirements

Reputable Sustainable Key strategies moving forward

EMBRACE TECHNOLOGICAL- BASED SOLUTIONS

Attract new players and enhance products offerings