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haria lender Bank Muamalat plans to further raise its fee-based income to be able to survive amid the country'€™s economic slowdown, which has caused a decline in the demand for new loans.

Bank Muamalat retail director Adrian A. Gunadi said the bank would further expand its bancassurance business with life insurance companies such as Manulife Indonesia in order to increase its fee-based income.

He said that from business cooperation with Manulife alone, Muamalat could receive fee-based profits of up to Rp 450 billion a year.

'€œWe aim to reap between Rp 450 billion (US$32.44 million) to Rp 500 billion of fee-based profit [from the cooperation] in five years,'€ he said at a press conference after the launching of Bank Muamalat and Manulife Indonesia bancassurance product in Central Jakarta on Thursday.

According to data published by the lender, Bank Muamalat pocketed Rp 1.12 trillion in revenue after profit-sharing distribution deductions as of June. The amount was 10.83 percent lower than the Rp 1.26 trillion booked during the same period last year.

The contracting economy has pushed the lender to revise its 2015 banking business plan (RBB). Previously in June, Bank Muamalat president director Endy Abdurrahman revised his firm financing and third-party funds target from growing 15 percent year-on-year (yoy) to 10 percent. Assets value growth was also projected to grow by 10 percent this year.

As of June this year, its assets totaled Rp 55.86 trillion, down 10.5 percent from Rp 62.41 trillion at the end of December

Adrian said that boosting fee-based income was one of the lender'€™s plans to diversify its revenue sources and not only depend on financing margins.

'€œZafirah is projected to expand Bank Muamalat'€™s fee-based income portion,'€ he said.

Bank Muamalat and Manulife Indonesia entered into a memorandum of understanding (MoU) last November to partner and launch the bancassurance label, Zafirah. The agreement is in effect for the next five years and is extendable by another five years.

The trade name'€™s first unit-link product, Zafirah Save Link, was launched on Thursday after obtaining approval by the Financial Services Authority (OJK) in June. Another four products will be issued after obtaining OJK approval.

Manulife Indonesia executive vice president and chief partnership business officer Hans de Waal said that with the largest Muslim population in the globe '€” around 88 percent of Indonesia'€™s population of 250-million '€” Indonesia had a huge untapped potential in the sharia life insurance sector.

'€œSharia insurance makes up only 5.01 percent of total life insurance contributions,'€ he said.

The OJK in its first-quarter 2015 report noted that the sharia finance industry currently accounted for a relatively small market share compared with the conventional finance industry.

Of Indonesia'€™s total finance industry, 4.7 percent is accounted for by sharia banking, 4.7 percent by sharia mutual funds, 3.6 percent by the sharia non-banking finance industry (IKNB) and 3.1 percent by sharia bonds value (sukuk).

De Waal said that his firm saw sharia business potential growth in the future so that it planned to tap deeper into the segment.

Manulife Indonesia, the second largest life insurance company by assets, which is valued at Rp 36.5 trillion, booked premiums and deposits amounting to Rp 16.3 trillion last year, or 10.5 percent higher than the Rp 14.8 trillion it reaped in 2013. It currently handles more than 2 million customers nationwide after more than 30 years of operation in Indonesia. (prm)