Malaysian Islamic insurance giant faces profit headwinds amid higher taxes, new costs
Islamic insurance giant Takaful Malaysia Keluarga is bracing for tighter profit margins as rising taxes, new finance costs
KUALA LUMPUR, Malaysia (MNTV) – Islamic insurance giant Takaful Malaysia Keluarga is bracing for tighter profit margins as rising taxes, new finance costs, and regulatory changes weigh on earnings, The Edge Malaysia reported.
The country’s largest family takaful operator and second-largest general takaful provider, Takaful Malaysia holds market shares of 27.8% and 22.8%, respectively, as of June 2025. But after a 21% drop in share price this year and softer quarterly results, analysts warn that the group’s two-year profit growth streak may stall.
Key pressures include a higher tax rate, new financing costs from a 1 billion ringgit ($237 million) sukuk issued to boost capital strength, and the Sales and Service Tax (SST) now applied to bancatakaful commissions since September.
The insurer also renewed its bancatakaful partnership with RHB Bank in August for 20 years, twice the length of the previous deal — a move seen as strategically beneficial but financially demanding.
“We believe this tie-up supports long-term growth in contribution income,” said Clement Chua of Kenanga Research. “However, market hesitation may stem from accounting concerns, particularly the upfront access fee payable to RHB Bank, which has yet to appear in the books.”
Analysts at Hong Leong Investment Bank (HLIB) echoed this caution, noting that Takaful Malaysia had to partially fund the large upfront fee through sukuk proceeds.
As a result, most analysts forecast lower net profit in 2025 compared with the RM378.1 million ($89.6 million) earned in FY2024 — a 9% increase from the previous year.
CEO: ‘Challenges are short-term’
Group CEO Nor Azman Zainal acknowledged the concerns but described them as near-term and manageable.
“These factors are largely external and structural in nature and do not indicate any weakness in our core operations,” he said. “We remain confident in mitigating their impact through disciplined expense management, operational efficiencies, and strategic pricing.”
He added that the new finance costs should be viewed as “strategic investments” tied to the company’s long-term capacity and positioning. “They strengthen our foundation for sustainable growth,” he said.
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