MBSB Bank to exit asset management as it scales back on non-banking businesses 

Malaysia’s second-largest full-fledged Islamic bank seeks to dispose its wholly owned asset management unit as the bank pares back its non-investment banking focus.

MBSB Bank confirmed with IFN Investor that divesting from MIDF Asset Management is part of its FLIGHT26 transformation program, a three-year roadmap launched in 2024 to boost cost efficiencies and returns.

“Any divestment of MIDF Amanah Asset Management, whether through a management buyout or otherwise, is expected to not have a material impact on MBSB’s financial performance, capital position or strategic direction,” a spokesperson told IFN Investor.

It retains its investment banking activities as a core business proposition.

MIDF Asset Management, which became MBSB’s asset management arm following the latter’s acquisition of Malaysian Industrial Development Finance (MIDF) in late 2023, has been lossmaking since 2021; it suffered its greatest decline in 2024 when it reported a RM9.32 million (US$2.27 million) loss against a RM1.12 million (US$272,442) net profit the year before following two years of consecutive negative earnings.

As at the end of Q1 2026, the asset manager was managing less than RM1 billion (US$243.25 million) in assets.

The bank has been on the lookout for buyers for its asset management arm, one it considers as non-core, since 2024 when it issued a request for proposal for a strategic equity partner or outright sale.

There have been a few bites, but nothing came to fruition. Potential past suitors included Affin Bank, BIMB Investment and Australia’s Salaam Group. It was recently reported that MIDF Amanah Asset Management CEO Shan Kamahl is leading a management buyout bid, pending regulatory approvals.

BIMB in its 2025 annual report confirmed that MIDF entered a share sale agreement with a third party on the 11^th March 2026 to dispose its entire equity interest in MIDF Amanah Asset Management. “As at 17^th March 2026, the proposed disposal has not been completed,” read the annual report.

The group told IFN Investor that all proposals are being evaluated based on strategic fit, commercial merits and value creation potential, stressing that ensuring a seamless transition for fund investors and clients remains a priority, with measures in place to minimize disruption to investment operations and service delivery.

Quitting its asset management business is one of a few moves MBSB has made to reduce cost inefficiencies. In April, it ceased operations of its online stockbroking platform, MIDF Invest.