Jakarta. The sharia unit of the state-owned Bank Tabungan Negara (BTN) is expected to conclude its merger with Islamic bank Muamalat in March 2024, according to a minister.

The Haj Fund Management Agency (BPKH) today holds 82.65 percent of the shares in Bank Muamalat. 

According to SOE Minister Erick Thohir, the merger plan is expected to make the domestic sharia market “healthier” in nature. In other words, the merged entity can become an alternative to the Bank Syariah Indonesia (BSI). BSI is a result of the merger between state-owned Islamic banks BRI Syariah, Bank Syariah Mandiri, and BNI Syariah.

“We have had talks with BPKH, Religious Affairs Minister [Yaqut Cholil Qoumas] if it was possible if we could make Bank Muamalat and BTN Syariah synergize as an alternative large sharia bank,” SOE Minister Erick Thohir told reporters in Jakarta on Tuesday.

“We are still in discussions. If everything goes according to plan, it will likely be finalized in March [2024]. Of course, we wanted the merger to take place earlier, but they wanted to finalize it in March 2024,” Erick said.

Erick claimed that the BTN Syariah-Muamalat merger plan could put the merged bank as the world’s 16th largest Sharia bank.

News agency Bisnis reported that BTN Syariah had recorded a net profit of Rp 235.27 billion (approximately $15 million) in the third quarter of 2023, up by 70.4 percent year-on-year (yoy). Bank Muamalat posted Rp 52.36 billion in profit after tax in Q3 2023, marking a 65.6 percent yoy increase.

Indonesia is home to the world’s largest Muslim population. Muslims represent 87 percent of the Indonesian total population, according to the government.