CIMB Niaga is set to spin off its Islamic banking unit into a standalone lender in Indonesia in the fourth quarter of this year, marking a key step in its strategy to strengthen its position in the country’s shariah finance sector.

The new entity will operate as Bank CIMB Niaga Shariah and will expand more independently within Indonesia’s growing Islamic banking landscape.

“We expect the spin-off to be in the fourth quarter,”

its President Director and Chief Executive Lani Darmawan tells The Edge in a virtual interview.

The timeline is based on the bank’s latest engagement with regulators.

Indonesia’s Islamic banking industry has been expanding steadily, supported by strong domestic demand.

However, penetration remains relatively low compared with regional peers.

Islamic banking assets account for about 8% of total banking assets in Indonesia, significantly below Malaysia’s level of more than 40%, indicating considerable room for growth.

According to data from the Financial Services Authority (OJK), Indonesia’s Islamic banking assets stood at IDR1,028 trillion as of October 2025.

Following the spin-off, Bank CIMB Niaga Shariah will begin operations with around IDR70 trillion in assets and approximately 30 branches nationwide.

It will enter the market as one of the larger Islamic lenders in Indonesia from inception.

CIMB Niaga currently holds about 7% market share in Indonesia’s shariah banking segment.

“Currently, we have about 7% market share in terms of shariah banking in Indonesia,”

Darmawan says.

“As a unit usaha shariah, basically, an Islamic business unit or window within the bank. we are right now the largest shariah banking window in Indonesia. But overall, we are the second-largest Islamic bank in Indonesia, after Bank Shariah Indonesia (BSI). We are almost head-to-head with Bank Tabungan Negara (BTN), which did the spin-off of its Islamic banking unit a couple of months back.”

Featured image credit: CIMB Niaga