Suvarnabhumi Airport, Bangkok

A good mate, Ally, asked me about this incredible deal that she had heard Bank Rakyat is paying out for fixed deposits. She had heard that they were paying out not 6%, or 8% or even 10% but…get this, 15% in “interest”. Although cynical that such a deal could exist, my curiosity was piqued and I decided to google for more information. 


It turns out that there is indeed such an offer…but it’s not exactly interest you’re getting. It’s dividends…

Bank Rakyat is an Islamic cooperative bank that has been paying out a 15% dividend to its members, for the past 8 years. Note that I said “dividend” and not “interest”. Actually the 15% dividend is payable only to the co-op bank’s members. Members are shareholders who own a stake in the bank. To become a member all you need is to be at least 18 years old, pay an entrance fee of RM5 and invest a minimum of RM500 (500 shares @ RM1 each).

But according to their website there is a “waiting list” to become a member so it may not be as easy as filling up a couple of forms and handing them your cash.

As for me, I’m still wondering why they are paying such a high dividend. Recalling the adage “high returns go hand in hand with high risk”. It’s good to see that they have got a consistent track record of paying out high dividends. However, I still believe there is probably much more risk than you would be exposed to compared to if you were to buy shares in a normal bank. 


Think about it. Dividends paid by the listed local banks are around 3-4% I believe but there’s also a chance of capital appreciation adding at least another 5%-10% if not more. So on the balance, the total returns to investors could also easily come to 15%. The good thing with buying shares in the listed banks is that you can sell anytime and get whatever “dividend” owed to you as this has already been factored into the bank’s share price by the market. The problem I see with Bank Rakyat is that if you need to sell your shares, you will not get to see the dividend if it has not been declared.


Still no harm to check them out to get more details. You can contact the Co-operative Services & Membership Department at 03-26129 573 / 561 / 562 or e-mail at for more info.


Other things worth noting:

  1. Becoming a member or shareholder of the co-op Bank is different from putting money into the savings/deposits accounts offered by the Bank, which anyone from the public can do. Deposits and savings will earn you a 3-4% rate similar to what you will get from other normal banks.
  2. For its financial year ended Dec 31, 2006, Bank Rakyat posted its highest earnings to date with a 32.6% year-on-year increase in profit after tax and zakat to RM561.35 on total income of RM2bil (source: theStar 26/2/07)
  3. According to a recent article dated April 21, 2007 by Bernama, ths Bank is targeting a profit before tax and zakat of RM713 million this year, up by 13.9% from the previous year. 60% of its Q1 profit was contributed by personal loans, 20 % property, and 20 % from pawn broking and car loans.  (compare: Maybank 2006 profit RM2.8bn, BCHB  RM1.5bn)
  4. The bank is also reported to be planning on opening 8 more branches this year to bring the total tally of branches to 119.
  5. As a financial institution, its primary aim is to raise the economic well-being of its members by providing financing facilities at reasonable rates for agriculture, production, marketing, industrial, fishery, transportation, housing, business, and other beneficial activities. The Bank also seeks to ensure a satisfactory profit towards meeting dividend payments to its members while charging reasonable profit rates to its members (source: Bank Rakyat website)