Malaysia's leading bank Malayan Banking said that its Islamic finance sector helped drive full-year profits up 12.0 percent to RM2.80 billion (US$756 million).

Maybank said that the results to June were boosted by higher net interest income, as well as improved Islamic banking and non-interest incomes.

Full-year revenue increased 13 percent to RM12.7 billion, even though revenue in the fourth quarter to June fell 20.5 percent to RM2.91 billion.

Net profit for the fourth quarter, however, rose 50.7 percent to RM855.38 million mainly due to some write-backs of loan-loss provisions, it said.

Asian leader

"With the rising cost of living, the challenge to the industry will be the preservation of asset quality," the bank said.

Malaysia, a predominantly Muslim country, has established itself as the Asian leader in Islamic banking after introducing the service in 1983.

The sector now makes up nearly 10 percent of the nation's banking system and the government aims to double this to 20 percent by 2010.

Islamic finance, banking and insurance complies with sharia or Muslim religious laws that ban the earning of interest, or involvement in alcoholic drinks and gambling.