As Islamic finance continues to grow and the market matures, the products and services it provides continue to innovate and impress. The Banker rewards the best of these in its Islamic Bank of the Year Awards 2014.
The global Islamic banking markethas continued on its path of growth in the past 12 months, with an impressive expansion of sharia-compliant products and services. This is partly the result of institutions tailoring their services as they branch out in search of new market segments. Yet, it also signifies the growing sophistication of the contemporary Islamic banking market, as institutions refine existing products, develop new services and employ innovative technological solutions across business lines.
The pace of growth of Islamic banking, coupled with the scale of the market’s potential, is prompting the emergence of new entrants. Smaller, up-and-coming players are now vying with established banks, particularly in the competitive retail segments of the larger, more dynamic markets. In turn, this competition is delivering a new emphasis on customer service and engagement, improving the accessibility of banking products as well as the geographical footprint of banks across regional hotspots such as south-east Asia, the Middle East and north Africa.
According to The Banker’s 2013 Top Islamic Financial Institutions survey, sharia-compliant assets increased globally by 8.67% from 2012, reaching $1267bn. The Islamic Bank of the Year Awards 2014 looked to those entrants who had achieved a level of innovation or market growth above and beyond the stellar performance of the industry as a whole. This included smaller banks and emerging heavyweights alongside those institutions that are successfully established in the market.
Judges also looked for standout deals and transactions that highlighted an institution’s sophistication in dealing with complex or ground-breaking structures. Of note, the National Commercial Bank of Saudi Arabia’s $1.3bn sukuk and 2014 initial public offering helped the bank scoop this year’s country award. Likewise, Albaraka Turk Participation Bank’s Tier 2 subordinated loan murabaha sukuk issuance, the first of its kind issued on the global capital markets, was a major achievement for the bank.
These examples point to the highly dynamic global sukuk market, as well as the level of demand for these types of sharia-compliant debt instruments.
In short, this year’s awards recognise the pioneering, ambitious vanguard of Islamic banks that are pushing the frontiers of sharia-compliant finance around the world.
Winner: Maybank Islamic
This year’s global winner, Maybank Islamic, not only enjoyed remarkable growth in 2013, but also demonstrated its long-term commitment to product and service innovation in the global market. Regional and international expansion in the past 12 months saw the bank improve its position as the third largest Islamic bank in the world by assets ($38bn), particularly as core expansionary markets, including Indonesia and Singapore, continued to perform well.
“The regulatory environment in Malaysia with the enactment of the Islamic Financial Services Act 2013 brought about positive challenges wherein the Malaysian central bank, true to its mantra, in taking the lead in developing the industry globally, further enabled the Islamic financial institutions to maximise global reach through promoting greater harmonisation, cohesion and accountability,” says Muzaffar Hisham, Maybank’s group head of Islamic banking and chief executive.
“Conditions within the global financial markets, particularly within the eurozone and with the tapering of the US Federal Reserve’s quantitative easing, brought about certain fluctuations within the G3 currencies [dollar, yen and euro], however domestic and regional demand in our countries of operation helped ease the uncertainty,” says Mr Muzaffar.
The bank’s net profits jumped 18.4% in 2013, to $333m, while total sharia assets and Tier 1 capital grew 36.8% and 34.9%, reaching more than $38bn and $1.7bn, respectively. Maybank Islamic also maintained the largest market share of Islamic commercial financing, at 29%, as well as deposit market share, at 23%, in a highly competitive Malaysian market. The bank’s growth in both of these segments outpaced industry standards, with 40% financing growth year on year against an average of 20%, while deposit growth, at 17% year on year, also outperformed the industry average of 14%.
The bank’s efforts to maintain and expand this dominant position in the local market are extensive, particularly in community and customer engagement. In
2013, Maybank Islamic conducted 21 marketing events and campaigns to stimulate deposit growth in the country, while leveraging on 16 Islamic banking branches and its parent company’s 507 branches to support this growth.
The bank has also introduced a number of Islamic products to the market, while streamlining existing offerings to better target specific customer segments. In the retail space, Maybank Islamic developed the Maybank One Solution-I package, comprising a seven-in-one banking solution to support the banking needs of the mass market. The innovative package includes Personal Savers-i with a supporting e-banking system; Flexi Saver Plan-I, a flexible savings plan; and Personal Cash-I, which acts as an unsecured lending platform for quick access to cash, as well as investment and insurance plans.
In 2013, the bank’s regional efforts focused on long-term priority locations, including Singapore and Indonesia. In Singapore, Maybank Islamic worked to establish its retail and wholesale banking product range. This emphasis has generated a number of landmark offerings in the country’s banking market, including the first Islamic autofinancing product, the first sharia-compliant cross-currency property financing in the wholesale banking sector, as well as the development and implementation of the bank’s Restricted Profit Sharing Investment Account.
A similar strategy was pursued in Indonesia, where the bank tailored its approach to the local market, introducing, among other innovations, two-wheeler financing and treasury solutions. Total assets and deposits in the country saw year-on-year growth of 91% and 402%, respectively.
Globally, Maybank Islamic, in conjunction with Maybank Investment, captured 7% of the international market share for sukuk issuance. In 2013, this came to more than $3bn through 134 issuances. Moreover, the bank’s cross-border deals also enjoyed considerable growth. The bank was involved in a number of key transactions in 2013, including the Swiber Capital S$150m ($119.81m) issuance, which was the largest Singapore dollar sukuk issuance by a corporate.
The bank’s expansion plans have been supported by its strong capital position and successful tapping of the Islamic capital markets. And its AA1 locally rated, Tier 2 and Basel III-recognised RM10bn ($3.1bn) sukuk programme, of which the first tranche of RM1.5bn was competitively priced to the market in 2014, will help the bank execute its long-term growth plans.
“In 2013, Maybank Group Islamic Banking further solidified its position as one of the global leaders in Islamic finance as we sustained our position as the world’s third largest Islamic bank, registering remarkable growth of 39% in financing and breaking the RM1bn mark for our profit-after-tax indicator. Our achievements are credited to our dedicated employees and sound risk management practices across the group,” says Mr Muzaffar.
“Going forward, our priority will be to drive profitability contribution from our key regional markets – Indonesia and Singapore – while facilitating global cross-border Islamic finance linkages for our clients. Our approach will be innovation driven and focused on market demand-based products, in line with our philosophy to be client and community centric.”
Winner: Al Baraka Banking Group
Al Baraka Banking Group (ABG) maintained its positive growth trajectory throughout 2013, as the bank and its regional and international subsidiaries continued to excel in their respective markets. This growth was all the more impressive in light of the challenging political and economic circumstances experienced in some of the bank’s key markets. ABG’s consolidated assets grew by 10% in 2013 to $20.97bn, while total financings and investments grew 7% to $15.36bn.
Much of this growth was evenly spread across the bank’s subsidiaries, although the impact of local currency volatility against the US dollar had a negative impact on profits in some instances, particularly in Turkey, Syria and South Africa. Nine subsidiaries recorded a net profit in 2013, eight of which either grew their net income or shifted from a negative outcome in 2012. Across the Middle East, ABG has enjoyed significant growth and is expanding its presence in a number of countries, including its home markets of Bahrain, Egypt and Jordan.
The group’s commitment to technological and service innovation has been a key feature of its growth in the past year. For example, subsidiary Al Baraka Bank Sudan will be launching a new mobile banking service in 2014, which will include a bill payment service offered through ATMs or mobile phones. Similar advances are being made across most of ABG’s subsidiaries, including Lebanon, where SMS banking, mobile phone banking and a 24-hour customer interaction centre are being launched this year.
ABG has achieved this growth while championing social responsibility. The bank’s dedicated social responsibility programme is regarded as pioneering among Islamic banking and financial services institutions worldwide. The programme includes a philanthropic component, as well as a focus on economic opportunities and social investments that covers community development and financing, and investments for affordable housing and healthcare activities. For the latter, investments of more than $925m have been made, accounting for 6.5% of total financings and investments, while total group-wide contributions to the philanthropic programme amounted to $5.9m.
Winner: Bank Islam Brunei Darussalam
Bank Islam Brunei Darussalam (BIBD) consolidated its position as Brunei’s leading Islamic bank in 2013, with total sharia assets and Tier 1 capital increasing by 4.5% and 7.8%, respectively. The bank’s 2013 rebranding strategy, emphasising the motto ‘Bruneian at heart’, saw the introduction of several innovative and customer-centric concepts to operations.
This fresh approach has been promoted at branch level, where the bank has focused on customer satisfaction. In particular, BIBD launched branch concierges, roving personal bankers and audiovisual exhibition and display spaces, among other concepts, to promote greater customer engagement with the bank’s staff and its products.
In tandem with these developments, a focus on electronic distribution channels through a mobility and digital economy engagement programme has provided retail and commercial customers with new banking and payment services for smart devices. These functions allow customers to pay bills, and buy products in store and online using their mobile device.
Advances to the bank’s Hadiah reward points scheme, introduced in 2012, enable customers to make points-denominated payments for goods and services in store.
In 2013, BIBD harnessed emerging-technology platforms to augment services, particularly in its trade finance department. Similarly, institutional banking services have grown domestically and internationally, with BIBD either acting as a key issuer or lead manager in a number of large financing facilities in the local market, as well as Turkey, the Gulf Co-operation Council, Bangladesh and Morocco.
As the largest bank in Brunei, BIBD has established a leading position in terms of assets, financings and deposits. It also has a significant geographical footprint across the small south-east Asian country, with 15 branches in the country’s four districts, as well as the largest network of ATMs, and cash and cheque deposit machines in the country.
Winner: Bank Pasargad
Bank Pasargad built on its strong performance in last year’s awardsby increasing its domestic lead in electronic and mobile banking systems. The bank became the first in Iran to introduce virtual card services, virtual banking, and secured payment mobile banking systems based on the unstructured supplementary service data protocol used by mobile phones, as well as geographical information systems, which can capture and utilise customer locations.
Despite the absence of interbank funds based on a digital signature certificate in Iran, Bank Pasargad has devised its own two-factor password system for safe internet banking. This allows an easier and more secure transfer of funds online.
The bank has launched a number of products and services to promote electronic payments. Its Ghabz PAD system enables the payment of goods and services through barcode scanning, as well as the payment of utility bills using a smartphone.
In 2013, Bank Pasargad’s Tier 1 capital increased to $3.9bn from $3.3bn in 2012, while total sharia assets increased from $18bn to $24bn. The bank’s commitment to innovation and growth in the market has also delivered substantial increases to net profits, up 25% to $1bn, from $802m in 2012.
Co-operating closely with the public and private sector, the bank has introduced the My Dual Card scheme, a card designed to pay for municipal taxes, as well as provide membership to the national football team fan club, among other organisations.
The introduction of an IR30m ($1200) credit card for the purchase of home appliances and for use in domestic tourism has also proved widely popular.
The expansion of the bank’s electronic products and services has been accompanied by broader geographical growth. Bank Pasargad’s branches increased to 325 in 2013 from 297, in line with its plans to expand its market share in underserved areas of the country.
Winner: Jordan Islamic Bank
Jordan Islamic Bank(JIB) maintained a strong level of growth throughout 2013, assisted by a prudent management strategy that has steered it through a challenging domestic and regional economic environment. Moreover, the bank has maintained its leading position despite an increasingly competitive Islamic banking space in the local market.
The bank achieved the highest return on equity of any bank in the country in 2013 at 18.63%, while net profits increased by 23.7% year on year, reaching $63.6m from $51.4m. Moreover, total sharia assets grew by 8.6% to $4.6bn. JIB’s conservative approach to growth has also seen its Tier 1 capital grow 10% in 2013, reaching $320.7m.
Over the past 12 months, JIB has expanded its network of branches and ATMs across the country, reaching 83 and 140, respectively. In addition, the bank introduced a number of innovative financing solutions and products in response to market demand. In particular, the Labbayk financing solution for Omra and Haj Financing was launched as a means to support customers looking to complete the Hajj and Omra pilgrimages.
JIB’s Iqra financing programme offering not only provides financing for a student’s school or university tuition but the programme is also designed to mobilise greater educational opportunities for the country’s youth.
The bank’s long-term commitment to innovative customer service options has seen the introduction of upgraded e-banking options, including the facility to receive SMS messages with updates on account transactions. Visa card holders can also access the SMS service to find the outcome of a transaction.
Meanwhile, developments to JIB’s I-Banking system now allow customers to conduct money transfers between accounts at JIB, as well as settle local telephone bills. These additions, which are free of charge, are designed to enhance existing I-Banking tools covering the customer’s account balance, chequebook requests, account statements and other information.
“Jordan Islamic Bank continues to diversify, develop and improve the quality of its banking and social services. Moreover, we plan to expand the issuance of muqarada bonds, as well as expanding our network of branches and cash offices to bring Islamic banking to a wider sector of the community,” says Musa Shihadeh, JIB vice-chairman, chief executive and general manager.
Winner: Ahli United Bank Kuwait
A strong financial performance, together with innovative banking practices and a commitment to technological development, all helped Ahli United Bank (AUB) Kuwait win this year’s country award. Consistently the most profitable bank in Kuwait (of both conventional and Islamic institutions), with the highest return on average equity and the highest return on average assets, AUB Kuwait built on its success across its private banking, corporate and retail business lines through commercial partnerships and innovative service offerings.
In its private banking segment, AUB Kuwait has partnered with commercial realtor Jones Lang LaSalle to provide clients with premium property services in the UK, including exclusive opportunities to purchase properties. An agreement has also been signed with London estate agent Knight Frank to assist the bank’s clients in the search and acquisition of secondary-market UK residential properties.
In terms of retail activities, the bank has augmented its online services to enable the online payment of education fees. The success of this scheme saw a 35% increase in the volume of transactions being conducted through the bank’s online payment system.
On the corporate side, in 2013 AUB Kuwait launched an Islamic syndications desk to facilitate club financing of mega-projects that require the involvement of multiple banks. The bank also launched
the corporate deposit card, which for the first time permits ATM and cash and cheque deposit functions for corporate customers. AUB Kuwait also launched a similar service for its corporate credit card, making it the first Islamic bank in Kuwait to offer corporate clients a card with the same functionality and features as a typical platinum credit card.
AUB Kuwait’s Tier 1 capital increased 7.9% year on year in 2013, reaching $946.1m. Most impressively, total sharia assets grew by 17.5% to $11.1bn, while net profits also increased to $151.8m, up 10.2% compared with 2012.
“The Kuwait banking industry has enjoyed significant growth in its customer base along with a growth in the competitive nature of banks offering their services. Recently, the Central Bank of Kuwait has allowed foreign banks to establish branches within the territory. This encourages more opportunities and choices for customers to explore,” says Ahmed Zulficar, AUB Kuwait’s deputy chief executive.
“We plan to continue to execute our successful growth strategy for the years to come by offering more developed products and cutting-edge services to our existing and potential customers. With the investment in our staff as well as the new means of banking technology, AUB prides its position for being a leading bank in providing bespoke banking products and services along with superior customer service.”
Winner: OCBC Al-Amin Bank
Despite being one of the smaller players in the competitive Malaysian market, OCBC Al-Amin Bank was the standout winner for this year’s country award.
The bank registered net profits of $34m in 2013, an increase of 133% from the previous year. Growth figures from 2011 to 2013 position OCBC Al-Amin as one of the fastest growing Islamic banks in the Asia-Pacific region. Much of this success has come from its strong corporate financing activity, as well as increased involvement in home financing.
Catering to its wholesale banking clients, OCBC Al-Amin has launched more than 10 foreign-currency Islamic products and services that cover financing and treasury options. In addition, the bank offers foreign currency Islamic financing options, as well as foreign currency sukuk either in US or Singapore dollars.
OCBC Al-Amin is also expanding its presence in the retail market as a priority. The launch of OCBC Al-Amin Xpres, Malaysia’s only Islamic bank open seven days a week, which is also open on evenings, speaks to the bank’s ambitions in this segment. The roll out of these branches is part of a wider strategy to generate a greater number of retail depositors, while targeting young working professionals in particular.
At present, OCBC Al-Amin’s deposit base is largely weighted towards corporates, leaving the bank more vulnerable to liquidity fluctuations from this sector. As such, and in tandem with its branch expansion strategy, the bank has executed a number of marketing campaigns promoting its deposits products and offering attractive rates to draw a greater number of retail depositors.
Significantly, the bank has been an active supporter of human capital development in Malaysia, particularly in the field of Islamic finance. An agreement with the International Centre for Education in Islamic Finance includes collaboration on staff training and development to augment Malaysia’s existing pool of Islamic finance professionals.
“There is a lack of public awareness and understanding of the merits of Islamic finance. This is important to address as it is a key driver to continued growth of the industry. There has been much effort [made by] both the industry players and governments to promote Islamic banking, but there is still room for improvement, locally and regionally,” says Syed Abdull Aziz Syed Kechik, chief executive of OCBC Al-Amin.
“We will grow OCBC Al-Amin’s Islamic banking business in both the wholesale and retail banking spaces. For the consumer business, we will continue to build capacity in personal financing, mortgages and wealth management through deeper and wider customer engagement. We will continue to spearhead efforts in wholesale banking business across the board covering from large corporates to [small and medium-sized enterprise] segments, and cross-sell our investment banking and treasury capabilities in capturing market share in the Islamic syndication and capital market space domestically and regionally.”
Winner: Qatar Islamic Bank
Qatar Islamic Bank (QIB) has enjoyed a highly successful 12 months, characterised by a growing international presence and the further innovation of its products and services. Moreover, in an increasingly competitive domestic market, the bank has distinguished itself through a commitment to customer engagement, as well as its pioneering advances in sharia-compliant financing.
“Despite some of the challenges in the domestic market, including increased competition from foreign and local institutions, QIB has recorded healthy growth across all financial indicators,” says the bank’s group CEO, Bassel Gamal. “Additionally, we have managed to strengthen our solid capital position and asset quality.”
QIB, in partnership with QInvest (one of the bank’s affiliates), jointly launched Shiira Funds, a range of sharia-compliant funds that incorporate international equity and sukuk markets. The aim of the funds is to deliver long-term and sustainable returns for the bank’s clients, through the provision of three investment options: defensive, moderate and long-term. Each category offers varying levels of risk, ranging from moderate to higher risk options.
Similarly, QIB has harnessed its expertise in global sukuk markets to offer a stake in its flagship product, the International Sukuk Portfolio. Managed by QIB-UK, a subsidiary, the portfolio is designed to offer customers the chance to diversify exclusively into the sukuk market. QIB-UK has a strong track record of asset management, including an existing $220m of assets under management offering 30% returns since 2009. Based on these numbers, QIB-UK beat the benchmark by 20% over the same period.
The bank has also enhanced its personal banking products. QIB’s Sadad payment programme offers customers a simplified and transparent payment system that allows them to buy out their liabilities from other banks and structure their financial needs in one fixed instalment over an agreed timeframe.
At home, QIB has expanded its presence with the installation of 25 ATMs and the opening of three branches. Overseas, the bank has commenced operations in Sudan under the first fully fledged overseas branch of Qatar Islamic Bank, known as QIB-Sudan. Additionally, it increased its holdings of QIB-UK, providing it with full ownership, as well as Arab Finance House in Lebanon, while QIB’s stake in Asian Finance Bank in Malaysia increased to 50%.
By the end of 2013, QIB had grown its Tier 1 capital by 0.23%, to about $2.5bn. Total sharia assets increased by 5.68% to $21.2bn, while net profits grew by 7.56% year on year.
QIB’s objectives for its home market include becoming Qatar’s benchmark Islamic bank, as well as the second largest bank in the country. “The bank will build on its domestic and global expansion to identify prudent opportunities for growth over the long term. In conjunction with this approach, QIB will play a more proactive role in the country’s economic growth prospects through greater engagement with the private sector, in line with national strategic vision for 2030,” says Mr Gamal.
Winner: National Commercial Bank
Saudi Arabia’s National Commercial Bank (NCB) was the standout country winner for 2014. The bank reported net profits of more than $2bn in 2013, a 21.7% increase from 2012, while total sharia financing grew by 19.1% to more than $33bn. This performance was supported by a number of growth initiatives, including focusing on mortgage-backed products and services, personal financing options, the expansion of the bank’s credit card programme, as well as extensive corporate financing activities, among others.
In early 2013, NCB approved a new strategy to promote growth, with the aim of significantly expanding the bank’s reach. The number of retail branches increased by 17, to 329, while NCB’s ATM network also increased significantly by 292. Similar growth was seen in the bank’s point of sale terminals, growing by 1300 to 14,075, and its QuickPay remittance centres increased by 29 to 57 across the country. This geographical expansion was accompanied by a broader evolution of the sales and service options and experience for retail and small and medium-sized business customers.
NCB’s Turkish subsidiary, Turkiye Finans Katilim Bankasi (TFKB), opened 68 branches across the country. TFKB’s swift growth in the market saw its total assets rise 43% compared with 2012, reaching $11.7bn at year end 2013.
The bank successfully executed its own $1.3bn sukuk in 2013, achieving a number of milestones in the process. As the largest issuance by a financial institution in Saudi Arabia, the transaction was structured as a 10-year non-call subordinated Tier 2 sukuk. This meant the deal also became the largest subordinated debt instrument issued by a financial institution in the Middle East and north Africa region. NCB is now preparing for an initial public offering, the first bank offering in the country since 2008.
“The past year was a landmark year in our bank’s advance toward the goal of being the region’s premier financial institution. NCB’s net income rose to a record SR7.85bn ($2.1bn), representing the highest among Saudi banks. This was driven by outstanding performance of our corporate banking, expansion of our retail network, strengthening of our infrastructure, and improving our service channels locally and internationally,” says Saeed Al-Ghamdi, NCB chief executive.
Winner: Albaraka Turk Participation Bank
In 2013, Albaraka Turk Participation Bankmaintained its leading position in the market with a set of outstanding financial results, coupled with the development of financing facilities and transactions that distinguished the lender from its peers. By the year’s end, the bank had increased its Tier 1 capital, total sharia assets and net profits by 2%, 16% and 5%, respectively.
Albaraka opened 30 branches in 2013, increasing its total number of branches to 167. The bank has plans to open a further 30 branches in 2014, before reaching 250 by 2017.
The bank’s major achievements for 2013 also include the development of new funding sources, largely a result of its international operations. Albaraka Turk completed a successful murabaha syndication facility, which was launched at $250m. Structured as a sharia-compliant, dual-currency (US dollar and euro), dual-tranche loan with tenors of one and two years, the facility ultimately received $430m worth of orders.
Albaraka Turk also had the participation of 23 institutions from around the world, helping to broaden and diversify its funding base, while developing new banking relationships and strengthening existing connections. The proceeds of the facility will be engaged to support and expand the bank’s financing activities in Turkey.
A standout transaction executed by the bank in 2013 involved a Tier 2 subordinated loan murabaha sukuk issuance. This was the first sukuk murabaha to be issued in the global capital markets, meaning the bank was able to benefit from a positive market environment and high demand for quality issuers in the Islamic finance space. The orderbook was two times oversubscribed, attracting a range of investors from the Middle East, Europe, the UK and the Asia-Pacific region. Banks accounted for 73% of the investment in the issue, while 10% went to funds and the remainder to other accounts. Ultimately, the issuance boosted the bank’s capital adequacy by almost 300 basis points.
As the leading Islamic bank in musharaka project finance, Albaraka Turk had 10 active projects at the end of 2013, all in the construction sector. Total earnings from these projects throughout the year amounted to Tl63m ($30m), a vast increase from the Tl18m generated in 2012.
“The decline of our capital adequacy ratio [CAR] in the first quarter of 2013, to 12.82%, was a point of concern. Yet, our main success has been overseeing an improvement to our CAR ratio, through the issuance of a $200m Tier 2 subordinated loan murabaha sukuk. The transaction was the first sukuk murabaha transaction issued in the international capital markets. This issuance supported the capital adequacy of our bank by almost 300 basis points and thanks to this facility we concluded 2013 with 33% growth in total funded credits,” says Fahrettin Yahsi, Albaraka Turk’s chief executive.
Winner: Abu Dhabi Islamic Bank
The standout winner for the United Arab Emirates was Abu Dhabi Islamic Bank (ADIB), which built on its success in previous years with impressive growth in most major metrics. Notably, ADIB’s Tier 1 capital increased to $3.4bn from $3.3bn, while total sharia assets jumped 22% to $28bn from $23bn. Owing to its ambitious growth strategy, the bank’s net profits also increased 21% to $395m from $326m in 2013.
ADIB is now growing its market share in the UAE through aggressive expansion of its retail activities. Much of the bank’s 2013 success was underpinned by strong retail customer financing, which grew by 20%, while deposits increased by 23.2%.
In April 2014, the bank’s growth strategy included the signing of an agreement to acquire the retail banking business of Barclays in the country. The acquisition is part of ADIB’s strategy of pursuing expatriate and non-Muslim customers to expand its footprint in the market.
This strategy is bearing fruit; the bank now sees about 40% of new business coming from expatriates, with 60% coming from UAE nationals. This is a marked increase from customer figures over the past few years, where 80% of business was sourced from locals and a mere 20% from expatriates.
To cater to the growing expatriate market, the bank is expanding its distribution channels in Dubai and the northern Emirates as it seeks to capitalise on the area’s rapid population growth and strong employment figures. The bank’s retail growth has been facilitated by one of the largest networks in the country, with 80 branches and 600 ATMs.
Despite this growth, ADIB has continued to enforce robust risk enterprise management controls and to take a prudent approach to new customer financing,
seeing its credit provisions and impairments fall 2.7% compared with 2012 to Dh780.4m ($210m).
“We remain positive about the UAE economy as well as the economies of the other countries in which we operate. ADIB is well positioned to continue its successful growth path both at home and across the broader region. ADIB’s vision of becoming a top-tier regional bank remains firmly on track with market leadership across an increasing range of segments in the UAE and expanding presence in the other six countries in which we operate,” says Tirad Al-Mahmoud, chief executive of Abu Dhabi Islamic Bank.
“Growing competition remains our primary challenge in the UAE, however, a 20% increase in net income and a 14% increase in the number of customers in 2013 demonstrate that we are growing above market average by targeting new customer segments such as expatriate retail and small and medium-sized enterprises to maintain our growth momentum.”
Source: The Banker