Islamic banking industry has bright future in UAE
The Islamic banking sector has a bright future in the UAE as it has been playing a major role in financing infrastructure projects, residential properties and corporate expansion, a top official of Noor Islamic Bank said.
The Islamic lender, which was established with a vision to be recognised as the financial icon from Dubai, is developing its online and mobile banking products and services to expand its reach to the customers. The bank is all set to launch its latest product – A Bank in Your Hand — at Gitex Technology Week next week.
“Islamic financial instruments have the potential to become a key funding source for the nation’s infrastructure needs,” Hussain Al Qemzi, group chief executive officer of Noor Investment Group and CEO of Noor Islamic Bank, told Khaleej Times in an interview ahead of the World Islamic Retail Banking Conference, starting from October 9.
Noor Islamic Bank is a full-service bank delivering the broadest range of products for its customers, with an emphasis on unique and personalised services. It has branches in Abu Dhabi, Dubai and Sharjah, and has a representative office in Tunisia. The bank’s mission is to be ranked among the top 100 most innovative companies in the world by 2020.
“I believe prospects for Islamic banking in the UAE are bright. The UAE Islamic banks account for around one-fifth of all banking assets in the country and 30 per cent of the global Islamic banking industry,” Al Qemzi said.
He said the UAE Islamic banks play a major role in financing infrastructure projects, residential properties and corporate expansion. “This will continue as the country’s economy maintains its steady growth, thanks to the influx of petrodollars, resulting from high oil prices.”
“Infrastructure financing, in particular, represents a tremendous opportunity for Islamic finance. At a time when the conventional banks are offering fewer and shorter loans, the UAE government and companies are increasingly turning to other options for finance,” he added.
Al Qemzi, a seasoned banker with over 28 years of experience working with the leading financial institutions in the UAE, is an insightful leader with proven experience of incubating, leading and managing strategic ventures and business transformation initiatives. During his tenure as CEO, Noor Islamic Bank has received 19 prestigious industry awards. Al Qemzi was also awarded the prestigious 2010 ‘CEO of the Year Award’ in the Islamic banking category at the CEO Middle East Awards.
About the outlook of banking sector in second half, Al Qemzi said the UAE banks are in a much better position today, but some challenges remain around credit growth and provisioning for legacy issues linked to overexposure to corporates and government entities.
“I am optimistic for the future. While uncertainties about the health of the global economy remain, the UAE banks are in a much better position today, than they were in 2008. The UAE banks are benefitting from improving liquidity, with higher deposits helping to push down the loan-to-deposit ratio below the 100 per cent for the first time since mid-2011.”
“Profits are holding up, assets are building, but challenges remain around credit growth and provisioning for legacy issues linked to over-exposure to corporates and government entities,” he added.
To a question about the bank’s profit and revenue growth in 2012, he said: “This year will be our first full year of sustained profitability, in line with our five year forecast when we launched in 2008.”
In reply to a question regarding the opening of more branches, he said Noor Islamic Bank is present in Abu Dhabi, Dubai and Sharjah. “There are no plans to open more branches at this time. Instead, we will focus on developing our online and mobile banking products and services, the latest of which, ‘A Bank in Your Hand’ we will be launching at Gitex Technology Week, later this month.”
In reply to a question about the bank’s Shariah-compliant services, he said Noor Islamic Bank is delivering the broadest range of Shariah-compliant products to its customers, with an emphasis on unique and personalised services.
“Noor Islamic Bank’s products and services are governed by a Shariah board, comprising leading Islamic scholars with extensive experience and expertise in legal, financial and banking-related matters.”
About the bank’s growth strategy, he said the bank is continuing to develop its retail offerings, with a strong focus on enhancing our customers’ online and mobile banking experience. “Our growth strategy is one of prudent growth, as we seek to extend the reach of our corporate advisory, capital market and structuring capabilities. At the same time, we continue to seek opportunities in international markets as cross-border investment opportunities emerge,” he said.
Elaborating his point, he said some investment opportunities emerge in Turkey and Southeast Asia. “In Turkey, we have closed Islamic mandates valued at nearly $3 billion over the past three years, the latest of which is a $450 million facility for Al Baraka Turk Bank, the largest Islamic finance deal in the history of Islamic banking in Turkey. In Southeast Asia, we believe the growing regional economies will provide significant opportunities to expand our cross-border business,” he said.
“We are keen to build relationships and cooperate with other banks on cross border deals. We believe this route offers us greater growth opportunities than establishing a physical presence in markets outside the UAE,” Al Qemzi concluded.
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