Dubai Islamic Bank Eyes Expansion Into African Markets

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Dubai Islamic Bank, UAE largest sharia-compliant lender, has revealed plans to expand its operations to Kenya and other African countries as well as Indonesia, as it seeks growth for its domestic and international business.

DIB’s chief executive, Adnan Chilwan told Reuters that the bank is exploring opportunities in Indonesia, Kenya and surrounding countries in Africa, the Indian subcontinent and the GCC (Gulf Cooperation Council), with the hope of doing this via acquisition, Joint Venture, establishment of a finance company, or through a greenfield operation startup.

While describing Africa as a virgin territory for Islamic finance, Chilwan said countries like Kenya where about 15 percent of the populations are Muslims and the financial regulator is preparing a ten-year capital markets development strategy that includes Islamic finance, is a viable investment hotspot for Islamic banking.

In recent times, Islamic banking, with respect to its strict priniciples, has put forward as a viable option to eradicating poverty

According to Standard Chartered Saadiq Bhd (StanChart Saadiq) CEO Wasim Saifi, market demand and support from the government will drive Islamic banking forward. He sees retail customers, corporate sector as well as small and medium enterprises (SMEs) fueling market demands.

“Both consumer and wholesale opportunities are there, especially in the countries we are targeting and while the initial investments are not too intensive, the returns are extremely decent and more than acceptable in our line of work,” DIB boss said.

The bank whose major revenue are sourced within the United Arab Emirates had been focusing on strengthening its balance sheet, reducing costs and dealing with bad loans and debts in the last few years. In 2013, it completely took over Dubai-based mortgage lender Tamweel, through a share swap.

While the bank expects strong growth in its domestic market, Chilwan said that entry into one another country would ease expansion into other countries around the region, so the balance between local and international business would not change radically.

“Given a five-year scenario, we expect a decent franchise spread across these countries with stable and solid yields across all sectors.”

“With all the plans in place, we do not expect a dramatic change in the medium term, with international business perhaps getting at best 10 percent to 15 percent of the overall group numbers in about six to eight years.”

DIB was recently recognised at two of the most prestigious awards ceremonies for its industry-leading corporate banking services.

The bank received one of the highest accolades at the EMEA Finance Middle East Banking Awards 2013, as the “Best Sukuk House, UAE,” in addition to winning “UAE Deal of the Year”, “Kuwait Deal of the Year” and “Pakistan Deal of the Year” at the Islamic Finance News awards 2014.

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