Muscat: ahlibank is planning to launch the Sultanate's first Islamic fund for the Middle East and North Africa (Mena) region. The bank is waiting for regulatory approvals from both Central Bank of Oman and Capital Market Authority.
"We are planning to raise the fund from Oman and other Gulf Cooperation Council (GCC) countries, using the facilities of our group institutions," Abdulaziz al Balushi, chief executive officer of ahlibank, told Times of Oman. The corpus money raised by the fund will be invested predominantly in Oman, and a portion in the Gulf region.
"We already had discussions with the Capital Market Authority and they give us a list of Sharia-compliant companies for investing the corpus," added Al Balushi, who declined to divulge the size of the fund.
Al Balushi anticipates ahlibank's loan book to grow in the region of 15-20 per cent this year, similar to last year. The bank has achieved a 19 per cent growth in net profit at OMR21.7 million in 2012, over the previous year. "What is more important for us is the quality of assets and not how large we can grow our balance sheet. We are very prudent and cautious in booking loans. We look at the quality of assets and not in the business of ballooning the balance sheet."
The bank's total loans and advances soared by 21 per cent to OMR927 million in 2012, over the previous year. He also noted that the bank's overall credit is well balanced between corporate and retail segments.
"At the moment, the retail banking growth has been very slow, mainly due to restrictions imposed by the banking regulator. While on the other hand, all the banks are witnessing a growth in corporate segment, thanks to the implantation of major projects. I expect corporate sector to continue to grow faster than retail segment," he explained.
Al Balushi expects severe competition from Islamic banks this year due to their excess capital. However, he said, ahlibank is well positioned in Islamic banking business. "We are the only bank that has five Islamic banking branches at this point of time. We have six Islamic banking products for retail customers alone, which is in addition to catering to the needs of corporate sector." The bank earlier said that it is planning to open sixth Islamic banking branch in Salalah soon.
Referring to the recent move to acquire Taageer Finance, he said it is mainly for strengthening SME funding in line with the proposed five per cent minimum stipulation of SME funding by banks and for strengthening Islamic finance in leasing business.
Taageer has a very good exposure in SME sector and micro-finance. "Also, we look at Taageer in terms of leasing products. It could be a good platform for us to market Islamic products. We have designed very good products and by using their network, system and people, we could strengthen our position. It is going to fit very well in our synergy," he added.
Further, he said, alhbank's cost of fund is much lower than Taageer Finance or any other leasing company, which is another advantage. Yet another reason for the proposed acquisition is the high capital adequacy ratio of ahlibank. "We are over capitalised and our ratio is around 17 per cent."