Abu Dhabi Islamic Bank PJSC, the United Arab Emirates’ second-biggest shariah-compliant lender, is considering entering markets in South East Asia and Africa to tap demand in countries with a large Muslim population.
The bank has “looked closely” at Indonesia and Malaysia as well as Algeria, Morocco and Jordan, Chief Executive Officer Tirad Mahmoud, told reporters late on Sunday. “We are actively visiting locations where we may be planting a flag” and may consider an acquisition next year as part of the plan, he said.
Banks in the U.A.E. are seeking to expand to diversify revenue and boost growth, which is restricted by the small size of their home market. ADIB, as the bank controlled by Abu Dhabi’s ruling family is known, is present in countries including Saudi Arabia, Qatar, Iraq, Egypt, Sudan and the U.K.
ADIB in 2014 acquired the retail banking business of Barclays Plc in the U.A.E. for 650 million dirhams ($177 million). The bank was also among lenders that bid to buy the retail banking assets of Citigroup Inc. in Egypt this year, losing out to Commercial International Bank Egypt SAE last month.
“We will be looking to do deals in 2016,” Mahmoud said. “If it’s a retail business, it’s going to be acquisitions, if it’s going to be a corporate business it will be greenfield.”
ADIB expects lending to grow by four percent to six percent this year, slower than expected industry loan growth in the “high single digit,” Mahmoud said. A slowdown in property transactions, competition and ample cash at banks is hurting growth, he said.
ADIB would like its return-on-equity to be at the higher end of 15 percent to 18 percent, the range for most U.A.E. banks, Mahmoud said. The bank has no plans to sell Islamic bonds or sukuk in the next three months and will evaluate its capital position every quarter depending on growth, he said.
(Bloomberg Business / 06 July 2015)
---Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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