By Arif Sharif
Aug 12 (Bloomberg) Abu Dhabi Islamic Bank PJSC (ADIB) plans to expand in North Africa as the lender controlled by the emirate’s ruling family seeks to access more-populous markets.
The bank applied for licenses in Algeria and Libya and is considering Tunisia and Morocco, Chief Executive Officer Tirad Mahmoud, said in an Aug. 4 interview. Interest in Shariah-compliant banking has increased since 2011, when revolts in North Africa catapulted Islamists to power.
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Lenders are pursuing new markets as populations of about 8.3 million in the United Arab Emirates and 1.9 million in Qatar limit domestic growth opportunities. Photographer: Duncan Chard/Bloomberg
We are seeking to expand in nations with “a critical mass in terms of population and economic activity,” Mahmoud said. The bank wants to be better placed to serve companies, such as Dubai-based mall operator Majid Al Futtaim, which operate across the Middle East and North Africa and rely on global lenders such as HSBC Holdings Plc (HSBA) and Citigroup Inc., he said.
Peers including Doha-based Masraf Al Rayan said in February it plans to buy into a Libyan lender and convert it into an Islamic business. Abu Dhabi sukuk are in demand, with the yield on the lender’s November 2016 securities falling 54 basis points in the past year to 2.22 percent at 5:18 p.m. in Dubai, compared with an increase in Gulf Cooperation Council financial services yields tracked by HSBC/Nasdaq Dubai indexes.
Regional Mandates
Lenders are pursuing new markets as populations of about 8.3 million in the United Arab Emirates and 1.9 million in Qatar limit domestic growth opportunities. Since 2008, Abu Dhabi Islamic has moved into countries including Saudi Arabia, home to about 28 million people, Egypt, whose population exceeds 80 million, and Sudan, Mahmoud said.
“Regional companies, when they choose their banks, choose those that are present in all their key markets and they give them regional mandates in working capital management, trade, and foreign-exchange flows,” he said.
Banking services that comply with Islam’s ban on interest came into focus after autocratic rulers who long oppressed Islamists were toppled in countries including Tunisia and Libya. Islamic financial assets could double to as much as $3 trillion by 2015, Standard & Poor’s forecast last year.
