x Abu Dhabi, UAETuesday 25 July 2017

ADIB plans to expand in North Africa

Abu Dhabi Islamic Bank plans to expand in North Africa as the lender seeks to access more-populous markets.

Abu Dhabi Islamic Bank plans to expand in North Africa as the lender seeks to access more-populous markets.

The bank applied for licenses in Algeria and Libya and is considering Tunisia and Morocco, chief executive Tirad Mahmoud, said. Interest in Sharia-compliant banking has increased since 2011, when revolts in North Africa catapulted Islamists to power.

We are seeking to expand in nations with "a critical mass in terms of population and economic activity," Mr 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 and Citigroup, 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 53 basis points in the past year to 2.23 per cent at late Monday morning in Dubai, compared with an increase in Gulf Cooperation Council financial services yields tracked by HSBC/Nasdaq Dubai indexes.

Lenders are pursuing new markets as populations of about 8.3 million in the United Arab Emirates and 1.9m in Qatar limit domestic growth opportunities. Since 2008, ADIB has moved into countries including Saudi Arabia, home to about 28m people, Egypt, whose population exceeds 80m, and Sudan, Mr 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 US$3 trillion by 2015, Standard & Poor's forecast last year.

Libya, where almost all of the 6.6m people are Muslim, has no stand-alone Islamic lenders, while Tunisia passed a law in July to allow sukuk sales to boost Sharia-compliant banking. Morocco and Algeria plan to expand their Islamic banking businesses and are drawing up plans to sell sukuk.

 

* Bloomberg News