Saturday, February 11, 2012
- Not eager to become PM: Amin Fahim
- Imran accuses PM of putting system at stake
- Uzbek man admits plot to kill Obama
- Anonymous takes down CIA website
- PM should write letter to Swiss authorities: Qureshi
- US to help Pakistan boosts agriculture: Munter
- One more die of drug reaction, toll reaches 120
- Four children burnt to death in Multan
- Lahore: Shopping centre caught fire in Gulberg
- Australia beat Sri Lanka by 5 runs, remain unbeaten in tri-series
AlBaraka Islamic Bank (AIB) develops strategy to expand its business in Pakistan
ASHRAF JAVED talks to Shafqaat Ahmed, Country Head AlBaraka Islamic Bank Pakistan
Mr Shafqaat Ahmed, one of the leading
bankers in Pakistan with 38 years of banking
career, started his career as a management
trainee with a leading Pakistani bank in
1969 after completing his education at F.C. College Lahore and Punjab University. He had the opportunity to work at one of the world's major financial centres in Bahrain for almost 18 years with different banks. During the decade of 80's Islamic banking also made its mark, and Bahrain saw the emergence of quite a large number of Islamic banks. He got interested in Islamic banking and joined the pioneer of Islamic banking, AlBaraka Banking Group.
He says that AlBaraka Islamic Bank (AIB) has the honour of being the pioneer of Islamic banking in Pakistan. Keeping in view the vast potential of Islamic banking in Pakistan and its 15 years of experience in the country, the management of AIB has decided to localize its Pakistan operations by injecting additional capital of US$ 80 million.
Q: Please tell us about AlBaraka Bank, its network, volume and management in Pakistan?
AlBaraka Islamic Bank (AIB) has the honour of being the pioneer of Islamic banking in Pakistan and has been operating in the country as branches of AlBaraka Islamic Bank Bahrain since 1991. AIB is currently operating with 18 branches in 10 major cities of the country: Karachi (5), Lahore (4), Faisalabad (1), Multan (1), Gujranwala (1), Islamabad (1), Rawalpindi (2), Abbotabad (1), Peshawar (1), Mirpur (1).
As on December 31, 2007, the bank had an asset base of Rs. 22 billion, with a combined financing and investments portfolio amounting to Rs. 13 billion. The total volume of foreign trade business generated by the bank during 2007 was Rs. 30 billion. The bank earned a profit of Rs. 324 million during the year.
Q: What were the achievements of AlBaraka in 2007 and what are your goals and set targets for the current year?
The year 2007 proved to be yet another period of solid performance by the bank. In line with its expansion strategy, AIB opened seven new branches during the year in diverse geographical areas so as to ensure maximum outreach to the masses. The profitability of the bank also showed substantial improvement and registered a growth of 90% during the year. The aggregate financing portfolio of the bank also grew by a healthy 30%, on account of increased financing activities especially in the consumer sector. In line with this, the deposit base also went up by 23% to support the increased business activities.
For the current year, we plan to maintain our growth trajectory through network expansion and an increased focus on targeting new areas for penetration.
Q: How do you see the growth of banking sector in Pakistan and what is the future of this sector in Pakistan?
The banking sector in Pakistan has evolved over the years from a state-run institution to a more vibrant and efficient private sector enterprise. During the 1990s, the nationalized banks created a bureaucratic and politically influenced environment, which lead to widespread inefficiencies in the system. A major turnaround in the system was witnessed when the State Bank of Pakistan initiated the banking sector reforms in late 90's. These reforms not only sought to privatise the banking sector, but also introduced various measures relating to corporate governance and prudent bank management. In addition, the supervisory authority, i.e. the SBP, also focused on its own capacity building and emerged as a strong regulatory body to introduce and implement sound banking policies and procedures. As a result of these and other such measures taken during the last 7-8 years, the banking system in Pakistan has now become one of the most resilient and profitable sectors of our economy.
Within the banking sector, Islamic banking in particular has a tremendous potential for growth and development. Currently constituting around 4% of the overall banking industry, it is projected to capture a share of 15% by 2012. The availability of Shariah compliant financial solutions has a far-reaching appeal for customers both in the corporate and consumer sectors. There is a great potential for this largely untapped market to be explored even further through creating awareness and developing innovative Islamic financial products to compete with the conventional market.
Q: How would you compare the banking sector of Pakistan with other advanced countries of the world?
The far-reaching banking sector reforms mentioned earlier have resulted in a more efficient and competitive financial system. The pre-dominantly private sector ownership, improved legislative framework and supervisory capacity have resulted in a financial sector that is sound and exhibits an increased resilience to shocks. Our financial market has acquired a depth in terms of the availability of new and innovative financial products and instruments.
In order to enhance our international standing and competitiveness, the banking sector has adopted several internationally accepted best practices, such as the Basel II Capital Accord. This Accord in under implementation in most of the banking systems across the globe, and seeks to bring the risk management and capital adequacy assessment capabilities of banks at the same footing. Pakistan is also moving ahead with its own implementation process in a phased manner, with the aim of becoming fully compliant with this Accord.
Over the years, technology has become an integral part of the banking business by making it a more convenient and hassle free experience. With the aim of enhancing our competitiveness in this area as well, the banking industry in Pakistan witnessed a tremendous influx of IT based products and services in the last 4-5 years, in the form of ATMs, credit cards, internet and mobile banking etc. Efforts are also being undertaken in terms of infrastructure development and legislation to further improve and expand such technology driven services in the country.
Q: What challenges the banking sector is facing in Pakistan at present and how the professional bankers are meeting these challenges? What is your strategy in this regard?
The biggest challenge being faced by the banking sector is the availability of qualified and well-trained human resource. The banking sector is growing at a much faster pace but we are not able to produce as many professional as are required. This issue is even more pronounced for the Islamic banking sector, as there are very few institutions that offer courses related to this area. There is also a need for continuous professional development in this field through high quality trainings and seminars.
Realizing this need, AIB plans to establish a well-equipped training institute to provide training and development facilities in the areas of Islamic finance, economics, accounting etc. This training facility will cater not only to bank's own employees, but also to professionals from other financial institutions.
Q: How AlBaraka is different from other leading banks in Pakistan?
Being an Islamic bank, AIB has the fiduciary responsibility towards all its customers and depositors to ensure that its products and services are in strict conformity with the Shariah rules and principles. For this purpose, the bank has constituted a Shariah Board comprising of highly qualified and world-renowned scholars who give their opinion on the Shariah compliance of transactions.
Q: Being Country Head of this leading bank how do you define Islamic banking?
The crux of Islamic banking lies in conforming to the teachings and value system of Islam and is governed by the principles laid down by Islamic Shariah, in addition to the conventional good governance and risk management rules. Islamic banking not only seeks to avoid interest-based transactions, which are prohibited in the Shariah, but also tries to eradicate unethical practices and participates actively in achieving the goals and objectives of an Islamic economy.
Islamic Shariah prohibits 'interest' but it does not prohibit all gains on capital. In fact, the basic theme behind Islamic finance is to ensure that real assets, which have the ability to create value addition in the economy, back all financing and investment activities.
Q: What is the expansion plan of AlBaraka in Pakistan?
AIB has developed a comprehensive strategic plan to expand its business in Pakistan. In terms of branch network, the bank plans to add more branches during 2008 and has projected to set up a total of 100 branches by the end of 2012.
Keeping in view the vast potential of Islamic banking in Pakistan and its 15 years of experience in the country, the management of AIB has decided to localize its Pakistan operations by injecting additional capital of USD 80 million. This will enable us to build on the expertise and experience of our workforce to further enhance our business and capture a greater market share. This process has been initiated and the locally incorporated bank will be established within a couple of months.
Q: What returns the AlBaraka bank has provided to its shareholders and account holders.
The returns being offered to AIB's deposit account holders are competitive and market based, and are comparable with those offered by any other banking institution in the country.
Q: Do you think that the educational institutions in Pakistan are producing the professional bankers according to the international standard and what are your suggestions in this regard?
As mentioned earlier, there is a considerable gap between the requirement and availability of qualified human resource in the field of banking in general and Islamic banking in particular. There is a need to further strengthen this area by professionally grooming young students of banking and finance so that they can take up the challenges of modern and innovative financing techniques.
Q: What are your priority areas and how you want to run your bank?
The main thrust of AIB's activities is on providing working capital and trade finance to its customers, most of which belong to the Corporate sector. However, the bank has expanded its outreach to other sectors as well, such as SMEs and Consumers, in order to meet their financing needs in a Shariah compliant manner.
Q: You have a good professional background. Do you think that Pakistan is a big opportunity for the investors?
Pakistan is indeed a good investment opportunity. There are a number of sectors and avenues where considerable investment has taken place both by foreign as well as local investors. Given the surplus liquidity available in our neighbouring regions, such as the Gulf and Middle East, we have further opportunity to project ourselves as an attractive investment proposition. This can be accomplished through designing investor friendly policies and by making the overall environment more conducive to encourage and support such initiatives.
Q: Please tell us something about the worldwide network of AlBaraka?
AIB operates under the auspices of the Bahrain-based AlBaraka Banking Group (ABG), which is a leading provider of Islamic banking, investment and treasury services. The Group enjoys widespread global presence in the Middle East, Asia and Africa through 12 subsidiaries based in Algeria, Bahrain, Egypt, Indonesia, Jordan, Lebanon, Pakistan, South Africa, Sudan, Syria, Tunisia and Turkey. These subsidiaries are mainly engaged in retail, commercial and investment banking, treasury services and fund management through a network of around 250 branches. With a combined asset base of over US$ 10 billion, these subsidiaries have been in operation for an average of 20 years and boast an excellent track record of commitment and performance.
Mr Shafqaat Ahmed, one of the leading
bankers in Pakistan with 38 years of banking
career, started his career as a management
trainee with a leading Pakistani bank in
1969 after completing his education at F.C. College Lahore and Punjab University. He had the opportunity to work at one of the world's major financial centres in Bahrain for almost 18 years with different banks. During the decade of 80's Islamic banking also made its mark, and Bahrain saw the emergence of quite a large number of Islamic banks. He got interested in Islamic banking and joined the pioneer of Islamic banking, AlBaraka Banking Group.
He says that AlBaraka Islamic Bank (AIB) has the honour of being the pioneer of Islamic banking in Pakistan. Keeping in view the vast potential of Islamic banking in Pakistan and its 15 years of experience in the country, the management of AIB has decided to localize its Pakistan operations by injecting additional capital of US$ 80 million.
Q: Please tell us about AlBaraka Bank, its network, volume and management in Pakistan?
AlBaraka Islamic Bank (AIB) has the honour of being the pioneer of Islamic banking in Pakistan and has been operating in the country as branches of AlBaraka Islamic Bank Bahrain since 1991. AIB is currently operating with 18 branches in 10 major cities of the country: Karachi (5), Lahore (4), Faisalabad (1), Multan (1), Gujranwala (1), Islamabad (1), Rawalpindi (2), Abbotabad (1), Peshawar (1), Mirpur (1).
As on December 31, 2007, the bank had an asset base of Rs. 22 billion, with a combined financing and investments portfolio amounting to Rs. 13 billion. The total volume of foreign trade business generated by the bank during 2007 was Rs. 30 billion. The bank earned a profit of Rs. 324 million during the year.
Q: What were the achievements of AlBaraka in 2007 and what are your goals and set targets for the current year?
The year 2007 proved to be yet another period of solid performance by the bank. In line with its expansion strategy, AIB opened seven new branches during the year in diverse geographical areas so as to ensure maximum outreach to the masses. The profitability of the bank also showed substantial improvement and registered a growth of 90% during the year. The aggregate financing portfolio of the bank also grew by a healthy 30%, on account of increased financing activities especially in the consumer sector. In line with this, the deposit base also went up by 23% to support the increased business activities.
For the current year, we plan to maintain our growth trajectory through network expansion and an increased focus on targeting new areas for penetration.
Q: How do you see the growth of banking sector in Pakistan and what is the future of this sector in Pakistan?
The banking sector in Pakistan has evolved over the years from a state-run institution to a more vibrant and efficient private sector enterprise. During the 1990s, the nationalized banks created a bureaucratic and politically influenced environment, which lead to widespread inefficiencies in the system. A major turnaround in the system was witnessed when the State Bank of Pakistan initiated the banking sector reforms in late 90's. These reforms not only sought to privatise the banking sector, but also introduced various measures relating to corporate governance and prudent bank management. In addition, the supervisory authority, i.e. the SBP, also focused on its own capacity building and emerged as a strong regulatory body to introduce and implement sound banking policies and procedures. As a result of these and other such measures taken during the last 7-8 years, the banking system in Pakistan has now become one of the most resilient and profitable sectors of our economy.
Within the banking sector, Islamic banking in particular has a tremendous potential for growth and development. Currently constituting around 4% of the overall banking industry, it is projected to capture a share of 15% by 2012. The availability of Shariah compliant financial solutions has a far-reaching appeal for customers both in the corporate and consumer sectors. There is a great potential for this largely untapped market to be explored even further through creating awareness and developing innovative Islamic financial products to compete with the conventional market.
Q: How would you compare the banking sector of Pakistan with other advanced countries of the world?
The far-reaching banking sector reforms mentioned earlier have resulted in a more efficient and competitive financial system. The pre-dominantly private sector ownership, improved legislative framework and supervisory capacity have resulted in a financial sector that is sound and exhibits an increased resilience to shocks. Our financial market has acquired a depth in terms of the availability of new and innovative financial products and instruments.
In order to enhance our international standing and competitiveness, the banking sector has adopted several internationally accepted best practices, such as the Basel II Capital Accord. This Accord in under implementation in most of the banking systems across the globe, and seeks to bring the risk management and capital adequacy assessment capabilities of banks at the same footing. Pakistan is also moving ahead with its own implementation process in a phased manner, with the aim of becoming fully compliant with this Accord.
Over the years, technology has become an integral part of the banking business by making it a more convenient and hassle free experience. With the aim of enhancing our competitiveness in this area as well, the banking industry in Pakistan witnessed a tremendous influx of IT based products and services in the last 4-5 years, in the form of ATMs, credit cards, internet and mobile banking etc. Efforts are also being undertaken in terms of infrastructure development and legislation to further improve and expand such technology driven services in the country.
Q: What challenges the banking sector is facing in Pakistan at present and how the professional bankers are meeting these challenges? What is your strategy in this regard?
The biggest challenge being faced by the banking sector is the availability of qualified and well-trained human resource. The banking sector is growing at a much faster pace but we are not able to produce as many professional as are required. This issue is even more pronounced for the Islamic banking sector, as there are very few institutions that offer courses related to this area. There is also a need for continuous professional development in this field through high quality trainings and seminars.
Realizing this need, AIB plans to establish a well-equipped training institute to provide training and development facilities in the areas of Islamic finance, economics, accounting etc. This training facility will cater not only to bank's own employees, but also to professionals from other financial institutions.
Q: How AlBaraka is different from other leading banks in Pakistan?
Being an Islamic bank, AIB has the fiduciary responsibility towards all its customers and depositors to ensure that its products and services are in strict conformity with the Shariah rules and principles. For this purpose, the bank has constituted a Shariah Board comprising of highly qualified and world-renowned scholars who give their opinion on the Shariah compliance of transactions.
Q: Being Country Head of this leading bank how do you define Islamic banking?
The crux of Islamic banking lies in conforming to the teachings and value system of Islam and is governed by the principles laid down by Islamic Shariah, in addition to the conventional good governance and risk management rules. Islamic banking not only seeks to avoid interest-based transactions, which are prohibited in the Shariah, but also tries to eradicate unethical practices and participates actively in achieving the goals and objectives of an Islamic economy.
Islamic Shariah prohibits 'interest' but it does not prohibit all gains on capital. In fact, the basic theme behind Islamic finance is to ensure that real assets, which have the ability to create value addition in the economy, back all financing and investment activities.
Q: What is the expansion plan of AlBaraka in Pakistan?
AIB has developed a comprehensive strategic plan to expand its business in Pakistan. In terms of branch network, the bank plans to add more branches during 2008 and has projected to set up a total of 100 branches by the end of 2012.
Keeping in view the vast potential of Islamic banking in Pakistan and its 15 years of experience in the country, the management of AIB has decided to localize its Pakistan operations by injecting additional capital of USD 80 million. This will enable us to build on the expertise and experience of our workforce to further enhance our business and capture a greater market share. This process has been initiated and the locally incorporated bank will be established within a couple of months.
Q: What returns the AlBaraka bank has provided to its shareholders and account holders.
The returns being offered to AIB's deposit account holders are competitive and market based, and are comparable with those offered by any other banking institution in the country.
Q: Do you think that the educational institutions in Pakistan are producing the professional bankers according to the international standard and what are your suggestions in this regard?
As mentioned earlier, there is a considerable gap between the requirement and availability of qualified human resource in the field of banking in general and Islamic banking in particular. There is a need to further strengthen this area by professionally grooming young students of banking and finance so that they can take up the challenges of modern and innovative financing techniques.
Q: What are your priority areas and how you want to run your bank?
The main thrust of AIB's activities is on providing working capital and trade finance to its customers, most of which belong to the Corporate sector. However, the bank has expanded its outreach to other sectors as well, such as SMEs and Consumers, in order to meet their financing needs in a Shariah compliant manner.
Q: You have a good professional background. Do you think that Pakistan is a big opportunity for the investors?
Pakistan is indeed a good investment opportunity. There are a number of sectors and avenues where considerable investment has taken place both by foreign as well as local investors. Given the surplus liquidity available in our neighbouring regions, such as the Gulf and Middle East, we have further opportunity to project ourselves as an attractive investment proposition. This can be accomplished through designing investor friendly policies and by making the overall environment more conducive to encourage and support such initiatives.
Q: Please tell us something about the worldwide network of AlBaraka?
AIB operates under the auspices of the Bahrain-based AlBaraka Banking Group (ABG), which is a leading provider of Islamic banking, investment and treasury services. The Group enjoys widespread global presence in the Middle East, Asia and Africa through 12 subsidiaries based in Algeria, Bahrain, Egypt, Indonesia, Jordan, Lebanon, Pakistan, South Africa, Sudan, Syria, Tunisia and Turkey. These subsidiaries are mainly engaged in retail, commercial and investment banking, treasury services and fund management through a network of around 250 branches. With a combined asset base of over US$ 10 billion, these subsidiaries have been in operation for an average of 20 years and boast an excellent track record of commitment and performance.
This news was published in print paper. Access complete paper of this day.
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