Al Baraka Banking Group, a Bahrain-based Sharia-compliant lender, plans to expand its footprint in Asia including India, China and Indonesia and is eyeing bank acquisitions as the coronavirus pandemic pushes valuations down, its chief executive said.
"We always acquire institutions outside [our home market]. This is what we did in Pakistan and this what we are going to do in future. If there is potential then why not – let's acquire," Adnan Yousif, told The National in a phone interview. "I believe the opportunity is there and we should not miss [out]."
Banks across the globe are at risk of reduced profitability as interest rates remain at historic lows and lenders increase their provisions in anticipation of a surge in bad loans. The pandemic, which has tipped the global economy into a recession, slated to be the deepest since the Great Depression, has dented lending, as businesses fold and non-performing loans rise.
Asset quality across the financial industry is under pressure, pushing prices down “not just for me but for everybody … Islamic or non-Islamic banks” who are looking for acquisitions, he said.
There’s no respite in sight in the short to medium term, and Mr Yousif expects valuations to remain low in the coming two to three years as banks will have to continue dealing with bad debts. Some lenders may even require additional capital in the future, offering institutions with stronger balance sheets a chance to pick up stakes.
Asia remains the focus of Al Baraka’s international expansion drive, Mr Yousif said. He, however, did not specify the timeline for entry into China, India or Indonesia, which is home to more than 220 million Muslims.
Al Baraka prefers to secure a banking licence in these markets, as acquisitions are complicated in these jurisdictions. However, if an opportunity to acquire a lender surfaces, the bank “will review it”, he said.
The lender plans to setup a small commercial bank in China focusing on trade financing to capitalise on growing commercial ties between the Asian country and the rest of the Muslim world.
In Indonesia, Al Baraka has already explored the possibility of taking a stake in Bank Muamalat three years ago and will continue to look for further opportunities, Mr Yousif said .
The bank also increased its shareholdings in its Jordanian and Egyptian subsidiaries a few years ago.
Al Baraka currently operates in Sudan, Turkey, South Africa, Algeria, Pakistan, Syria, Tunisia, Saudi Arabia and Lebanon.
Mr Yousif, who is also chairman of the Bahrain Association of Banks, sees the non-performing loans ratio climbing to 8-9 per cent of the total loans portfolio of lenders in the region amid the pandemic. Banks in the GCC, however, have very good capital adequacy levels and buffers to absorb the impact of bad debts, he said.
“We have a buffer of $36 billion (Dh132bn) in the GCC. Now we see central banks have also put flexibility … and I think for the time being central banks won’t insist on high capital adequacy,” Mr Yousif said.
He sees reduced profitability for lenders across the GCC this year and expects it will take at least two years for the banks to come back to pre-crisis profitability level.
Ovo's tips to find extra heat
- Open your curtains when it’s sunny
- Keep your oven open after cooking
- Have a cuddle with pets and loved ones to help stay cosy
- Eat ginger but avoid chilli as it makes you sweat
- Put on extra layers
- Do a few star jumps
- Avoid alcohol
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
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ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
The specs
Engine: 3.8-litre twin-turbo V8
Power: 611bhp
Torque: 620Nm
Transmission: seven-speed automatic
Price: upon application
On sale: now
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
'Fantastic Beasts: The Secrets of Dumbledore'
Rating: 3/5
Directed by: David Yates
Starring: Mads Mikkelson, Eddie Redmayne, Ezra Miller, Jude Law
Killing of Qassem Suleimani
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
Australia tour of Pakistan
March 4-8: First Test, Rawalpindi
March 12-16: Second Test, Karachi
March 21-25: Third Test, Lahore
March 29: First ODI, Rawalpindi
March 31: Second ODI, Rawalpindi
April 2: Third ODI, Rawalpindi
April 5: T20I, Rawalpindi
The National in Davos
We are bringing you the inside story from the World Economic Forum's Annual Meeting in Davos, a gathering of hundreds of world leaders, top executives and billionaires.
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PROFILE OF SWVL
Started: April 2017
Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh
Based: Cairo, Egypt
Sector: transport
Size: 450 employees
Investment: approximately $80 million
Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani
THE APPRENTICE
Director: Ali Abbasi
Starring: Sebastian Stan, Maria Bakalova, Jeremy Strong
Rating: 3/5
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Match info
Uefa Champions League Group B
Tottenham Hotspur 1 (Eriksen 80')
Inter Milan 0
