Al-Salam Bank of Bahrain eyeing Islamic banking in Pakistan
The Al Salam Bank, a Bahrain-based Islamic bank, is contemplating starting its operations in Pakistan, The Nation learnt on Friday.
With a vision to become a global force in the Islamic financial services industry by offering innovative and differentiated Sharia-compliant products and services, the bank is negotiating with the government regulators its plan of starting Islamic banking in Pakistan, said sources.
According to the sources, Shaikh of Kingdom of Bahrain visited Pakistan recently and met the then Prime Minister Shaukat Aziz to show his expression of interest to enter into fastest growing Pakistani financial market.
Meanwhile the Qatar Islamic Bank is also planning to starts its operations soon. With the entrance of 2 more Islamic banks into Pakistan, the total number of banks offering Islamic banking services and products will increase to 8 in the next calendar year CY08 whereas the full-fledged Islamic banks have increased to 6 in CY06 from 2 in CY05.
In Pakistan the nationwide full-fledged Islamic Scheduled Banks’ numbers of branches have expanded by 117 during the seven months of the current calendar year (CY07).
According to the State Bank report on Islamic banking sector growth during CY06, the total assets of this segment grew by almost 67 percent to Rs119 billion thus increasing its share in the overall banking system to 2.9 percent from 2 percent in CY05. Infection ratio (gross) stayed at 1.3 percent while ROA remained at 0.9 percent. Building a specialized human resource would help Islamic banking system foster as a successful parallel banking system.
However, in 2006, all the 39 commercial banks made Rs84 billion after-tax profit. But only five large local banks had a seventy per cent share in it, the latest data released by the State Bank revealed.
According to company profile, Al Salam bank was established on 17 April 2006 in the Kingdom of Bahrain with a paid-up capital of US$ 317 million (BD 120 million), Al Salam Bank Bahrain BSC operates under an Islamic retail banking licence issued by the Bahrain Monetary Agency. The Bank’s Initial Public Offering (IPO) of 35 per cent of the paid-up capital, which closed in March 2006, raised over US$ 7 billion (BD 2.7 billion) and was the largest IPO in the Kingdom’s history.
The Bank was subsequently listed on the Bahrain Stock Exchange on 27 April 2006.
The founding shareholders of Al Salam Bank hold 65 per cent of the paid-up capital. They include Emaar Properties, Amlak Finance, Dubai Investment Group, Dubai Holding, Global Investment House, Lebanese Canadian Bank, Al Salam Bank Sudan, and Dubai Islamic Insurance and Reinsurance Company (AMAN).
The interim results posted by the Bank for the half-year ended 30 June 2006 showed net profits of US$ 11.1 million (BD 4.2 million). This performance reflected a return on average equity of just under 9 per cent.