Bahrain’s Ahli United Bank (AUB) AUBB.BH AUBB.KW, the kingdom’s largest lender by market value, on Monday said it expected its new Islamic division to generate revenue equivalent to half its current total in as little as three years.
The bank, whose consolidated net profit was $207.5 million in 2006, also expects to increase to 50 from four its Al Hilal brand Islamic branches in two years. Founded in 2000, the bank has about 100 conventional branches.
“Globally you see the growth of Islamic banking is much faster than conventional … We have got a large customer base across the region and there’s strong demand,” AUB Deputy Group Chief Executive Abdulla Al-Raeesi told reporters.
The bank has operations in Britain, Kuwait, Qatar, Iraq, Oman and Egypt and is targeting Saudi Arabia, the United Arab Emirates, Iran and Switzerland for expansion.
The lender has four Islamic branches — two in Bahrain, one in Britain and another in Qatar — and aims to expand Al Hilal in territories where it is already present.
It is in talks with the Egyptian central bank for an Islamic licence and will open another branch in Bahrain within a month and four more in Qatar this year.
Islamic finance prohibits interest and operates on the principle of sharing risk and reward among all parties in a business venture. Islamic law bans investing in certain sectors, such as alcohol, pornography and gambling.
The industry is set to hit $1 trillion in assets by 2010, management consultants McKinsey & Co said in December, and experts say it is growing at a rate of about 15 percent a year.