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Islamic banking is not just for Muslims – It makes business sense

Interview - March 11, 2015

Efficiency and quality service makes Qatar Islamic Bank the perfect candidate for the Top Islamic Bank in Europe.


Qatar currently is one of the regional players obviously in the QISMUT region. Could you tell us and share your thoughts on how, perhaps with regional players like Dubai and Istanbul, Doha could become the bridge between London and Kuala Lumpur?

Well most of the Islamic banks not just QIB. For a very long time Islamic banking was all about ideology rather than efficiency. If you prefer to deal with an Islamic bank, you go and deal with the likes of QIB, QIIB, Qatar International Islamic, Dubai Islamic and the likes in the region.

Service industry is all about service and cost or price. So I would say over the past decade, things have been changed overall in the region and banks have been investing to make sure that within their strategies they are working towards being more efficient banks. In the past, we had the pleasure or let’s say the luxury of being monopoly or almost monopoly in the market like Qatar. This is not the case for the past few years, conventional banks opened Islamic windows, and we had competition from there.

At this point in time, you have to dip into a bigger market share which is a conventional banking market share. To do that, you have to compete in terms of service and quality; in terms of cost, infrastructure, technology or those resources. This is what most of the Islamic banks have been doing over the past few years.

And if a client is going to pay me, he’s going to pay the conventional bank. If he doesn’t or if he’s not willing to pay me, he’s not going to pay the conventional bank, the risk is the same. It is the structure and the procedure that differentiates between an Islamic Sharia’ compliant product and the conventional product. But at the end of the day, we are running the same risks, we are running the credit risk, we’re running the interest rate risk, in our case we call it profit rate risk, which related to the interests rate. We’re running an operation risk, we’re running market risk. That’s the whole idea about banking.

Just to be clear, the idea that Islamic banks are different. We are not different from conventional banks except in the structure we do things; we are taking the same risks, we’re expecting the same rewards.

I would say over the past period we have been growing and we’ve been growing more than the market. That means that we are taking a little bit of the market share from here and there to recapture what was taken from us when the competition intensified, as that means that we’re getting into conventional banking clients as well. And we’re diversifying our products, we are investing in technology and the client that was satisfied with very basic products in the past is much more sophisticated now.

The QIB obviously is a fundamental company on the Qatar exchange and with Qatar exchange and the recent MSCI upgrade from frontier to emerging market status along with 10 other companies, QIB included, how has this highlighted the intrinsic connection between the Qatar exchange and the country’s success and the financial sector particularly? What are your thoughts on QIB?

I think actually to be included in the emerging market index is something is a recognition of the effort that has actually taking place in the past years to even build up your infrastructure and to build up your reputation to be able to be eligible, to be part of that as a country, we are included.

QIB being part of, and I would say a major player in, the financial sector within Qatar is one of the shares or one of the stocks that has been included as Qatar contribution to the index. Market care is a factor, importance and the liquidity of the share is another factor. You can have actually a very large or high market capitalization, but it’s a liquid at the end of the day, because this wouldn’t be useful for them. I think over the past period as well, Islamic banking has been growing quite steadily in Qatar and regionally.

Sometimes impact is positive and sometimes it’s not positive. It is positive because it provides liquidity and it’s not positive because the foreign funds or international funds, it is not as stable funding or stable investors as the locals or the regional because they have been working within certain standards and if somebody got somewhere, they are out of here. But the good thing about it is that it definitely provides more liquidity and more depth into the Qatar exchange in general. It adds more depth to each individual stock and it provides liquidity which is any stock or any company or any script you would be interested in having.

In June 2014, the UK Treasury sold 200 million pounds and Sukuk in a bid to make Britain a global hub of the Islamic finance and they were the first country to do so outside of the Islamic region. How is QIB contributing to the development of Sharia’ banking and services in the UK but also ensuring a piece of the British market share?

We are holders of parts of the Sukuk that were issued. There are actually other countries that are interested in tapping into that market, and that’s a very liquid market. The Islamic funding in general is liquid for one reason. If you look at it, they’re not too many opportunities to put your funds into something that surely are compliant. So I think the trend is more towards having an Islamic trench or Islamic aspect of issuance going forward then it adapts into a very liquid market. And if you got so much liquidity in the Islamic hemisphere and the financial institutions and the corporatations that would like to deal under Sharia’ compliant structures do not have a lot of options to put their money into.

But I think it’s a growing market and definitely by presence here and being a leading Islamic bank and I would say, it’s not a big presence in the UK but still we have presence there and it’s a full fledge bank and we have also an investment on QInvest which is very active in Sukuk issuance. I think out of the Sukuks that were issued this year, we have 20% market share as QInvest. So I think it’s going to play a more important role in the future and I think this market is going to expand quite rapidly and the growth there is quite interesting.

What is it that makes you passionate about your position especially here at QIB, but also for Qatar?

I’m familiar with Islamic banking, I worked previously as well with another bank or group that was doing Islamic and conventional banking. And pure Islamic banking started when I moved to QIB and I think there is a lot to be done. People were viewing Islamic banks as inefficient and overpriced; I hear those from the clients even. What we need to prove and what we need to change is the concept and the perception of people about Islamic banking. This is my passion. If actually this happens during my duration with QIB, I would be very happy; I would feel that I have done something. It’s not just me; I think the whole team is passionate about that.