“Islamic banking is on a steady growth path.”
An exclusive Interview with Ahmed Khizer Khan, President & CEO, Burj Bank Limited
Ahmed Khizer Khan, President & CEO, Burj Bank talks about the growth of Islamic banking.
What is the concept behind the Burj Bank slogan ‘Shariat Mein Barkat’
Our slogan expresses the pure nature of our business and we want to communicate the same through our slogan. We believe that Shari’ah leads to the blessed path of success and that is exactly what ‘Shariat Mein Barkat’ means. Where does Burj Bank trace its roots as an Islamic Bank?
Burj Bank has a rich Middle Eastern background with the financial and technical support of a great institution, ICD Jeddah (Islamic Corporation for Development of the Private Sector) which is the private sector arm of Islamic Development Bank, Jeddah. ICD is working for economic development and social progress in various Muslim countries by investing in the private sector. Other major shareholders include Bank Al-Khair from Bahrain, Gargash Enterprises from the UAE and Al-Romaizan from Saudi Arabia. This strong background gives Burj Bank exceptional financial strength and absolute credibility. What advantages does an Islamic bank have in Pakistan?
In Pakistan, Islamic banking penetration stands at about 8 %. Being the 6th most populous country, Pakistan is now the second largest Islamic nation in the world, with over 180 million people and continues to grow rapidly. Till date the banking sector has only been able to tap roughly 20 million customers. According to our analysis an untapped banking market of over 40 million customers still exists within the country. Islam is the predominant religion in Pakistan and Shari’ahcompliant Banking as of today has a very small market share, thus reflecting a huge potential for growth in this sector. Islamic banks, having carved out a niche in Pakistan, should now be given greater support and encouragement by the regulatory authorities to operate on a standalone basis. Full fledged Islamic banks are still in the process of building their capital base, which is imperative for growth in a post -Basel III world. This will even out the competition in the industry and be beneficial for the consumers at large. What are the challenges to Islamic finance thriving in Pakistan?
Islamic Banking is based on the principles of Islamic finance and people have very little knowledge about these principles. This in itself gives rise to a number of challenges, for instance, establishing credibility and spreading awareness. Capacity building is another major challenge. Conventional banking is being taught in numerous universities whereas very few institutions are offering formalized education in Islamic Banking, thus production of quality human capital is another challenge for our growing sector. Though it is true that greater awareness of the inbuilt strengths of Islamic finance has contributed towards increased international participation in Islamic financial markets, awareness alone is not sufficient to ensure sustainable growth for our industry in Pakistan and beyond. To remain competitive we have to continually innovate and adapt. If we are to challenge the conventional banks’ entrenched position in international and local financial deals, we must develop the capacity to structure multi-currency and cross-border transactions and build scale. As Islamic banking grows in Pakistan, what will differentiate Burj Bank?
Burj is the only Islamic Bank in Pakistan with a Sharia’h Quality Rating of AA (Double A) affirmed by the Islamic International Rating Agency – Bahrain (IIRA). The rating signifies that Burj conforms to very high standards of Shari’ah compliance. Besides delivering the highest standards in Shari’ah compliance, our primary differentiator will be the quality of our customer service. We aim to be the unique Islamic Bank that offers the service standards of international standards while guiding our customers to the blessed path of success. Our customer service is at par with the leading banks of the world. The new look and feel of our branches has completely transformed the customers experience and the perception of Islamic Banking in the country to a progressive alternative to the conventional banking system. Secondly, we take pride in being the first Islamic Bank of Pakistan that aggressively took up the challenge of spreading awareness of Islamic Finance and Banking. I can proudly say that our marketing efforts informed the customers of the services that an Islamic bank offers
and how these services are different from conventional ones. In the next 5 years, Burj Bank will have over 300 branches as well as an established non-brick and mortar banking model in place, emerging as one of the most important players in the Banking sector of Pakistan. How do you rate Burj Bank’s progress so far?
I can proudly say that with the help of Almighty Allah, we have managed to get ourselves recognized as the fastest growing financial institution in this country. Today our company’s vision of becoming the Islamic Bank of Choice seems approachable. Our core brand values of “Purity”, “Integrity”, “Passion” and “Devotion” are being lived out by the people running the company, demonstrating in their personal and business lives that they passionately believe in these values.
The list of our achievements in 2012 is never ending. In just 12 months, we grew our deposit base by 80 percent. Our financing portfolio also grew by 80 percent. We successfully converted a loss-making business into a highly profitable venture. Our branches have grown from 50 to 75. Within our Retail Banking arm, we have successfully inducted a strong BDO Channel, we have converted our car financing facility (Carsaaz) into a market leader and established our SME and Takaful business. We have strengthened our human capital and we are all set to launch Priority and Home Musharaka (financing) propositions. Within our Corporate Banking division, we have added a rich portfolio of top Corporates and started dedicated corporate branches, nearly doubling our asset book. We have launched the first Islamic Debit MasterCard of Pakistan and our brand has evolved into one of the strongest consumer brands in the country. Hence, we faced multiple challenges in the beginning but, I can proudly say that we rose from these challenges with distinction. Currently, what are your most popular services?
Burj Bank offers a diverse range of products and services to its customers. We have launched differentiated products and services in every category. We launched consumer financing last year and Burj Carsaaz (auto financing) has already become the fastest growing consumer financing product in the market. The Corporate product menu is also very comprehensive and includes traditional Murabaha, Mudarba, Istisna, Ijarah financing and diminishing Musharaka. We have an enhanced product menu in terms of retail banking, Consumer Financing, SME Banking, trade financing. Can you share Burj Bank’s contribution towards CSR (Corporate Social Responsibility)?
Corporate Social Responsibility is at the heart of our business and we believe that giving back to the community and this country is just as important as our Core Brand Values. We understand the responsibilities of being a corporate citizen and value the importance of the activities done under CSR. Burj Bank Limited has been able to seamlessly integrate the social, ethical and environmental concerns of the society in its business model. It has proactively participated in community well-being and growth efforts, with its employees contributing to various philanthropic initiatives under the aegis of the Burj Charity Committee. Recognizing every Burj Bank employee as a powerful agent of positive change, we recently launched an employee-driven CSR initiative - “Giving Beyond the Workplace Campaign”. Under this initiative we carried out a number of activities that involved spending quality time and dining with the beautiful children at the Edhi orphanage and distributing clothes and household items to the children at the SOS village. Recently we also hosted an event where we distributed donation to the families of the victims of the Baldia Town fire incident. We are working on a variety of new initiatives for 2013 and will disclose the details very soon. What are Burj Bank’s initiatives for 2013?
During the year 2012, we expanded our branch network from 50 branches to 75 branches. Apart from adding 25 branches, we also relocated some of our branches to more prominent and accessible locations to increase outreach. With the objective of further increasing our footprint in the country, we plan to add another 25 branches to our network in 2013 bringing it to 100 branches. We also plan to introduce new liability products focusing on senior citizens, children and salaried individuals. We will be venturing into the home remittance business as well and are also planning to expand our consumer product portfolio and form strategic alliances with renowned brands to facilitate our customers. We have recently launched Pakistan’s first Islamic Debit MasterCard, and will be launching Priority Banking along with many new products for our Alternative Distribution Channels.