LAHORE: Al Baraka Islamic Bank is the latest bank to announce its intention to rapidly expand its branch network throughout Pakistan, and appears to have a focus on the market in Punjab.
The announcement was made by Al Baraka President and CEO Adnan Ahmad Yousaf during a visit to the Lahore Chamber of Commerce. Yousaf made it a point to extol the virtues of Islamic finance and point out why he felt it was a superior product to the more conventional forms of banking.
“We do not treat money as a commodity, which just makes a few people richer and everyone else poorer. Our way generates economic activity and spreads money throughout society. Islamic finance is based on a system of asset leasing and partnerships rather than outright money-lending,” he said.
Al Baraka was one of the smallest banks in Pakistan until October 2010, when it acquired Emirates Global Islamic Bank’s Pakistan branches. It now has a network of 89 branches in 37 cities and towns across Pakistan. The merger appears to have been good for Al Baraka’s business, since it turned a profit for the first time in 2006, earning a net income of Rs410 million for the financial year ending December 31, 2011.
The current year, however, appears to be a reversion to its loss-making ways, since the bank earned a net loss of Rs213 million for the first six months of 2012, compared to a net profit of Rs324 million for the same period in the previous year. The loss happened largely on the back of rising non-performing loans in the bank’s portfolio.
Meanwhile, after strong growth in 2011, deposit growth appears to have stalled, with deposits having stayed virtually stagnant during the first half of 2012.
Ahmad did not specify that the bank would expand its presence in Punjab, but his visit to Lahore appears to be part of what is now becoming a trend among Karachi-centric banks to seek expansion in the industrial triangle between Lahore, Faisalabad and Islamabad. The visit to the Lahore Chamber of Commerce appears to be part of a bid by the bank to attract corporate customers in that belt. The Al Baraka CEO seemed keen only to burnish the bank’s Islamic credentials.
He did, however, admit that the bank appears to be lagging both its conventional and Islamic banking peers in terms of the breadth of products offered. “We will introduce new Islamic financial products in Pakistan to facilitate our customers,” Ahmad said.
For its part, the Lahore Chamber of Commerce appeared to be keen to offer its assistance to the bank, stating that it planned on holding workshops and seminars about Islamic finance for its members.
Published in The Express Tribune, November 3rd, 2012.