Saudi Arabia's Aljazira Bank expects growth in consumer loans and corporate banking to bring gains on top of record first-half results, Chief Executive Officer Mishari al-Mishari said on July 13.
The bank a decade ago came close to collapse and responded by switching to Islamic banking and targeting affluent Saudi clients. The focus on Sharia-compliant products in the deeply conservative Muslim kingdom appears to have paid off.
Mishari said a large part of the 278 percent leap in profit so far this year came from Saudi share trading commissions. Last month the bank, Saudi Arabia's smallest, became the most active broker on the Arab world's biggest bourse.
Consumer lending and a growing corporate portfolio will help drive profits for the rest of the year, Mishari said.
"Over the next few months, other areas of business are going to gain in prominence," he told Reuters in a telephone interview from the bank's headquarters in the Red Sea city of Jeddah.
"Maybe we launched our consumer loans a bit later than other banks. But that is an area where we expect a lot of growth, and we feel we will get our share," he said.
Aljazira's net profit for the first six months of the year almost quadrupled to 254.3 million riyals ($68 million). Loans and advances rose 50 percent to 6.5 billion riyals.
Saudi banks have reported good results across the board this year as high oil prices have spurred economic growth of the world's biggest exporter. But Aljazira's profit rise - accentuated by last year's 162 million riyals of provisions - was exceptional.
Last month the bank handled 16.8 percent of trade on Saudi Arabia's stock exchange, Mishari said, beating its nearest rival Al Rajhi, with 13.2 percent.
Even after the sharp fall in stock transactions this month as business slowed for the summer, Mishari said revenues from share trading will hold up.
"Our market share has grown. We will still be way ahead of the first quarter," he said.
Aljazira has 19 branches across Saudi Arabia and plans to open 10 more by the end of next year, Mishari said.
Islamic banks do not charge or pay interest, which is considered usury by many Muslims. Instead they make regular payments on profits from approved investments.
Mishari said Aljazira was a market leader in Islamic banking, offering Sharia-compliant instruments to fund share trading and provide insurance services.
Now other banks are following suit. National Commercial Bank, the mainly state-owned giant of Saudi banking, says its branches will be completely Sharia-compliant by the end of the year. Bank AlBilad, a new Islamic bank, is also setting up this year.
Saudi bankers say Aljazira plans to issue a sukuk, or Islamic bond, soon to help finance its expansion. Mishari declined to give details but said the bank was set for continued growth.
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