Corporate banking, sukuk to boost Asian Finance growth

Malaysia-based Islamic lender Asian Finance Bank will boost its net profit by at least 30-40 percent this year as it beefs up its corporate banking and sukuk business, its chief executive said on May 11.
-- To cut non-performing financing to below industry average
-- Expects at least 30-40 percent rise in net profit this year
-- Has 300-400 million ringgit of sukuk in the pipelinet
The three-year old bank will focus on activities such as trade financing, machinery leasing and providing letters of credit to the infrastructure, oil and gas and services industries in Asia, Mohamed Azahari Kamil said.
The bank expects to receive a $50-million capital boost from its Middle Eastern shareholders this year which would enable it to grow its net profit from last year's 4 million ringgit ($1.25 million), he said.
It recorded a loss before tax of 20.5 million ringgit in 2008 and a loss of 5.3 million ringgit in 2007. "The generation of this year's income will be more fee-based driven, more investment banking deals in the pipeline," Azahari said in an interview. Asian oil and gas and infrastructure offer growth opportunities as economies expand despite the risks posed by Greece's fiscal problems, he said.
Almost 85 percent of the bank's net profit is derived from corporate banking and the rest from retail business.
Qatar Islamic Bank and its associates own 70 percent of Asian Finance Bank. RUSD Investment Bank Inc of Saudi Arabia holds 20 percent and Financial Assets Bahrain has a 10 percent stake. It is one of three foreign Islamic banks given a licence to operate in Malaysia and has a paid up capital of 355 million ringgit.
Asian Finance will cut its non-performing financing level, the Islamic equivalent of bad loans, to below the industry average of 2 percent this year by lending to stronger names, Azahari said. Its non-performing financing level was 1.7 percent last year and two percent in 2008.
The bank has 300 million-400 million ringgit of dollar sukuk deals in the pipeline, from government-linked firms and listed companies in the auto and energy sectors, he said adding that some of the deals are expected to be closed by year-end. "There is a lot of demand for sukuk but of course now with this very difficult economic crisis in Greece, the appetite could also be affected," he said.