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Abu Dhabi Islamic Bank (ADIB) is considering cutting jobs and closing branches as part of a series of cost-cutting measures. The cutbacks come as ADIB announced a growth of 4% in net profit for 2019 to AED2.6 billion while group net revenues increased by 2.5% to AED5.9 billion. Net profit margin was 4.25%, despite lower rates in the market, helped by the positive impact of the low cost of funds. The UAE economy is coming under pressure from regional geopolitical tensions and weak domestic demand, while business conditions worsened for the first time in over a decade. ADIB joins competitors such as First Abu Dhabi Bank (FAB) and Emirates NBD in cutting jobs.

In this interview Adnan Ahmed Yousif, President & Chief Executive of Al Baraka Banking Group reviews the group’s 2019 results. Overall, Al Baraka Bank maintained its healthy financial performance despite the lower-income. However, Al Baraka's adherence to its conservative approach to set aside hedging provisions for all its units resulted in a 14% decrease in net income attributable to shareholders during the third quarter. In 2019 the bank launched the Al Baraka Global API website, a step towards innovation in open banking. Al Baraka Banking Group also inaugurated a new fintech company which focuses on e-payments ‘alneo’ in Turkey through its Turkish subsidiary. The bank’s units opened six new branches, taking the total number of branches to 703. Yousif is planning to enter new markets in the coming period through the presence in the Indonesian and Chinese markets, expansion in East Asia, as well as Africa.

The central bank of Bangladesh approved applications from two domestic banks, Standard Bank and NRB Global Bank, to become fully Islamic banks. The two banks so far only operated Islamic windows but sought to convert to fully-fledged Shariah-compliant banks to enlarge their scope of product offerings. NRB Global Bank said it plans to change its name to Global Islami Bank to underscore its new role. The move brings the number of fully-fledged Islamic banks in Bangladesh to ten, with the others being Al-Arafah Islami Bank, Islami Bank Bangladesh, Exim Bank, Social Islami Bank, Shahjalal Islami Bank, Union Bank, First Security Islami Bank and ICB Islamic Bank. Analysts note that the industry has still high potential for further expansion as Bangladesh enjoys a vibrant economy with GDP per capita having more than tripled over the past decade.

Al Salam Bank-Bahrain signed a memorandum of understanding with Al Saraya Properties Company to offer an exclusive financing facility for customers purchasing villas in the new Saraya Al Reem 3 development. The bank's property finance scheme is available to all customers, including Bahraini nationals eligible for Mazaya social housing.

Maybank Islamic has officially opened its first overseas branch in Dubai International Financial Centre (DIFC). It offers wholesale banking services and facilities, with emphasis in corporate financing, treasury, and capital market and trade finance. According to Maybank Islamic’s CEO Datuk Mohamad Rafique Marican, the DIFC branch was a significant milestone for Maybank Islamic, as it not only marks its first overseas branch but also Malaysia’s first Islamic bank to have a presence outside local shores. The regional office is headed by its country manager Nik Joharris Nik Ahmad, who has over 20 years experience having worked in Kuwait, Bahrain and Saudi Arabia. Maybank Islamic offers a range of Islamic financial products and services across 354 Maybank touch points in Malaysia, as well as international operations in Indonesia, Singapore, Hong Kong, London, Labuan, and Dubai.

Nigeria’s Jaiz Bank has been assigned positive rating by the Islamic International Rating Agency (IIRA). This is the first rating for the bank as the first Sharia compliant bank in the country. The Bank gets an investment grade rating of BBB (Triple B) for the medium to long-term and A2 in the short-term (A Two) on the national scale. The IIRA also assigned it a foreign currency rating of B-/B (Single B Minus/B) and local currency rating of B/B (Single B/B) on the international scale with a ‘Stable’ outlook. The agency affirmed that when compared, Jaiz Bank fares well in terms of risk exposure with its gross non-performance falling below 10%.

Dubai Islamic Bank (DIB) is planning more than 500 dismissals at newly acquired Noor Bank as part of cost cuts across both lenders. DIB, the largest Shari’ah compliant lender in the UAE, has more than 9,000 employees, while Noor Bank has between 1,200 and 1,400 full-time staff. DIB completed its acquisition of Shari’ah-compliant Noor Bank in January 2020 in a deal that will make DIB one of the world's largest Islamic banks, with total assets worth AED 275 billion ($75 billion). Job cuts will be on both sides but DIB is the buying side so job losses are expected to be more on Noor side.

Birmingham-based Al Rayan Bank has appointed Simon Nash as the new chief information officer.
Simon Nash has 30 years’ experience in the financial services sector with multinational businesses including RBS, Credit Suisse and Deutsche Bank. He will lead information technology innovation as well the development and augmentation of information policies and processes. He will be responsible for a team of almost 50 colleagues and will oversee further technology projects scheduled for this year, including the ongoing development of the recently launched mobile banking app.

Abu Dhabi Islamic Bank (ADIB) has announced plans to streamline its UK operations in a bid to end several banking services and to focus on commercial real estate financing. The bank will refrain from providing regulated services to customers, which includes account services, savings, deposits and safe deposit boxes. The bank said that the decision follows a rigorous evaluation process that took into consideration the high demand for commercial real estate financing in the UK. The bank has built a strong full-service property financing solution to support clients’ investment strategies in commercial real estate in compliance with Islamic Shari’ah principles.

Kuwait Finance House (KFH) plans to shed assets worth about 100 million dinars ($329.5 million) in 2020 as it finalises the acquisition of Bahrain’s Ahli United Bank. KFH has sold assets worth 137 million dinars in 2019 and achieved a profit of 40.1 million dinars. Kuwait's largest Islamic bank registered a net profit of 60.5 million dinars in the fourth quarter last year, up from 58.3 million one year earlier. After the acquisition of Ahli United Bank, the new entity will have assets of $101 billion and shareholder equity of $10.5 billion, with an annual forecast profit of $1.5 billion. This merger will be the Gulf’s first major cross-border bank merger in recent years.

Boubyan Bank had received valid acceptances in respect of a total of 73,263,270 BLME Shares. On 27 January 2020, Boubyan Bank announced that all conditions to the offer were either satisfied or waived and the offer became unconditional. The offer will remain open for acceptances until 1.00 p.m. (London time) on 19 February 2020. Following completion of the offer, Boubyan Bank intends that BLME will continue to operate as a standalone group within the wider Boubyan Bank business.

Al Baraka Bank Egypt is establishing a digital bank, as it decided to increase the capital to EGP 5 billion through 3 years abiding by the Central Bank of Egypt's (CBE) new act. The bank injected EGP 1.7 billion joint funding to the national projects aiming to reach EGP 5 billion in 2023, as well as it will provide in principles 100 Automated Teller Machines (ATM), targeting to reach 200 ATMs during the upcoming period.

Dubai Islamic Bank (DIB) has completed the acquisition of Noor Bank through a share swap deal. As part of the agreement, DIB has issued 651 million new shares to take its issued share capital to 7.2 billion shares. The new DIB shares have been listed and admitted to trading on the Dubai Financial Market. The GCC financial services industry is witnessing a wave of consolidation as banks seek ways to improve competitiveness. Earlier this week, the National Bank of Bahrain acquired a 78.8% stake in Bahrain Islamic Bank. Similarly, Alizz Islamic Bank’s Board of Directors approved a share swap ratio for the proposed merger with Oman Arab Bank.

The upcoming proposed merger between Alizz Islamic Bank and Oman Arab Bank (OAB) will provide customers with better services and more outlets. Al Yusr Islamic Banking, Oman Arab Bank’s Islamic window with all its branches and staff will become part of Alizz Islamic, which will remain as a fully licensed Islamic bank. Under this merger, Alizz Islamic Bank will be fully owned under Oman Arab Bank and will see the former continue to operate as an Islamic bank, with its services available to all existing customers, as well as OAB customers. The latter, however, will continue to function as a conventional bank.

Kuwait Finance House has affirmed plans to purchase Bahrain’s Ahli United Bank. The merger can possibly become the Gulf’s sixth-biggest lender with $101 billion in assets. Reaching the value of about $101 billion, the acquisition will generate the largest Islamic banking entity in the world in terms of assets. Based on its past performance, the annual forecast profit of the merger is $1.5 billion. The shareholder equity of the new entity will be $10.5 billion. Besides Kuwait Finance House, Dubai Islamic Bank in the UAE has also received shareholders’ approval for purchasing Noor Bank via capital increase and share swap. The merger will potentially be valued at AED 275 billion.

Dubai-based Fajr Capital has completed its divestment from Bank Islam Brunei Darussalam (BIBD) to Brunei Investment Agency. Fajr Capital stated that this transaction marks another successful exit for the firm, following several recent high-profile divestments. The bank’s transformation journey resulted in enhanced customer experience through the introduction of internet banking and new digital platforms, international expansion and improved financial performance with the bank’s net income more than doubling.

Alizz Islamic Bank’s Board of Directors has approved a share swap ratio for its proposed merger with Oman Arab Bank (OAB). The share swap ratio is around 81%: 19% for the shareholders of OAB and Alizz Islamic Bank respectively. The proposed merger and the indicative swap ration will remain subject to the approval of the shareholders. On completion of the merger, Alizz Islamic Bank will continue to operate as a dedicated Islamic banking franchise with management autonomy.

Boubyan Bank has reported net profit of KD 62.7 million in 2019, at a growth rate of 12% compared to 2018, with an earnings per share of 20.4 fils compared to 19.2 fils in 2018. Boubyan Bank CEO Adel Abdul Wahab Al-Majed said that the total equity of the bank increased to KD 575 million by the end of 2019 and the operating income increased to KD 146 million. The year 2019 witnessed the introduction of many new services and products. All-new smart phone Apps were launched in addition to the issuance, activation and use of the virtual prepaid card through Boubyan App. Additionally, the bank earned its verified badge in WhatsApp business and successfully integrated the bank’s Chatbot service, Msa3ed, with WhatsApp business.

The National Bank of Bahrain (NBB) has acquired a 78.8% controlling stake in Bahrain Islamic Bank (BisB). The offer which initially opened on 18 December 2019 was launched by NBB in a bid to develop its Islamic banking activities. NBB’s CEO Jean-Christophe Durand said that the two banks would remain independent and BisB would remain listed on Bahrain Bourse. The Islamic bank will continue to operate under its normal course of business as well as maintain its operations as a subsidiary of NBB. The settlement of the offer is expected to take place on 22 January 2020.

In the past two years, we have seen a number of bank mergers take place in the GCC. While the cost synergies of a bank merger can be tempting, the strategies to execute such a consolidation vary significantly and there is no "one size fits all" approach. A number of GCC banks observe a healthy capital position, requisite scale, and supportive shareholders also provide the necessary impetus for international expansions. However, not all international expansion strategies have yielded desired returns. In the past few years, one of three GCC banks incurred losses in their international operations. Only two out of every five banks are witnessing improvement in returns compared to the previous year.