In #Kenya the Gulf African Bank has ambitious expansion plans for the local market. The bank, which is so far only represented in five counties, plans to open ten new branches between 2016 and 2017. Follwoing Sharia rules, the bank does not finance casinos, breweries and anything that is hazardous to the human body. Gulf African Bank is stable and prepared to increase core capital which now stands at Sh3.8 billion. At the end of the year the bank's capital will be above Sh4 billion, while by 2017 above Sh5 billion.
The International Finance Corporation, the private-investment arm of the US-based World Bank Group, has announced that the Gulf African Bank (GAB) in Kenya has become a member of its Africa Micro, Small, and Medium Enterprise Finance Program. Through this program, GAB will receive advisory services from IFC in the areas of accessibility for customers, speed of service, adding new products and customer relationships. In 2013, IFC paid USD 5 million for a stake of undisclosed size in GAB. As of December 2013, GAB had total assets of KES 16 billion (USD 184 million). IFC has 182 member countries and reported total assets of USD 77.5 billion.
Our employer of the week has several vacancies to offer job seekers out there. Gulf African Bank which opened its doors in the country in 2008 is looking for customer service officers, product development, shariah compliance officers and tellers. Swaleh Sharif who is the human resource director says the deadline to submit your applications is in two months’ time.
Gulf African Bank has tied its public listing plans to the exit of International Finance Corporation (IFC) from its shareholders’ roll. IFC bought a 15 per cent stake in the bank for $5 million (Sh430 million) last year, which valued it at about $33.33 million (Sh2.86 billion) at the time. Chief executive of Gulf Bank Abdalla Abdulkhalik said IFC plans to exit through a public share sale. The IPO is also expected to raise additional capital for the lender. However, no timeframe has been set. Going by the IFC’s investment horizon the public could get a chance to buy into the lender by 2017. IFC’s policy is to invest in firms for between five and seven years. Gulf Bank's total assets stood at Sh13.56 billion as at the end of 2012, up from Sh5 billion as at the end of 2008.
The International Finance Corporation (IFC) – the investment arm of the World Bank – has acquired 15 percent shareholding in Gulf African Bank, Kenya's Islamic bank, for $5 million (Sh425 million). In addition, a further $3 million (Sh255 million) trade guarantee has been opened for Gulf African Bank under IFC’s global trade finance programme. Gulf African Bank said it would use IFC’s financing to boost finance for retail and corporate customers and develop programmes for women entrepreneurs while also extending services to SMEs. In addition to the IFC partnership, the bank is undertaking a rights issue to increase its capital base by an additional Sh850 million.
The African Guarantee Fund (AGF), reportedly has agreed to guarantee an unspecified portion of KES 100 million (USD 1.2 million) to be loaned by Gulf African Bank (GAB) to SMEs in Kenya. After the signing of the agreement, GAB Managing Director Asad Ahmed reportedly expressed his belief that the deal will help to increase the bank’s financing and risk management capabilities. AGF was established in Kenya in June 2012 with initial capital sufficient to issue partial guarantees of loans totaling USD 50 million. AGF has branches in nine African countries as of March 2013. As of March 2011, GAB had total assets of KES 9.6 billion (USD 112.3 million) and customer deposits of KES 8.2 billion (USD 96 million).
The two Islamic banks in Kenya posted growth in their profits last year as the faith-based banking concept becomes entrenched in the country's financial sector. Gulf African Bank and First Community Bank were able to break even in a fairly short time — Gulf African in two years and First Community in three years. Last year, Gulf African registered 154 per cent after-tax profit growth to Sh242 million. First Community Bank, on its part, recorded 239 per cent growth in profit-after-tax to Sh241.3 million last year. According to the Central Bank, by December 31, 2010, the two Islamic finance banks collectively commanded 0.9 per cent of the banking sector net loans and advances of $115 million (Sh9.7 billion) and deposits of $171 million (14.5 billion).
IFC has announced the investment of $5 million equity in Gulf African Bank, one of Kenya’s two Islamic Banks. The bank will use IFC’s financing to increase finance for retail and corporate customers, develop programs for women entrepreneurs and extend more services to small and medium businesses. Jamal Al Hazeem, Chairman of Gulf African Bank, welcomed IFC’s decision to take up a 15% shareholding stake in Gulf African Bank. In addition to the equity investment, a further $3 million trade line will be made available to Gulf African Bank under IFC’s Global Trade Finance Program.
Reporting to the Head of Risk and Compliance, the successful candidate will identify measure and analyze the various enterprise-wide operations risks that the Bank faces and formulate strategies on how to mitigate and minimize the risk exposures.
Dubai Bank Kenya has launched two Shari’ah compliant accounts, one aimed at low income earners, the other at higher income earners as it looks to satisfy the insatiable request for Islamic banking products in Kenya.
Dubai Bank is among around half a dozen conventional commercial banks in Kenya that have opened up Islamic finance windows in order to lock-in their existing Muslim customers, discouraging them from shifting their loyalty to the two fully fledged Islamic banks in Kenya: First Community Bank and the Gulf African Bank.
The awash with Tawarruq deals as Islamic finance institutions, starvation of wealth creating opportunities and liquidity in the local market will allow East Africa to transact with the conventional financial sector.
Kenya's two existing Islamic banks, the Shari'ah compliant windows of conventional banks in East Africa and Takaful firms are constantly exploiting the Tawarruq window.
Abdalla Abulkhalik Sheikh, general manager and acting CEO of Gulf African Bank in Kenya, stated that they are using Tawarruq until the government will allow trading of Sukuk.
Takaful Insurance of Africa has been licensed and launched in Nairobi.
The company was registered by the Kenyan industry regulator, Insurance Regulator Authority, this month. It is backed by the Cooperative Insurance Company of Kenya.
The launch of Takaful Insurance of Africa follows on from the granting of two Islamic banking licenses to Kenyan authorities in 2007 to Gulf African Bank and First Community Bank.
Investors are showing increasing interest in offering Sharia-compliant financial services in the Kenyan market. The two Islamic banks, First Community and Gulf African Bank, last week said they had acquired regulatory licenses to roll out takaful — Islamic insurance covers. Business Daily spoke to Dr Hassan Anandwa, a scholar at the Thika College for Sharia and Islamic Studies, on the new products.
Conventional financial services involve earning or charging interest. The Islamic versions, however, prohibit interest earning which is called haram. Those that comply with the above condition are called halal.
Savings and current accounts are halal and so are commissions and fees charged on these and other services like money transfers.
Ordinary banks earn the bulk of their income from interest on loans. Instead of earning interest on loans, Islamic banks simply put a markup on the value of the loan a borrower is seeking. There are several ways of doing this. One, the bank and borrower enter into a joint investment funded largely by the bank.
Investors are rolling out more Sharia-compliant financial services into the Kenyan market, betting on the growth of the Muslim population to boost the uptake of Islamic financial services that began five years back with simple current accounts.
The growth in numbers coincides with a string of new financial service investments that target the faithful.
The bank’s managing director, Mr Nathif Adam, said the entry into takaful is a first step towards offering integrated Islamic financial services, a strategy that has been echoed by Gulf African Bank that also announced plans to venture into other financial services in the near term.
Other conventional banks have also developed Sharia-compliant current accounts while conventional insurers are eyeing new opportunities in Sharia-compliant products.
Mr Adam told Business Daily the bank has signed up one conventional insurer and will soon rope in more underwriters to act as agents for its takaful offerings.
The two firms said they are targeting general insurance focusing on property and motor covers.
The first Sharia-compliant insurance company in Kenya has been formed as the race for Islamic cash intensifies.
The firm, which will operate as Gulf Takaful Company Ltd, is being fronted by GulfCap Investments — the principal shareholder in Gulf African Bank.
Under the model, people seeking insurance cover will pay premiums to a collective fund from which payments will be made to members who suffer from the risks covered.
But unlike conventional insurance practice, the new insurance model, known in Islamic parlance as Takaful, is both an investment offering as much as it covers members.
Gulf African Bank will act as the fund manager for the insurance company, earning fees for its services to the insurance scheme.
Analysts say that by introducing Sukuk, the government could diversify the base of investors bidding for government debt papers, given the cash flush investors from the East who have shown interest in Africa as an investment destination.
James Makau reported in Business Daily on 31 March that the Gulf African Bank and First Community Bank became the first fully fledged Islamic banks in Kenya but both had to record losses in their first year of operations as operating expenses and heavy set-up costs took a heavy toll on earnings.
Gulf African Bank recorded a loss of Sh281 million last year while First Community Bank (FCB) posted a loss of Sh307 million within the same period despite both players recording increases in net income during the year.