KUALA LUMPUR, Sept 2 Kazakhstan's Al Hilal
Islamic Bank, the only sharia-compliant lender in the country,
may expand into neighbouring countries as legislative efforts to
develop Islamic finance gather pace across the region, its chief
Fresh Islamic finance legislation is being developed in
Azerbaijan, Kyrgyzstan and Tajikistan, creating a more welcoming
framework for the industry in countries which have secular
Legislation is also being redrawn in Kazakhstan, the first
former Soviet country to introduce Islamic finance rules in
2009; the initial set of rules failed to spur much activity.
Almaty-based Al Hilal, whose parent is wholly owned by the
Abu Dhabi government, is considering increasing its geographical
presence as part of its 2015 business plan, chief executive
Prasad Abraham said on the sidelines of an industry conference.
"Our medium-term strategy is to test the effectiveness of
the Kazakhstan model, and then use that as a base for further
expansion to other regions of the CIS (Commonwealth of
Independent States) as appropriate.
"An important precondition for any expansion is the
existence of a proper legislative framework for Islamic finance
in the respective countries."
A draft amendment, currently awaiting discussion in
Kazakhstan's parliament, would provide the bank with a clearer
framework that could translate into better commercial
opportunities, Abraham said.
This could spur new entrants into the sector, such as Zaman
Bank, a local bank which is working to convert itself into the
country's second Islamic bank. It has not given a time frame for
In addition to Zaman, the regulator has now received an
application to operate another full-fledged Islamic bank,
Abraham said without elaborating.
Launched in 2010, Al Hilal is on target to see asset growth
of 70 percent this year, with similar growth expected for 2015,
he said, adding this was partly because growth was from a low
base; it is expected to slow as the bank gains size.
The bank posted a 46 percent increase in assets in 2013,
reaching 16.7 billion tenge ($92 million), financial statements
Its business is focused on government and large corporate
clients, and after conducting a feasibility study earlier this
year it has decided to wait for legal issues to be resolved
before offering retail banking services.
Islamic banks in Kazakhstan are categorised on a par with
other commercial banks, known as Tier 2 banks, but current law
does not extend to them all the tax privileges that conventional
(1 US dollar = 181.7900 Kazakhstan tenge)
(Reporting by Al-Zaquan Amer Hamzah; Writing by Bernardo
Vizcaino; Editing by Andrew Torchia)