National Bank of Kenya Islamic Unit Aims for 25pc Market Share

National Bank of Kenya’s (NBK) Islamic unit National Ammanah has refuted claims that financial institutions with an Islamic element have loopholes saying ‘not true.’

Mohammed Hassan, National Bank Board Chair while responding to a question on the Islamic bank element that contribute to three Kenyan banks being under receivership, “Out of three, two had nothing to do with Islamic banking. It is not true. Only 2 percent of the business was Islamic.”

The response was in relation to Chase Bank that was alleged to have used its Islamic banking product to sanitise bad loans, according to the Kenya Deposit Insurance Corporation (KDIC).

Read: Dispute Resolution Mechanism Proposed to Reconcile Chase Bank Auditors

Addressing the media during training on Islamic Banking on Thursday in Nairobi, Hassan said they have given the management and the Shariah board enough tools to drive Islamic Banking in Kenya.

Musa Adan, Director Islamic Banking said since its introduction as Al-mumin, in 2009 to the rebranded in April 2013 to National Ammanah, “Its growth success has been phenomenal.”

“40 percent of our customers are non-muslims. This is a huge potential that we can enroll to the whole country,” he adds.

In addition, Dr. Abdullatif Essajee a lecturer at the University of Nairobi said by the end of 2014, the bank’s market share was at 1 percent to 2 percent and the uptake was rising.

“This is a good opportunity for growth in Islamic financing. The market is there my expectation is at the end of the 2016 it will have a market share of at least 25 percent.”

Dr. Essajee says Kenya aims to develop into an international financial center as well as a hub for Eastern and Central Africa for Islamic finance by 2030 and it has proposed a separate regulatory framework for IFI as part of a broad ten year strategy designed to boost capital markets.

In Kenya, fully fledged Islamic banks include:  Gulf African Bank and First Community Bank with the Dubai Islamic Bank which is still under formation.

Banks which have introduced the Islamic Banking Window include:  National Bank of Kenya, Barclays Bank, Chase Bank, Standard Chartered and the Kenya Commercial Bank.

Related: What CBK should do to spur growth of Islamic banking

Dr. Essajee says Islamic banking and finance is not any different from the conventional banking and finance only that the underlying structures are based on the trading of assets, leasing arrangements, and profit and loss sharing investments as dictated by the Shariah principles.

On Wednesday NBK reported Half Year group pre-tax profit of 438.4 Million ended June 2016 with a group total interest income of 6.97 billion shillings versus 6.41 billion shillings in 2015.