Exclusive Interview with Al Hilal Bank CEO, Mohamed Berro

Reading Time: 3 minutes

1.   Many non-Muslims are turning to Islamic-compliant banking instruments. Why is this? What is it about Islamic banking that makes people feel safer?

 Ethical values which Islamic banking brings to the table, such as prohibition of speculation, have steered depositors and investors towards the safe haven of Islamic banking. 

2.   You have ventured into Kazakhstan with the aim of providing Islamic financial solutions for large infrastructural projects. How do you identify markets such as Kazakhstan and what other markets are you exploring?

Al Hilal Bank capitalised on the opportunity to establish the first Islamic bank in Kazakhstan, a county with a vision of becoming the centre for Islamic finance in Central Asia.  Furthermore, Al Hilal Bank seized the opportunity to contribute to the growing economic ties between the UAE and Kazakhstan.

Al Hilal Bank is currently exploring a number of potential expansion opportunities aligned with its strategic directives.

3.   You launched the GCC equity fund in February. What is special about this fund and how has it performed since it was issued?

The GCC fund was launched to provide our personal banking customers an opportunity to achieve long term capital appreciation by investing in listed Shari’a-complaint equities in the GCC region.

The Fund’s investment strategy adopts a blend of top down and bottom up approach with greater emphasis on stock specific fundamentals. The fund invests in three growth sectors, Consumer discretionary/staples, Infrastructure, and Commodities.

The fund has consistently outperformed its benchmark, the DJIM GCC capped, since its launch.

4.   You have enlisted HSBC to provide custodial and administrative services for this fund. How much Islamic banking expertise is available with banks that do not have a history in Islamic banking?

The objective of appointing HSBC as custodian and administrator for the fund is to maintain segregation of duties over the funds operations in line with International practice.  Our selection was made in light of the significant strides made by HSBC towards the development of their Islamic Banking platform.

5.   A comment on Islamic banking is that many institutions are merely copying western banking concepts, eg sukuk to mimic bonds. Does Al Hilal provide any unique Islamic financial products or do you tailor your products to meet what customers expect from a conventional bank?  

At Al Hilal Bank we provide our clients with the best-of-breed banking and investment products customized and built from the ground-up with strict Shari’a supervision to ensure our clients are extended the highest standard of innovation and product development without compromising their religious values.

6.   Malaysia has ambitions of becoming a global centre for Islamic finance. How do you see the industry progressing in Malaysia?

Malaysia has taken a holistic approach to Islamic finance.  The industry in Malaysia benefited tremendously from structured amendments to the tax, regulatory and legal frameworks over a period of more than 20 years with the ultimate aim of ensuring that Islamic financial products and institutions are not at a disadvantage relative to their conventional counterparts.  The authorities gave the industry a boost, especially in the early years, by introducing incentives and tax breaks to encourage the usage of Islamic financial products and services.  Malaysia also addressed the issue of human capital by establishing several centres of learning that cater specifically to Islamic finance studies.  Now that the Islamic finance platform is strong in Malaysia, the country is well positioned to move to the next phase, which is to become a global centre for Islamic finance..

7.   How can banks such as Al Hilal take advantage of Malaysia’s push to lead the way in Islamic finance and banking?

In view of the ongoing dynamics of the global economy and the need for Al Hilal Bank to expand and diversify its sources of revenue, Malaysia could provide an ideal gateway to Asia.  Malaysia’s deep and mature capital markets could also provide an attractive and alternative funding options to finance our business and expansion plans.

8.   There is talk of a new world economic order with the US and Europe in economic stagnation and the focus turns to Asia and the Middle East. How can Islamic banks such as Al Hilal protect themselves from economic tremors in the West?

Strong corporate governance, robust risk management practices, maintaining a healthy level of capital adequacy, ensuring sufficient liquidity at all times, avoiding unfamiliar and high risk investments are some of the ways in which Al Hilal Bank can protect itself from global and financial shocks.

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Reading Time: 3 minutes

1.   Many non-Muslims are turning to Islamic-compliant banking instruments. Why is this? What is it about Islamic banking that makes people feel safer?

Reading Time: 3 minutes

1.   Many non-Muslims are turning to Islamic-compliant banking instruments. Why is this? What is it about Islamic banking that makes people feel safer?

 Ethical values which Islamic banking brings to the table, such as prohibition of speculation, have steered depositors and investors towards the safe haven of Islamic banking. 

2.   You have ventured into Kazakhstan with the aim of providing Islamic financial solutions for large infrastructural projects. How do you identify markets such as Kazakhstan and what other markets are you exploring?

Al Hilal Bank capitalised on the opportunity to establish the first Islamic bank in Kazakhstan, a county with a vision of becoming the centre for Islamic finance in Central Asia.  Furthermore, Al Hilal Bank seized the opportunity to contribute to the growing economic ties between the UAE and Kazakhstan.

Al Hilal Bank is currently exploring a number of potential expansion opportunities aligned with its strategic directives.

3.   You launched the GCC equity fund in February. What is special about this fund and how has it performed since it was issued?

The GCC fund was launched to provide our personal banking customers an opportunity to achieve long term capital appreciation by investing in listed Shari’a-complaint equities in the GCC region.

The Fund’s investment strategy adopts a blend of top down and bottom up approach with greater emphasis on stock specific fundamentals. The fund invests in three growth sectors, Consumer discretionary/staples, Infrastructure, and Commodities.

The fund has consistently outperformed its benchmark, the DJIM GCC capped, since its launch.

4.   You have enlisted HSBC to provide custodial and administrative services for this fund. How much Islamic banking expertise is available with banks that do not have a history in Islamic banking?

The objective of appointing HSBC as custodian and administrator for the fund is to maintain segregation of duties over the funds operations in line with International practice.  Our selection was made in light of the significant strides made by HSBC towards the development of their Islamic Banking platform.

5.   A comment on Islamic banking is that many institutions are merely copying western banking concepts, eg sukuk to mimic bonds. Does Al Hilal provide any unique Islamic financial products or do you tailor your products to meet what customers expect from a conventional bank?  

At Al Hilal Bank we provide our clients with the best-of-breed banking and investment products customized and built from the ground-up with strict Shari’a supervision to ensure our clients are extended the highest standard of innovation and product development without compromising their religious values.

6.   Malaysia has ambitions of becoming a global centre for Islamic finance. How do you see the industry progressing in Malaysia?

Malaysia has taken a holistic approach to Islamic finance.  The industry in Malaysia benefited tremendously from structured amendments to the tax, regulatory and legal frameworks over a period of more than 20 years with the ultimate aim of ensuring that Islamic financial products and institutions are not at a disadvantage relative to their conventional counterparts.  The authorities gave the industry a boost, especially in the early years, by introducing incentives and tax breaks to encourage the usage of Islamic financial products and services.  Malaysia also addressed the issue of human capital by establishing several centres of learning that cater specifically to Islamic finance studies.  Now that the Islamic finance platform is strong in Malaysia, the country is well positioned to move to the next phase, which is to become a global centre for Islamic finance..

7.   How can banks such as Al Hilal take advantage of Malaysia’s push to lead the way in Islamic finance and banking?

In view of the ongoing dynamics of the global economy and the need for Al Hilal Bank to expand and diversify its sources of revenue, Malaysia could provide an ideal gateway to Asia.  Malaysia’s deep and mature capital markets could also provide an attractive and alternative funding options to finance our business and expansion plans.

8.   There is talk of a new world economic order with the US and Europe in economic stagnation and the focus turns to Asia and the Middle East. How can Islamic banks such as Al Hilal protect themselves from economic tremors in the West?

Strong corporate governance, robust risk management practices, maintaining a healthy level of capital adequacy, ensuring sufficient liquidity at all times, avoiding unfamiliar and high risk investments are some of the ways in which Al Hilal Bank can protect itself from global and financial shocks.

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