The Business Year

Mohamed J. Berro

UAE, ABU DHABI - Finance

A New Moon

Group CEO, Al Hilal Bank

Bio

Mohamed J. Berro was appointed CEO of Al Hilal Bank in 2008 and has 20 years of experience in the banking sector. He was previously Global Head for Arab Bank’s Personal Banking Group. He began his career with Arthur Anderson in Kuwait, and held various senior positions at the National Bank of Kuwait in both Kuwait and Lebanon before joining Crédit Agricole in Egypt. He has also served as a Board Member on a number of regional financial institutions, including Arab Islamic International Bank, Al Nisr Insurance, and Visa in Jordan.

"We foresee sustained growth for Islamic banking, with expectations that the segment will outgrow conventional banking."

What sort of steps is Al Hilal taking to safeguard against future external shocks?

There are some things that are specific to Al Hilal, and other precautions that are banking-sector specific and are being carried out by the regulators. As far as Al Hilal is concerned, we follow the Central Bank’s actions and focus further on our risk management and geographic exposure. We are lucky in the sense that Al Hilal is a new bank that didn’t have much exposure globally. We started in June 2008, just on the heels of the crisis. That gave us an advantage as we weren’t exposed to the wrong sectors or issues in certain geographies. We have more experience with certain ailing industries in the UAE or the region, and that gives us an advantage. We are one of the cleanest banks in the region, not just because we are very intelligent, but because time is on our side.

How do you adapt your business strategy during difficult times?

We identified the root of the issues and signals and readjusted our strategy and priorities. We often go back to basics and focus on very clear economic sectors that we forecast will not be as affected. During recent times, we paid close attention to the local line of business. Looking at our balance sheet, there is much local exposure. Everything is very Abu Dhabi based and sector-specific, and these operations were not affected by the economic turbulence that we were facing. That was by design.

“We foresee sustained growth for Islamic banking, with expectations that the segment will outgrow conventional banking.”

How would you evaluate the performance of your branches in Kazakhstan over the last year?

There is a strong relationship between Abu Dhabi and Kazakhstan, and we forecasted that this partnership would yield further investment and trade between the two countries. This is one of the reasons we are following this investment and trade opportunity, which will continue to happen. Kazakhstan also has a large Muslim population, and we entered the market after the first Islamic banking license was issued. The country’s location is very central to the CIS region, and it could be considered a stepping-stone for the whole region. Because we didn’t know much about Kazakhstan, our strategy was very conservative and focused on infrastructure and government at first. We have done well in Kazakhstan, despite the fact that the crisis was also hitting that country. The banking sector was ailing and it faced many problems. We opened our Kazakhstan branch a year after we opened Al Hilal, in 2009.

Are you cautious of a bubble bursting in the sukuk market?

Not really. There are many elements that protect the sukuk market. First is the fact that it is nascent, small, and has yet to grow. Islamic finance has outgrown conventional banking in the last few years, even during the crisis, when the yearly growth of Islamic finance was almost more than 20% regionally and globally. That is not a bubble. Until there is a more rewarding opportunity or better yielding instruments for investors, the sukuk market will be there. There is growth in sukuk, and we see many corporates interested in the market. Specifically, Sheikh Mohammed bin Rashid Al Maktoum has a vision of Dubai becoming an Islamic center and a major sukuk player. The whole Islamic finance market globally is worth around $1.2 trillion, so it is still minute compared to global assets and banking assets in the region, as well as compared to the growth and expenditures that our local economies are witnessing.

How else does the bank seek to increase its profile in the finance industry?

For Al Hilal Bank, being green is very important to our plan because Abu Dhabi is following the same trend. We are a bank that supports the realization of the 2030 Vision of Abu Dhabi, and being green is a cornerstone of that plan. Considering our strategy, our operations are focused on three pillars. One is the financial pillar. Second is the health of the bank. Third is our responsibility toward the development of the UAE and Abu Dhabi and their citizens. For example, there are a few achievements I am very proud of, one of which is the newly signed agreement we made with Emirates National School, a major education provider here in Abu Dhabi. We have created a banking curriculum that will be for school-aged children from kindergarten until graduation. We are not only financing the realization of the bridges and the various industrial sectors in the country, but we are also helping to shape the new generation for 2030.

What is Al Hilal Bank doing to increase the number of nationals working in the banking sector?

Currently, 31% of our employees are nationals, and we have one of the highest percentages of local staff among the banks. All of our branch managers are nationals. Since day one, this has been our policy design, and we are working to operate more unconventionally. The classic answer is that we train and hire nationals, which is what we do, but we also go beyond that. We have a program called Project 2020, in which everyone in the first line of management at Al Hilal should be a UAE national. This will be carried out through a very comprehensive program of development, and we do not expect it to take one month or one year. Instead, it will take us five or six years to shape the employees to become the new leaders. If I am to be remembered by this bank, aside from the financial side, I would like people to remember that I led the bank to graduate the best nationals in the union at the UAE level.

Al Hilal won Best Regional Bank in the Middle East in 2012. How does the bank plan to sustain this achievement?

We won because we are different and the bank has proven that there is value in its brand. The name of Al Hilal is large and well respected across various segments. We will sustain this by continuing our strategy and improving it where possible. Today, we are focused on designing Al Hilal 2.0, which will provide solutions and redefine banking. We hope this vision gives us an advantage over the competition as we face a new age in banking. The advantage for Al Hilal is that it is still small, and we can adapt easily, change, and improve much faster than the competition.

What is your forecast for Islamic banking in the UAE for 2013?

We foresee sustained growth for Islamic banking, with expectations that the segment will outgrow conventional banking. However, I believe we still have a long way to go. Islamic banking regionally, locally, and globally is being sought after, and people want to do banking with Islamic institutions. If we break the market into three segments, there is one segment that wants to do Islamic banking irrespective of how good or bad the banks are, another segment that would prefer to do Islamic banking if the product and the level of service are competitive, and a third segment that is indifferent—its customers go where the best service or product is. Islamic banks today have the opportunity to tap into the whole market, whereas conventional banks have only two out of the three. With the comprehensiveness of their product, good service, technology, and service they provide, Islamic banks have increased potential, and Al Hilal is an example of one such company. Any Muslim that prefers to do Islamic banking has every reason to choose Al Hilal. The bank has all of the products that conventional banks have, but it is also fresh, modern, young, and energetic. In addition, the bank is quickly evolving into its vision for the future.

© The Business Year – May 2013

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