How do you assess the development of DIB in recent years?
In the last four years, DIB has transformed into a regional powerhouse in the world of finance. Our successful growth strategy has led to significant enhancement of all key metrics, particularly those around profitability and returns leading to the bank joining the “billion dollar profit club" for the first time. However, there is more to the bank than just financial success. The entire institution has changed from within. It is almost as if the rebuilding efforts prior to embarking on growth were like a vaccine that not only provided the strength to recover from the woes of the global financial crisis, but also provided immunity from future market volatility. While the growth and profitability make me proud, what truly hits the mark is the fact that the bank had its best performance in times that were genuinely challenging for all. I have always believed DIB had the potential and the prowess, and it just needed the right focus and strategy to unleash these. Today, the market views the bank not just as a performance benchmark for Islamic finance but also for the entire banking sector. This, to me, is the greatest achievement, particularly in the face of tremendous adversity in the form of global economic slowdown, low oil prices, liquidity challenges, and rising cost of funding.
How can Dubai further strengthen its position as the global capital of Islamic finance?
Dubai's commitment to Islamic finance is irrefutable. After all, it was the Emirate that first introduced the concept by establishing the world's first full-fledged commercial Islamic bank, which I have the privilege and honor to lead today. The Emirate and regulators have since continued to support the development of this sector over the last four decades into what is today, a flourishing industry. Every institution wants to be part of it, including global multinational names and governments, even in non-traditional countries and markets. We consider ourselves extremely fortunate to be headquartered in Dubai. The government focus, not just on Islamic finance but also on the development of Islamic economy as a whole, has been a massive factor in enabling us to break the age-old myth that Islamic finance is a niche offering with limited scope. The sector's growth has far outpaced its counterpart over the years, and the last decade has clearly shown that the segment can not only compete head to head with conventional players but can in fact surpass them in many aspects. Additionally, Dubai government's unflinching commitment to this industry is fully aligned with its aspiration to become the global capital for Islamic economy. Many steps have already been taken since the unveiling of this agenda, a key one being the establishment of a development center (DIEDC) to oversee this ambition. The center has already set in motion various programs to help develop a modern framework for Islamic economies. From a financial success viewpoint, one glaring example is NASDAQ Dubai. The entity has now become a leading international financial exchange for Sukuk listings with the total listed value of around USD56 billion, the largest for any listing center in the world.
Are you looking to expand your international footprint?
Over the recent past, DIB has established its presence in Indonesia and Kenya, with plans to further grow in the East African belt. Combined with the growing presence in Pakistan, the PIK (Pakistan, Indonesia, Kenya) focused expansion is targeted on capturing the flows between Southeast Asia, the subcontinent, and Africa, with Dubai as the hub. DIB is already positioning itself in these markets as the ideal partner for connecting the three continents. We believe in organic growth, so even if there is an acquisition, we start small and grow from there. Our growth strategy in the UAE has worked phenomenally well, and we are now translating this strategy in the other countries. Pakistan has already turned around with significant increase in business and profitability, and we expect to see similar stories in Indonesia and Kenya. We seek opportunities that create value for the overall franchise. If there is a possibility of unlocking value and a feasible business logic, we will always remain interested. Today, the GCC, ASEAN, India, and East Africa continue to remain exciting potential geographies for us and, depending on the opportunity, DIB could expand in these markets, if the economics make sense at the time.
What is the significance of fintech to the Islamic finance industry?
The challenges in the new digital world are exactly the same for Islamic banking and finance as they are for the conventional counterpart. And so. Like the rest, we should also take this phenomenon, which many refer to as the fourth industrial revolution, seriously. This development is the reason why the progress in the last decades has surpassed that in the preceding half century by an infinite margin. With changing family needs, disappearing cultural barriers, and enhanced lifestyle, it is inevitable that financial services will have to follow suit and evolve accordingly. Hence, I expect to see more opportunities and many new avenues, though one has to be quick, nimble, decisive, and ready to act. The world is moving fast and technological advancements will only see an acceleration going forward. So, the choice is to evolve or dissolve. The global fintech industry is expected to triple in the coming five years to over USD150 billion, and here in MENA, the UAE leads the fintech evolution with nearly 30% of start-ups based in the emirates. We, as financial institutions, are at a crossroads; we need these start-ups just as much as they need us, so it is about complementing rather than competing. It is about embracing rather than excluding, and it is about using the latest development in the industry to our advantage.
What is your outlook for the future of Islamic Finance both in Dubai and globally?
I believe Islamic finance is fast becoming a norm in the financial world. Stats from across the world show extremely positive trends and the existence of high levels of liquidity among GCC investors and other predominantly Muslim markets continue to push the industry northbound. Yet, the real driver above all these is the fact that the myth of the sector being limited to Muslims is clearly gone. Any customer can go to an Islamic or conventional player competing in the same landscape and expect to get all the typical banking and finance needs fulfilled. Investors from all over the world are making decisions by analyzing both types of institutions in the same manner. There are no more product or offering gaps, and there is no more confusion about how the Islamic financial institutions conduct their business. The industry is clearly not an alternative anymore and is in fact globally accepted as a system for banking and finance. Dubai started the concept with DIB and the last four decades have seen the emirate truly take the leadership position in this arena. In fact, the ambition of becoming the global capital of Islamic Economy is going to be another major boost for the Islamic finance industry. As Dubai's government continues its efforts to attract investments in areas such as halal healthcare, fashion, cosmetics and related products, food, and entertainment, imagine the advantage for banks and financial institutions offering Shariah compliant services. While the global expansion and penetration continues to excite us, we are perhaps even more excited about what our home location has in store for us in the years to come.
What is your outlook for the coming year?
2018 is the final year of our 10-year strategic master plan. The last five years of that plan have been focused on an unprecedented growth agenda. We have been ambitious from the start and perhaps the market was slightly skeptical about us in the earlier years. However, seeing our performance, this skepticism is fast dissipating and being replaced by even higher expectations. Our financial guidance for the year continues to be well above the existing market trends and we expect our market share to continue to grow this year, as has been the case for the last few years. Specifically, we expect our Pakistan operations to continue on an upward trend post the translation of our UAE strategy two years ago. The results have been strong over the period, with over 150% profitability growth in the last few years. With Indonesia and Kenya operations now revamped with infrastructure, systems, and people, we are set to push forward a similar strategy in both markets.