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Masraf Al Rayan Bank: A financial bridge between the region and the world

Article - November 26, 2012
Ambitious plans for growth in the region and beyond have always been part of the plan for Masraf AI Rayan

Masraf Al Rayan, one of Qatar’s largest banks, set itself the goal of becoming an international Islamic finance institution right from when it was established seven years ago.

“Because of what was going on in the whole region in terms of growth, and particularly in Qatar, we needed a mega-sized bank to cater to Islamic and non-Islamic customers,” says Adel Mustafawi, the bank´s Group CEO. “From the very beginning, our strategy was to start from Qatar, then expand to the GCC and other countries in the Middle East & UK, building the real economy through the financial sector.”

Today, Masraf Al Rayan has become one of Qatar’s largest Islamic banks, with a market share by assets estimated at 10 percent at year-end 2011. It was the first bank in Qatar to have shareholders from Saudi Arabia, Kuwait, Bahrain, UAE and Oman, in addition to its domestic base of shareholders.

“Our strategy is to link the real economy with the financial sector.”

Adel Mustafawi,
Group CEO of Masraf Al Rayan
The Doha-based lender makes no secret of its interest in making acquisitions in other GCC countries and beyond.

Currently, it is working on a plan to enter the UK market by acquiring a 70 percent holding in Islamic Bank of Britain (IBB), in a deal in which the Government of Qatar would secure the remainder of the shares.

This would be the bank’s first advance beyond the GCC, giving it a foothold in the European market.

While Mustafawi insists Masraf Al Rayan won’t be rushing into Europe, it could be an attractive prospect for the bank in the longer term, given the potential for Islamic banking in countries like Germany and France.

In the meantime, he has noticed an increasing number of international investors taking an interest in ethical Islamic financial institutions.

“International investors are becoming increasingly aware of Islamic products,” he observes. “They see it as an ethical, less risky kind of banking that serves to benefit both the client and the financial institution.”

Masraf Al Rayan’s results for the first nine months of the year show net profit up 7 percent to QR1.08 billion ($297.418 million) compared to the same period in 2011. Financing activities increased nearly 32 percent to QR37.86 billion, while customer deposits rose more than 29 percent to QR51.72 billion, from QR40 billion.

Offering a full range of retail, corporate and banking services, the bank has been creative and innovative in terms of its products. “We compete with conventional banks in terms of the type of products that we offer,” says Mustafawi.

It is extending its nationwide branch network and, in the wake of Qatar’s conventional banks being ordered to cease offering Islamic banking services, has launched a brokerage arm, Al Rayan Financial Brokerage Company.

Moody’s Investors Service says Masraf Al Rayan is well placed to benefit from the strong economic growth in Qatar. Recently upgrading the bank’s credit rating to A2 Prime-1 from A3 Prime-2, it cited the quality of its assets, a growing domestic franchise in the corporate market in Qatar, and “strong financial fundamentals, in comparison with its peers.”

Mustafawi says Masraf Al Rayan will be one of the fastest-growing financial institutions in the region, extending its activities across the Qatari economy.

“Our strategy is to link the real economy with the financial sector,” he says. “We are going to expand into other sectors. Today, we are into oil and gas services – we have a joint venture with an international company. We are also involved in a real estate development with another international company. We have a facilities management company, an insurance company and an industrial company."