KUWAIT - Finance
Vice Chairman & CEO, Boubyan Bank
Bio
Adel Al Majed has been at the helm of Boubyan Bank as Vice Chairman and CEO since 2009, achieving remarkable success in the Islamic banking industry. He first joined NBK in 1985 and saw his career progress from Executive Manager to AGM in 1992, DGM of Consumer Banking in 1993, GM of Consumer Banking Group in 1998, to Deputy CEO in 2008, before taking the leadership position at Boubyan Bank. He graduated from the University of Alexandria with a Bachelor’s degree in Accounting, and attended various management training programs at prestigious universities including Harvard, Wharton, and Stanford.
Growth and demand in the Islamic economy is very high—40% of Kuwaiti banking assets are Islamic—and this is an industry that was just getting started 35 years ago. Looking at Kuwait’s demographics, we estimate that 15-20% of the population are interested in dealing with Islamic banks “exclusively“ due to religious reasons, while the remaining customers might consider their bank of choice based on the quality and diversification of the services provided and products offered. As a result, we believe that by providing top-notch services our Islamic bank will present itself as a very attractive option, and that customers are smart enough to choose the option that serves them best. We certainly know that customers will never sacrifice quality of service, products, or innovation only for products to be merely branded as “Islamic,“ and this is why we spare no effort in trying to outperform our competition as well. Our strategy is to target Kuwaitis, especially young ones, as well as affluent expatriates, by differentiating ourselves from other banks in terms of services and technology. Islamic banking is a growing segment, but the pie is shrinking, especially in the Kuwaiti market, making it very competitive to operate here.
We already have a presence in the UK, where we hold a 25.62% stake in Bank of London, and the Middle East, and similarly we are in East Asia considering that we hold a 22% stake in Bank Muamalat Indonesia. We know that our customers’ aspirations go beyond that, and we are exploring overseas expansion opportunities as a part of our strategy. This is a longer-term plan, owing to the political uncertainty around the world at present, which has even led some international banks to pull back from certain markets. Meanwhile, I do expect that Islamic banks will be affected, too, but I believe that such an effect will in no way be similar to that suffered by global banks. This is mainly attributed to the special nature of Islamic banks and their exclusivity being the one and only destination for a specific segment of Muslims who only seek sharia-compliant banking services. While controlling $2 trillion worth of assets, Islamic banks also have a huge customer-base, but some are looking at taking Islamic banking to Europe while there is still potential growth in Muslim countries. For example, in Kuwait Islamic banking accounts for 39% and in Dubai it is not more than 30%. Also, there are unseized opportunities in Indonesia, a Muslim country with a population of 250 million Muslims where Islamic banking accounts only for 5%, and Egypt, a Muslim country with a population of around 100 million and a lack of Islamic banking. Egypt is one of the Muslim countries subject to our 2020 Strategy that aims at overseas expansion to position the bank and Islamic banking as an attractive and modern option for young people in such markets.
We are looking at 20% growth YoY, at least for the next five years. We have been achieving this growth for the past five years and think we can carry it on for five more years. Our goal for 2020 is to be the third top bank in Kuwait. Six years ago, we planned to place ourselves as one of the best Islamic banks in Kuwait, but now the sky is the limit for our aspirations, and we are not only planning to be among the top three banks in Kuwait but also to be among the top 20 Islamic banks in the world. We think Islamic banks should invest more in productive sectors, such as the agricultural or industrial sectors, where investments are secure and not dependent on speculation. It is time now to come up with banking products that chime with the soul of Islamic banking, for example profit sharing instead of lending. We are looking forward to partnering with customers and sharing profits with them and this is quite possible under Islamic banking which is more asset-oriented. Partnerships and profit-sharing are much higher risk because the same logically entails loss-sharing as well, so Islamic banks should have the right tools in place to mitigate such hazards.
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