January 21^st, 2008
Algeria,
AL Salam Bank Managing Director and Board Vice Chairman, Hussein Mohammed Al Meeza, has said that Islamic banks are witnessing rapid growth and attracting more patronage worldwide, particularly in the Islamic world.

In his address to the Algeria Economic Forum, which opened today in the Algerian capital, Algiers, Al Meeza, who is also the Salam Bank managing director, said:  "All financial institutions' reports point to significant growth of assets and liabilities of Islamic banks in all Islamic countries, except in Iran. It is estimated that Islamic banks' total assets is hovering around USD450 billion. It is highly expected that this figure would jump to about one trillion dollars by 2010."

Al Meeza pointed out that Islamic banks are growing at higher rates than other banks and this is helping in creating conducive climate in the banking sector in most parts of the world. He said profit margins being achieved by Islamic banks and financial institutions are better than those being achieved by their traditional counterparts in many Arab countries, adding that the sharp increase in the number of Islamic banks and financial institutions reflects the deep interest in Islamic finance and this is pushing for tough competition on this market.

Al Meeza added: "Financial statistics and studies show that there is an upward trend in the number of people who prefer to deal with Islamic banks. Islamic financial institutions' deposits total USD68 billion. The assets of Islamic financial institutions have also witnessed rapid growth. In 1997 it was USD20 billion but this figure grew to USD85 billion in 2005. The growth rate in the Islamic finance industry in the Gulf region, for example, is about 35%. There are about 270 banking and financial institutions in various parts of the world, including 34 in Bahrain, which is the main hub of these banking institutions in the Middle East region. The above statistics reflect a major switch from the traditional banking system to Islamic banking. This is why we see the free flow of investment in Sharia-compliant investment opportunities in the Gulf, Middle East and Asia."

He pointed to three potential areas in Islamic banking as including bonds paid by mega infrastructure and real estate projects, investors' deep interest in looking for variety of financial tools and asset management which is expected to witness a major boom due to the huge wealth stashed in the region, in addition to the fast growing markets of Islamic countries in Asia.

He said the issuing of Islamic bonds continues to attract investors from Europe, the United States and Asia, in addition to the countries in the Gulf region, which are enjoying unprecedented economic boom. "It is worth noting here that most Islamic bonds issued were rapidly covered totally due to the high demand for Islamic bonds, whose market has witnessed significant growth in 2007," he said, adding that a number of institutions, particularly in the Gulf region, have been shifting to Islamic bonds to finance their projects.

"We believe this market will witness major growth in the next five years," he said and attributed the increase in the volume of bonds to the high oil prices, which recently hit a record high of USD100 per barrel.

A report issued by the Citigroup Bank of the United States show that Islamic investment funds worldwide is estimated at about USD3.3 billion with growth expected to reach more than 25% in the next seven years. The report estimated the deposits of Islamic banks at about USD200 billion, with a steady growth expected to range from 10% to 20% per annum.

Al Meeza drew the attention of his audience to two major issues which Islamic banks and financial institutions must take note of. The first being risk management, particularly with regard to Islamic banks which are prone to risks and the second being operations that obstruct the way of these banks to become the major engine of competition.

"The golden age of Islamic banking and high patronage they enjoy encouraged us to launch the Salam Bank Group which continue to witness rapid growth and prosperity day by day. We started with Salam Bank of Sudan, then with Salam Bank of Bahrain and now with Salam Bank of Algeria, God willing, we shall soon open more in other Arab countries," he said.

Salam Bank of Sudan, which was set up on May 25, 2005 with an initial capital of USD100 million, is one of the biggest banks in Sudan’s financial market and has been working hard to position itself as one of the most reputable banks on the Sudanese market, thanks to its innovative and high quality services.

The Salam Bank of Bahrain was established on April 17, 2006 with a capital of 120 million Bahrain Dinar (USD317 million). The bank was listed on the Bahrain Stock Market on April 27, 2006. The general subscription of its shares attracted high patronage having been covered 63.4 times, while the outcome of the subscription of the bank’s shares, which closed in March 2006, reached 2.7 billion Bahrain Dinar (about USD7 billion). The bank achieved a big profit of USD43.5 million in 2006.

This was followed by the setting up of the Salam Bank of Algeria, which obtained license to operate in Algeria on October 17, 2006 and started business with a subscribed and paid capital of 7.2 billion Algerian Dinar (about USD100 million). Salam Bank of Algeria is highly tipped to make a generous contribution to the Algerian economy.

The two-day Algeria Economic Forum opened today in Algiers under the auspices of the Algerian President, Abdelaziz Bouteflika and Algerian prime minister, Abdelaziz Belkhadem.

Salam Bank is participating in the forum with a high-level delegation, headed by Salam Bank deputy board chairman and managing director, Hussein Mohammed Al Meeza.