Chat with MM - CEO of Amana Bank

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COVER STORY I MOHAMED THOWFEEK MOHAMED AZMEER CEO OF AMANA BANK LTD ASIA ASIA

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Exclusive Interview MOHAMED THOWFEEK MOHAMED AZMEER CEO of Amana Bank Ltd.

PROPELLING PERFORMANCE GROWTH

BY MUATH MUBARAK

Issue 08 2014 / Islamic Banker ASIA

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COVER STORY I MOHAMED THOWFEEK MOHAMED AZMEER CEO OF AMANA BANK LTD

Q1 IBA: As the newly appointed CEO of Am達na Bank - the first and only fully fledged Islamic Bank in Sri Lanka, what are your aspirations for the bank and Islamic Finance in the country?

Azmeer: My immediate and primary focus is to concentrate on improving the performance of the Bank by strengthening and enhancing the core business to take the Bank to the next level. In doing so we will ensure a culture of service excellence where customer expectations are turned into employee commitments to deliver the right products and services at the right price while managing the costs and the risks. As you have rightly pointed out, we have pioneered Islamic Finance in Sri Lanka and it should be noted that Am達na Bank has completed nearly 3 years of banking operations. In fact, it symbolises in many ways the origin, growth and development of Islamic Finance in our country. This feat was passionately pursued by a few individuals who had the vision of introducing this unique model

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of finance to Sri Lanka which culminated by the launch of Am達na Bank 3 years ago as envisioned by our Chairman Mr Osman Kassim. My task has been made relatively easier by these individuals who had worked tirelessly in overcoming the many obstacles in ensuring that the Bank was laid on a solid foundation. I aim to build on this foundation and ensure that the true potential of this Bank is realised. The Islamic finance industry in Sri Lanka has come a long way since its inception in 1997. The current market potential for Islamic Finance is estimated to be over USD 2.5Bn. I believe that in order to service this potential we should match the needs of faith based as well as a value based propositions. I sincerely believe that Am達na Bank could play a significant role in ensuring that this potential is catered to. Moving forward I believe that the industry must focus its efforts to make Islamic finance to be seen as an appropriate model that can help businesses and individuals in meeting their financing and banking requirements. The general public need to yet understand the unique value

The Country’s leadership and Regulators have played a significant role in the process by making changes to the legal structure and regulatory framework. However, as the industry in Sri Lanka evolves in a growing economy, there are many other areas for further improvement such as suitable instruments for liquidity management and investment instruments so that the industry would have a level playing field.

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COVER STORY I MOHAMED THOWFEEK MOHAMED AZMEER CEO OF AMANA BANK LTD

Amãna Bank was also recognised as one of those institutions that had brought in foreign investments into Sri Lanka during the most difficult period of terrorism in the country, at the Global Commerce Excellence Awards ceremony which was organised by the Central Bank of Sri Lanka and supported by the Board of Investment of Sri Lanka. Recently we were also adjudged the Best Up and Coming Islamic Bank in the World by the prestigious Global Finance Magazine Awards.

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proposition put forth by Islamic finance, for which the industry players need to play a vital role in terms of knowledge marketing. Once people understand the inherent benefits of the model, I am confident that we would expect to see more customers preferring the Islamic banking concept as opposed to conventional banking. While Amãna Bank plays a lead role for the above, I would like the Bank to also expand its services to the under banked and unbanked sector of the economy. I believe Islamic finance has the solution for their needs as well.

In the years to come, I expect Amãna Bank to not only maintain its overall leadership status in the Islamic finance industry but also to be a strong contender in the banking sector amongst its conventional banking peers, thus taking the alternative financial solution to new markets.

IBA: Could you share with us on the journey of Amãna bank and how well the bank has strategically positioned to pave the way under your leadership?

Azmeer: We commenced banking operations on 1 August 2011 with a reach of 14 strategically located branches across the island offering Current Accounts, Savings Accounts, Children’s Savings Account, Term Investment Accounts, Home Financing, Leasing, SME Banking, Corporate Banking, Trade Services and Treasury Services.

Today the reach of the bank has increased to24, with 10 new branches whilst offering new products and services such as Istisna financing, Ijara financing, Wakala financing, salary savings, ladies savings, senior citizen savings, small asset finance (easy payment plan), gold safe keeping, solar financing, debit cards, ATM services with access to 600+ ATMs and safety deposit locker facilities etc. In a short period the Bank has acquired over 130,000 customer relationships while recording impressive three digit growth in its asset portfolio with a well-balanced deposit base. Having taken over the reins of the Bank, I will In Sha Allah continue to pursue the business strategy which I was heading previously since joining the bank 2 years ago. We shall aggressively grow our business volumes and revenues

largely through the Consumer and SME sectors which carry the potential for future economic growth which is also in line with the economic growth of the country. The Bank’s growth and expansion to date has been with this strategic focus which we will continue to build in the coming years by expanding our distribution network and alternative channels in territories where we have identified strategic business opportunities.

Mohamed Thowfeek Mohamed Azmeer, CEO OF AMANA Bank Ltd’ is a banker with a solid international experience.

IBA: How is Amãna Bank seen from an International perspective?

Azmeer: Over 50% of the Bank is owned by foreign shareholders. Of which key strategic shareholders are within the region including Bank Islam Malaysia Berhad, the Islamic Development Bank based in Saudi Arabia and AB Bank in Bangladesh. This speaks of the confidence foreign investors have not only in Amãna Bank but the potential of this unique model of Banking in Sri Lanka. Bank Islam Malaysia has played a pivotal role since our inception providing the technical impetus, which testifies the trust the international market has placed on us. Our IPO in late 2013 also had a successful outing in the overseas market.

Further, Amãna Bank was also recognised as one of those institutions that had brought in foreign investments into Sri Lanka during the most difficult period of terrorism in the country, at the Global Commerce Excellence Awards ceremony which was organised by the Central Bank of Sri Lanka and supported by the Board of Investment of Sri Lanka. Recently we were also adjudged the Best Up and Coming Islamic Bank in the World by the prestigious Global Finance Magazine Awards. Such recognitions vouch for the role we have played for Islamic banking in a global context.

IBA: As an experienced Islamic

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COVER STORY I MOHAMED THOWFEEK MOHAMED AZMEER CEO OF AMANA BANK LTD

Inline with the CBSL road map, Amãna Bank has a Board Approved 5 year plan, realigning our strategies with that of the Road Map 2014 of Central Bank of Sri Lanka and we, In Sha Allah, are on course in achieving these objectives.

banker, what are the challenges and pressing issues concerning the industry in Sri Lanka and what actions need to be taken in addressing these challenges?

Azmeer: In our journey since inception, we have faced tough challenges every year. Going forward as the economic conditions become more conducive and increase in demands of investment and financing opportunities, we will face more challenges. As discussed earlier, we have had challenges in the area of liquidity management and investment instruments. Middle East markets and Malaysia thrive on products such as Sukuks, which Sri Lanka is yet to develop. This is a major setback for us. I believe that the industry has to collectively work with the Regulators and legislators in bringing about the required changes in the regulatory and legislative framework. Therefore, the practitioners along with Shari’a scholars will have to collectively work together to bring about

adequate changes to the legislative and regulatory framework.

IBA: Yr 2014/2015 is more challenging years for the banks and financial institutions in Sri Lanka as the Central Bank of Sri Lanka (CBSL) has come up with a consolidation plan. As the only full-fledged Islamic bank in the country, how do you see this move and what are the challenges and opportunities of this change for Amãna Bank?

Azmeer: This is a very important question and the entire industry is working towards this including ourselves.

The consolidation process is eventually expected to result in a few but stronger players in the financial sector which is good for the economy. Such processes have taken place in other economies in Middle East and Asia. In this context, banks such as ours are expected to substantially increase their capital bases and total assets to a minimum of LKR 10 billion and LKR 100 billion respectively within the timelines specified by the Regulator while strengthening other key areas. Inline with the CBSL road map, Amãna Bank has a Board Approved 5 year plan, realigning our strategies with that of the Road Map 2014 of Central Bank of Sri Lanka and we, In Sha Allah, are on course in achieving these objectives.

IBA: Last year Amãna Bank had announced its IPO and subsequent listing. How has the market sentiment been developed since then?

Azmeer: In the IPO we were faced with the challenge of raising LKR 1.5 Billion in equity investment funds amidst dwindling stock market confidence and a tide of attractive interest-based

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The government has planned to transform Sri Lanka into a strategic economic centre by developing key strategic hubs namely the Knowledge Hub, Commercial Hub, Naval and Maritime Hub, Aviation Hub, Energy Hub and Tourism Hub. I am happy to note that AmĂŁna Bank, with its existing product suite is servicing these hubs.

debenture issuances amounting to about LKR 70 Billion floated by a number of conventional banks and finance companies as well as corporate, all of which swiftly mopped up the liquidity in the market. The strategies we adopted to raise the targeted capital under these challenging circumstances worked out well for the Bank and resulted in an oversubscription of the IPO and a successful closure of the issue. Since listing in the bourse, our market sentiment has had a healthy development, and this was testified by the optimistic comments we received from a wide audience at the recently concluded AGM. Our focus is on the medium to long term value and is well accepted amongst investors.

IBA: As you have been blessed with Middle East Islamic finance exposure, how do you see the progress of Islamic banking & finance in Sri Lanka particularly?

Azmeer: Having worked and come

from a majority Muslim country where Islamic finance is widely acknowledged and practiced, the acceptance of Islamic finance in a non-muslim majority country such as Sri Lanka is truly commendable. In a relatively short period of time the country has been successful in developing an eco-system to support Islamic finance, consisting of a Bank, Window operations of almost all large local banks and financial institutions and Takaful operators. In addition, there are other support institutions that provide Advisory, Shari’a supervisory, Fund/ Asset Management, Stock broking, Training and Development services besides various well represented local and international conferences and forums on Islamic finance. These are positive and encouraging signs for the industry.

IBA: What are the possibilities of introducing the most promising asset class such as Sukuk in Sri Lanka especially at this juncture of the country’s post-war Issue 08 2014 / Islamic Banker ASIA

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COVER STORY I MOHAMED THOWFEEK MOHAMED AZMEER CEO OF AMANA BANK LTD

Shari’a scholars and banking practitioners thereby creating an enabling environment with a comprehensive knowledge base. This would result in everyone to appreciate and embrace the true value of Islamic Finance. My advice to the leaders is to come together and work in unison taking a long term focus of the entire industry as opposed to institutional focus.

This would grow the industry to its full potential.IBA

development?

Azmeer: Islamic finance is very well geared for infrastructure development.

Sri Lanka since the end of the 30 year conflict has been aggressively concentrating on infrastructure development projects where Islamic Finance could play a vital role. However, the challenge is there are many changes required in the legislative framework to support the issuance of Sukuks and other related instruments.

With the infrastructure initiatives, the government has planned to transform Sri Lanka into a strategic economic centre by developing key strategic hubs namely the Knowledge Hub, Commercial Hub, Naval and Maritime Hub, Aviation Hub, Energy Hub and Tourism Hub. I am happy to note that Amãna Bank, with its existing product suite is servicing these hubs, although a lot more could be done under the Sukuk structure.

IBA: In your view, is Islamic finance ready to drive a State’s economy to fulfil the requirements of the nation’s vision?

Azmeer: I am confident In Sha Allah that the industry can contribute towards achieving the nation’s vision significantly.

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As I mentioned earlier, is already happening with the available product suite. Islamic finance in Sri Lanka is still in its nascent stages and by addressing the challenges we discussed earlier we could reap the full potential of the model.

IBA: As an Islamic banker, could you share with us on the most memorable experience of your journey? What are your valuable advices for the young generation, the Islamic bankers and fellow leaders of the industry?

Azmeer: By far the most memorable experience in my career is the moment I was made Vice President of Citi Bank in UAE, where I had initially dreamt of working. I had a solidly laid career path at Citi, a Bank where I had planned to continue my career to the end.

However, this was surpassed by the bold decision to quit conventional banking and take the journey towards Islamic finance when I first joined Al Rajhi Bank in Saudi Arabia. A decision that has brought me no regrets and a lot of fulfilment spiritually and professionally.

My advice to the youngsters is to look beyond merely the banking operations alone and try to bridge the gap between

Mohamed Thowfeek Mohamed Azmeer

Full Name: Mohamed Thowfeek Mohamed Azmeer Nationality: Sri Lankan Qualifications: MBA from the University of Leicester, UK. FavoriteShariah Scholar: Taqi Usmani Inspiring Islamic Finance Book: One line advice: Don’t ever compromise on your values in life What one would describe you?

Left for others to decide What are you most passionate about you? Well-being of my family What is your greatest achievement in your life? Having worked for world renowned institutions such as Citi, Al Rajhi Bank, Sharjah Islamic Bank and Commercial Bank of Ceylon, which have their own unique achievements What is your favourite journey?Annual Umrah Pilgrimage