After a surprisingly profitable year buoyed by a prudent strategy and innovative measures during unprecedented pandemic-triggered disruptions, Khaleeji Commercial Bank (KHCB) is channeling resources to expedite its digital transformation this year as the Islamic bank guns for a greater market share.
Competition is rife
KHCB is one of 21 fully-fledged Islamic banks in Bahrain, serving a population of about 1.6 million. The Islamic banking market is competitive, with another 14 conventional lenders fighting for businesses through their window operations. The year 2020 has been particularly difficult for the country, as with many others, as the economy grappled with the paralyzing effects of the COVID-19 pandemic.
Yet despite so, KHCB has managed to grow its earnings last year. The Islamic bank reported a surge of over 46% in net profit attributable to its shareholders at BHD2.12 million (US$5.59 million).
“We embarked upon 2021 with positive financial results that reflect the tireless efforts taken by our team to implement our new strategy, which primarily aims to maintain our shareholders’ interests and focuses on activities with remunerative returns. These promising financial results come in a time where the COVID-19 pandemic still overshadows all aspects of regional and global economies, and this proves our sound strategic initiatives and the bank’s ability to cope with various circumstances and to wisely and ably face challenges,” Chairman Jassim Alseddiqi commented.
Jassim attributed the bank’s financial performance to its “holistic” strategy adopted last year and innovative banking solutions. In 2021, however, digital will be a main thrust for KHCB.
“During this year, the bank will move on to achieving the main objectives of its new strategy, mainly accelerating digital transformation while applying the latest technologies in banking services, adopting the best practices in fintech to improve our client banking involvement and launching a new set of state-of-the-art banking products,” said Jassim. “With our robust liquidity and stable financial position, KHCB will advance on the right track to expand its partner base by establishing new strategic partnerships which will have the greatest impact on increasing and diversifying its financing activities.”
It is understood that the bank intends to invest more in Sukuk this year to finance its future plans and diversify its financing portfolio.
KHCB’s laser-like digital focus is not an anomaly. It has become thematic among banks in Bahrain to integrate digital initiatives into their business and growth strategies. Islamic retail bank Ithmaar, for example, has invested significantly into improving its customer journey through online-mediated instruments.
“The bank’s financial performance is a result of our continued focus on enhancing our customers’ Islamic banking experience,” shared Ithmaar Bank CEO Ahmed Abdul Rahim. “This included tremendous investments of time, money and effort on continuously enhancing our existing products and services while also developing innovative new solutions.”
Ithmaar returned to the black in the first quarter of 2021 with a BHD1.55 million (US$4.09 million) net profit as compared with a net loss of BHD5.68 million (US$14.98 million) in the corresponding period in 2020.
Among the measures the Islamic bank took included introducing a salary advance option through its mobile application, a process which was fully automated from initial application through to the review, evaluation, approval and disbursement of funds. It also collaborated with the Ministry of Justice, Islamic Affairs and Waqf to streamline Zakat and Sadaqah payments through online methods as well as partnered with the Bahrain Bourse for the latter’s electronic Shariah compliant brokerage service. “Despite the ongoing economic challenges, Ithmaar Bank continues to grow, particularly in the key, customer-focused areas,” Ahmed said. “This is reflected in the continued growth of customer deposits, a key indicator of market confidence in the bank, despite the extraordinarily turbulent economic conditions,” he added.