Interview: Bassel Gamal

Do you view the recent growth of sharia-compliant finance in non-Islamic jurisdictions as complementary to, or competitive with, Qatar’s aspirations to become an Islamic financial centre?

BASSEL GAMAL: Islamic banking has grown substantially in the GCC as banks introduce additional products and services to provide holistic financial solutions to all clients. A growing number of new customers are becoming aware of the increasing Islamic banking offering. It is no surprise that Islamic banking is growing in traditionally non-Islamic jurisdictions, such as the UK, Luxembourg and other countries.

Islamic banks are now attracting not only customers seeking sharia-compliance, but also those seeking value, who find the Islamic products’ features and pricing comparable to those of conventional banks. Within this context, we view any new centres of Islamic finance as complementary to the growth we are seeing in our region. We expect Qatar to stay within the top five countries in terms of sharia-compliant banking assets, and to continue to play a key role in the industry’s development.

Does Dubai’s framework to create an Islamic economy have an impact on Qatari Islamic banks? Should Qatar develop a similar programme?

GAMAL: Qatar’s Islamic banks are among the region’s fastest-growing. The Qatar Central Bank has provided sound legislation and a platform for Qatari sharia-compliant banks to grow. Islamic banks are gaining market share in many areas and, for the first time, more than one-quarter (27% as of September 2015) of the system is sharia-compliant. It is widely projected that in the medium term Islamic banks’ share in the local banking industry will surpass 35%.

That said, we should note the various steps Qatar is undertaking to further develop Islamic banking, such as through studying changes in legal framework and investing in sharia-related education. In addition, the depth and experience of its human capital, together with solid economic fundamentals, makes Doha a stable and solid destination for Islamic banking growth.

Given falling hydrocarbons income, what role will sukuk (Islamic bonds) play in the coming years?

GAMAL: The rationale for issuing sovereign sukuk varies. While they are primarily issued to raise finance on an ad hoc basis, during recent years certain issuances served the purpose of creating relevant benchmarks and diversifying the region’s investor base. In the current market environment, sovereign sukuk issuance remains a viable option, in the sense that it can be used to diversify sources of funding, as well as cover fiscal funding in the short to medium term.

Recent years saw efforts from local conventional banks to expand their international presence. Can Qatar’s Islamic banking industry do the same?

GAMAL: Qatari Islamic banks do have international presence, similarly to their conventional peers. At QIB we are expanding to economies where Islamic banking growth is expected to be strong in the future. We are present in the UK through our wholly owned subsidiary, QIB UK. We also recently opened the first QIB branch outside Qatar, in Sudan. We are also present in Malaysia through Asia Finance Bank, and in Lebanon through Arab Finance House. Finally, we are leveraging the offices of QI nvest – our investment banking subsidiary – in Saudi Arabia and Turkey.

With expansion in Islamic banking, what measures could be taken to enhance products and services?

GAMAL: Following the global trend, you can expect Islamic banks to invest in further digitisation of all provided services. The segment has competed well with conventional banks, which would not have been possible without it developing new products, as well as investing in both technology and infrastructure.