EXPERT OPINION
How Islamic banking develops in Kazakhstan?
Islamic bank launches the retail
For the years 'Al Hilal' Islamic Bank' JSC has been the only Islamic bank in Kazakhstan. After 7
years of its operation Al Hilal has launched the retail. We talked with Mr Gordon Haskins, CEO
about the situation with Islamic banking and its further development in Kazakhstan.
Gordon Haskins,
CEO,
'Al Hilal' Islamic Bank' JSC
Islamic banking demonstrates a good
tendency worldwide. Could you please
share a short history of Al Hilal Bank and
Islamic banking in Kazakhstan?
Al Hilal has been in Kazakhstan for almost
eight years. We started operations and were
licensed in early 2010. It launched as part of an
intergovernmental agreement signed between
the Abu Dhabi and Kazakhstan governments.
The government of Abu Dhabi agreed to
support the government of Kazakhstan in their
desire to develop the Islamic finance industry
in the country. It then resulted in Al Hilal Bank
coming here from Abu Dhabi. Since that time,
we have focused on our corporate clients.
It has been a steady but relatively careful
growth path for us over the last seven years
focusing on those corporate clients.
In the meantime, some other Islamic financial
institutions have also started in the market.
At this point, the market is comprised of the
leasing companies as well as another Islamic
bank, which has been recently licensed
(August, 2017). In addition, the Astana
International Financial Center has confirmed
that Islamic finance is one of its main pillars.
We see all of this as positive steps for the
market generally, with some critical mass
being developed.
Islamic banking assets in Kazakhstan
constitute less than 0.1% of the total
number of the country’s banking assets.
Could you specify the reasons? In your
opinion, what are the prospects for the
Islamic banking development in our
country?
One of the key factors is that Al Hilal, as
mentioned, was the only Islamic bank in
32
world monitor
Kazakhstan for years. We focused particularly
on large corporate and national companies in
the country, having a relatively small balance
sheet. This put restrictions on how much we
can finance our clients, although we have
been quite successful with that. Looking at
the figures, we have provided financing in
excess of one billion US dollars for various
projects over seven years in the market.
However, it obviously still remains a very
small proportion of overall banking assets.
Another factor is the general lack of
knowledge about Islamic finance. There is
a degree of education that still needs to
be undertaken in Kazakhstan with respect
to Islamic finance. Many people don’t
understand the differences from conventional
finance. Part of what we try to do is to
educate the market and our customers
on the benefits and differences of Islamic
finance. That is still very much a work in
progress. However, there is currently more
awareness developing of Islamic banks and
Islamic financing. So, this might bring some
growth in total assets.
What are the main features of Islamic
banking in Kazakhstan? What financial
instruments does it provide?
One of the most important features to
start with is the nature of Islamic banking
generally. It is based upon Shariah principles.
One the most important features from a
customer perspective, I think, is that it is
based upon a partnership between the bank
and the customer in a more ethical approach
to banking. There is also a greater degree of
risk sharing with our customers as opposed
to conventional banking arrangements.