Tuesday, April 30, 2013

NBK to create an Islamic subsidiary

PHOTO | EMMA NZIOKA | FILE Customers queue at a National Bank of Kenya branch

PHOTO | EMMA NZIOKA | FILE Customers queue at a National Bank of Kenya branch. The bank plans to establish an Islamic banking subsidiary.  NATION MEDIA GROUP

By JOSHUA MASINDE [email protected]

The National Bank of Kenya plans to establish an Islamic banking subsidiary in 12 months.

This follows the launch of the bank’s National Amanah unit which will be independent and then become a subsidiary.

Savings accounts

National Bank managing director Munir Ahmed said they would convert what was essentially a couple of savings and current account into a full-fledged Islamic bank.

He spoke during the launch of National Amanah, with a branch on Kenyatta Avenue.

The bank will use the subsidiary to expand to Somalia, Tanzania, Uganda and South Sudan. Other banks running Shariah-compliant accounts include First Community Bank and Gulf African Bank.

As it does much business with the government business, the bank will also be targeting the counties to turn around its business, whose profits fell 53 per cent in the last financial year.

National Bank started Islamic banking in 2009 under Al Mumin after the Central Bank of Kenya allowed it to offer two deposit-taking accounts.

In February, Central Bank authorised the bank to rebrand the Al Mumin to National Amanah.

The bank has 60 branches countrywide and is opening 10 new ones this year and a similar number in 2014.

Its 2012 after-tax profit fell to Sh729.8 million, down from Sh1.5 billion in a similar period in 2011, owing to high interest cost.

Speaking at the event, Central Bank of Kenya governor Njuguna Ndung’u said they were in the process of creating laws to regulate Shariah Banking in the country.