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Islamic bank Al Rayan forays into Scotland; to add more products

Al Rayan, Britain’s only Islamic bank, saw year of strong growth despite Brexit

* Estimates roughly one-third of customers are non-Muslim

* Its retail business has grown by 24 per cent over the past 12 months


The Islamic bank, Al Rayan, is expanding its product range and adding an office in Scotland, its top executive said, after a year of strong growth for Britain’s only Islamic retail lender despite uncertainty stemming from Brexit.


(GCC investors hold back from UK property on Brexit fears)



Islamic retail banking is still a rarity in the West, but the experience of Al Rayan could encourage other Islamic banks to explore markets outside the Middle East and Southeast Asia.

Birmingham-based Al Rayan, formerly the Islamic Bank of Britain, is growing beyond its traditional client base and now estimates that roughly a third of its customers are non-Muslims.

While the potential for regional expansion has been dimmed after Britain’s vote to leave the European Union, Al Rayan has seen its balance sheet grow by nearly 40 per cent this year, said chief executive Sultan Choudhury.


(Bracing for Brexit, UK to ramp up borrowing, cuts growth forecasts)


Its retail business has grown by 24 per cent over the past 12 months, with both deposits and real estate finance assets surpassing 1 billion pounds ($1.25 billion) this year, Choudhury said in an interview.

The bank was launched in 2004 with a retail focus, but an acquisition by Qatar’s Masraf Al Rayan in 2014 saw a capital injection of 100 million pounds that helped expand its business lines.


Branching out

Over the past 18 months, Al Rayan has branched out into commercial real estate and private banking, and it plans to offer products targeting SMEs, Choudhury said.

“As part of those developments, we will look at new products and expand in existing markets as well,” he added.

Brexit could have a silver lining for the bank as well. The EU’s consumer credit directive does not make allowances for sharia-compliant products, which has left mainland Europe out of reach for most Islamic retail banking efforts.


(Milan wants to lure Asian and Gulf firms fleeing Brexit)


“More autonomy, due to Brexit, will accelerate the pace of Islamic financial products in the UK,” Choudhury said.

Britain has actively encouraged Islamic finance, including through a sovereign Islamic bond issued in 2014.

A devaluation of the pound and a flattening of London property prices due to Brexit have also led to increased demand for some products catering to expatriates, he added.

Al Rayan will offer buy-to-let mortgages through its Glasgow office, adding to government efforts to build an ethical financial hub in Scotland.