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Thursday, 6 September 2007

The Islamic Bank of Thailand wants to become the market leader in funding the growing halal food industry

The Islamic Bank of Thailand wants to become the market leader in funding the growing halal food industry, according to acting bank president Dheerasak Suwannayos. The bank this month introduced its halal financing programme in a bid to penetrate a market now dominated by Bangkok Bank, Krung Thai Bank and Siam Commercial Bank. But Mr Dheerasak said the Islamic Bank's position as the only financial institution in Thailand operating based on Islamic law gave it an advantage. As its credit facilities carry no interest cost, in line with Islamic principles, producers and consumers of halal food can be assured that businesses serviced by the Islamic Bank are 100% in compliance with Muslim law. Mr Dheerasak said the bank expected to lend 800 million baht under the new halal programme by the end of the year. The bank plans to promote the new service at World of Muslim 2007, a halal food exhibition that runs from tomorrow until Sunday at Impact Muang Thong Thani. Mr Dheerasak said the bank hoped to arrange up to 200 million baht in credit at the event to some of the 200 food producers expected to attend. Halal food exports currently total around 70 billion baht per year, out of an estimated market worth 400 to 500 billion baht in imports by Muslim countries each year. Meanwhile, the Islamic Bank hopes to complete a recapitalisation next month to lift its capital funds by another 3.3 billion baht from one billion now. The Finance Ministry, which together with other state agencies hold 36.7% of the Islamic Bank, has already agreed to the capital increase, which when complete would boost state shareholdings to 49%. But it remains uncertain whether other bank shareholders, including Bank Islam Brunei Darussalam Berhad, with 7.419%, will participate in the capital increase. Mr Dheerasak said that if the bank was able to increase capital as planned, it would have the resources to lend another 40 billion baht. The bank has outstanding credit of 11 billion baht and deposits of 12.1 billion. Non-performing loans are 12% of total loans, but are expected to drop to 10% by the end of the year and 5% next year. The Islamic Bank, which started operations three years ago, expects to post a modest profit of 300,000 baht this year for the first time. The company anticipates profits of four million per year in 2008 and 2009. ''I want to see the Islamic Bank become one of the top five Islamic banks in the region within the next five years,'' Mr Dheerasak said. - (BP, 6 Sep 07)
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