UK Islamic mortgages set for growth after Qatari Investment

 

30 August 2010
Source : IBB

Shareholders of Islamic Bank of Britain (IBB or the “Bank”, www.islamic-bank.com) yesterday approved a £20million capital injection from founding shareholder Qatar International Islamic Bank (QIIB, www.qiib.com.qa).

The additional capital will allow IBB to realise product development plans including the growth of its Islamic mortgage alternative, the Home Purchase Plan. IBB immediately released details of two new products to be launched as a result of the capital injection.

Coinciding with the Islamic holy month of Ramadhan, IBB will today launch a 3.99% fixed rental* rate product until January 2012 and a variable rental* rate product at 4.99%.

Established in 2004, IBB is the UK’s only stand-alone, Sharia compliant retail bank. With an established retail brand in the UK banking sector, the additional capital enables IBB to reinforce its position as the pioneer of Sharia compliant banking. In the face of challenging conditions for the British economy, the Bank has grown its deposits, assets and customers every year since its launch in September 2004. The Bank reported customer deposits of over £186million, customer financing at £46million and nearly 50,000 customers in its 2009 financial statements.

Commenting on the investment, Sultan Choudhury, Commercial Director, IBB, said, “IBB already offers the largest range of Sharia compliant products and services in the UK. With a fresh injection of capital we are well placed to grow the business through our Home Purchase Plan products. The products will offer peace of mind for customers, both financially and spiritually, which is especially important in the holy month of Ramadhan.”

About Islamic Bank of Britain

Islamic Bank of Britain (Bank) has pioneered Sharia compliant retail banking in the UK and has launched a wide range of products, including the Home Purchase Plan (the halal mortgage alternative) Current Accounts, Savings Accounts and Personal Finance. The Bank was also the first to introduce Sharia compliant business banking to the UK, and now offers a wide range of institutional and business banking products and services, including Commercial Property Finance.

Several of the Bank’s products remain unique in the UK retail market.

The Bank is authorised and regulated by the Financial Services Authority and is a member of Financial Services Compensation Scheme. All products offered by the Bank are fully approved by the Bank’s Sharia Supervisory Committee (SSC).

Sharia compliant banking operates without the use of interest. The products that are offered are structured in a different way to those provided by conventional banks. For example, for the Home Purchase Plan, each monthly payment will consist of two elements:

Rent element – this is the amount that the customer pays to the Bank as rent on the Bank’s share of the property. This is in accordance with an Ijara (Lease) agreement.

Acquisition element - this is the amount that the customer pays to purchase a part of the Bank’s share in the property. This is in accordance with a Diminishing Musharaka (partnership) agreement.

The rent element decreases as the Bank’s share in the property decreases with each acquisition payment. Correspondingly, the customer’s equity in the property increases, with every payment

Whilst the Bank offers products and services that are designed in accordance with Sharia principles, it is an inclusive Bank and welcomes customers of all faiths.

About QIIB

QIIB is listed on the Qatar Exchange and regulated by the Qatar Central Bank. QIIB has assets in excess of £3billion* and annual reported profits of £95million* in 2009. Founded in 1991, QIIB is well-placed to provide a full array of retail and corporate banking services.

*Total assets and net profits to shareholders taken from 2009 financial statements and exchange rate of 5.4 Qatari Riyals to £1 sterling (Source: www.xe.com rates as of 30th June 2010).