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Thursday, March 28, 2024

CEO sees Amanah Islamic Bank back in the black

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The government-controlled Amanah Islamic Bank is embarking on various expansion plans and will soon introduce new products to boost its client base and make the bank profitable, the bank’s newly-appointed chairman and CEO, Dato’ Al-Iskandar, said Thursday.

The veteran banker, who took over the reins of the country’s only Islamic bank earlier this year, said Amanah has been awash in red ink for over two decades now. 

“With very little capital and with only nine branches throughout the country, the bank has had little opportunity to expand or open more branches,” he said.

“It came to a point when Amanah, being a government entity, owed over P500 million to the National Treasury. This was in 2007. Thus, the following year the Bangko Sentral ng Pilipinas initiated a plan that would help the bank service the debt,” Al-Iskandar said.

The bank arranged for the Development Bank of the Philippines to pay the money Amanah owed the National Treasury. “In return, DBP gets to have a roughly 99 percent stake in Amanah,” he said.

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Closing the bank was not an option for the BSP, since it was the only Islamic bank in the Philippines, Al-Iskandar added.

“Politically, it wouldn’t have been feasible to just shut the bank down. It would have meant lost opportunities for the country’s Muslims, who rely on Amanah to finance their businesses or livelihoods,” he explained.

Al-Iskandar

Most of the bank’s operations are based in Zamboanga City. Of its nine branches, only one is in Luzon—at DBP’s Makati headquarters. As the DBP is managing the bank, it was prudent for Amanah to move its only Luzon branch and executive offices to the DBP building, Al-Iskandar said.

Amana was established in 1973 with a P50-million capitalization to cater to the country’s Muslim population. As an Islamic bank, it offers interest-free business loans to Filipino Muslims. 

“Instead of charging interest to borrowers, Islamic banks take a small percentage of the profits of the business. But this is only when the business is posting a profit. If it isn’t, the bank will not make any charges or demand payment of any sort,” said Al-Iskandar.

Likewise, the bank’s savings and checking accounts don’t yield any interest for depositors, but Al-Iskandar is drawing up a profit-sharing scheme that will entitle clients and depositors to a percentage of the bank’s annual earnings.

Al-Iskandar acknowledged that Muslim communities have been sprouting all over Metro Manila, and he is determined to tap this rapidly expanding market. 

“We want to have them as depositors and clients but since we only have one branch in Metro Manila, will introduce mobile banking, which is actually more convenient since clients can make banking transactions through their cellphones,” he said.

Although a Maranao born in Dipolog City, Al-Iskandar has been on the move since childhood. He said his family had to move whenever his father, who was in the military, was assigned to another station. He attended elementary school in Quezon City, and majored in Political Science at the Mindanao State University in Marawi City. He obtained his MBA at the Asian Institute of Management.

As an executive for institutions like the Philippine National Bank and the United Coconut Planters Bank, he was tasked to manage their Middle East offices.  In the early 2000s, he went back to the Philippines and worked as a consultant for Amanah. 

With his banking expertise and his familiarity with Amanah’s operations, Al-Iskandar became the obvious choice to head the bank for the next six years.

Al-Iskandar expressed optimism for Amanah for the coming years. He said: “The bank has been the through the worst already, so there is no other way to go but up. It’s going to start going up this year.”

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