Thailand: Islamic Bank of Thailand expands customer base to include non-Muslims

Section: Business News - The Islamic Bank of Thailand (IBT), set up in 2003 to offer financial services in compliance with Islamic law, isn't only for Muslims, believes new chairman Somchai Virunhaphol, the Bangkok Post reports.

Instead, it needs to rebrand into an "I-bank", ready to offer services to all.

"The IBT isn't only a bank for the country's six million Muslims. It must be a bank for all people, with faster, more efficient services," he said.

The improvement campaign includes a 100-million-baht investment in new computer systems to assist in processing and data management. Staff uniforms will be redesigned to focus on modernised Muslim style.

Dr Somchai, who holds an economics doctorate from the State University of New York, said the bank would also change its expansion policies.

Instead of buying commercial buildings for development into branches, the bank would now lease space in shopping complexes for use as mini-branches to better reach out to customers.

The change will also help cut investment costs sharply, from five to 10 million baht for a full-size branch to just one million. The IBT, with 26 branches now, plans to open five new branches by the end of the year and another 15 in 2009.

Dr Somchai said the bank was also studying other Islamic banks around the world for ideas on how best to improve customer services and operations.

The IBT expects to turn its first profit this year, albeit a small one at four million baht. Accumulated losses to date amounts to around 700 million baht. Executives hope to eventually list the IBT on the Stock Exchange of Thailand.

The Finance Ministry is the IBT's largest single shareholder at 48.54%, with the Government Savings Bank holding another 39.8% and Krung Thai Bank 9.8%. The bank's remaining shares are held by minor investors, including a 0.6% stake by the Brunei Islamic Bank.

Investment funds from Kuwait have expressed interest in taking up to 49% in the IBT through a buyout of the shares held by the GSB and Krung Thai Bank.

Dr Somchai said he would hold talks with the Kuwaiti investors during a conference in Malaysia from Aug 16-17. A deal would require Finance Ministry approval and a waiver of the 25% foreign shareholding limit set on the bank.

"If we can bring in Middle Eastern investors to the bank, this would help lead to significant benefits for our operations by helping us gain a channel to the international market," he said.

Relative to other commercial and specialised state-owned banks, the IBT is one of the smallest in the country, with deposits at the end of April of just 13.2 billion baht, outstanding credit of 11.4 billion and assets of 16.9 billion.

Non-performing loans are relatively high at 16% of total loans, although bank executives hope to bring this to below 10% by year-end through restructuring.