Al Rajhi looks to widen customer reach

By Habhajan Singh

[In a new series called CEO ONE-ON-ONE, The Malaysian Reserve began its first in a series of one-on-one interviews with the CEOs of Islamic financial institutions with Al Rajhi Malaysia CEO Ahmed Rehman.]

IN the first two years of operations, Al Rajhi Banking & Investment Corporation (Malaysia) Bhd (Al Rajhi Malaysia) opened one branch after another. This activity is about to slow down this year as the subsidiary of the Saudi Arabia banking group eyes expansion through alternate channels.
This insight was one of the many that Al Rajhi Malaysia CEO Ahmed Rehman shared with The Malaysian Reserve in an exclusive interview recently.
"In retail, we have to increase our reach to customers. There is no debate on that. That can come in a variety of ways, including the increase of branches. "This year, we will perhaps see more of alternate channels like ATMs. It's a more efficient way of reaching a customer compared to the brick and mortar approach. Our emphasis this year will be more on alternate channels," he said. One of the 17 Islamic banks including Maybank Islamic Bhd and Kuwait Finance House (Malaysia) Bhd, licensed by Bank Negara Malaysia (BNM), its parent in Saudi Arabia represents itself as being the largest Islamic banking group in the world.

How did Al Rajhi perform in Malaysia last year?
It was our second year of full operations. We have now completely built up our full infrastructure. There will always be further developments, from a busines as usual perspective, rather than a rush to get to a minimum scale platform. We have arrived at that minimum scale platform. I'm referring to a platform for retail business, a network of branches that you can justify from a retail business perspective. You cannot be a two-branch operation and say I'm in the retail business.

What about your balance sheet position?
We have built up a minimum scale balance sheet. It has grown fairly aggresively. It has gone fairly geomatrically in terms of growth in a short period of time. It is important to grow geomatrically as you need a certain amount of scale to be able to conduct your business and have a certain amount of reach. We have arrived at that.

Where do you see your growth coming from?
Obviously, retail is our key engine. We will continue to drive on that front.

What kind of alternate channels are you looking at?
It will be ATMs, the Internet, SMS banking, these kinds of areas.

[FOR THE FULL INTERVIEW, PLEASE EMAIL TO habhajan.singh@gmail.com]

(This story appeared in The Malaysian Reserve on Mar 2, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)