DIB Bank Kenya, a subsidiary of Dubai Islamic Bank, has posted a profit of 103.4 million Kenyan shillings for 2024, a sharp rebound from a 256 million loss last year, driven by customer confidence in Shariah-compliant banking and strategic expansion. Mary Kanuku, Acting CEO & Managing Director, joins CNBC Africa's Tabitha Muthoni with more.
DIB Bank Kenya, a subsidiary of Dubai Islamic Bank, has posted a profit of 103.4 million Kenyan shillings for 2024, a sharp rebound from a 256 million loss last year, driven by customer confidence in Shariah-compliant banking and strategic expansion. Mary Kanuku, Acting CEO & Managing Director, now joins us for deeper insights on their performance. Mary, a very good afternoon to you and thank you so much for joining us on the show. So, you have attributed your turnaround profit to growing customer confidence in Shariah-compliant banking. But looking at it, what are some of the specific strategies or market drivers that led you to having this profit compared to the loss that you saw in 2023? And also, in the long term, how do you think you are going to sustain this? Thank you very much, Tabitha. I just want to appreciate the fact that this has been a journey for us because we opened our doors in 2017 to offer Shariah-compliant banking. And this is ethical banking. And so what we have seen is a strong, loyal customer base. We have seen hardworking staff and we have also invested heavily in systems and capital to ensure that we offer our clients, you know, good service and customer-centric services and products. Indeed, maybe you can expand a little bit on some of the macroeconomic factors that could have led to some of the profits that you are seeing here and maybe some little bit of the losses. So basically, what we have done is we have relied, we have built our balance sheet over time from 2017 to last year, and that balance sheet is now bearing fruit largely because we have managed our costs, we have been, created operational efficiencies, we have grown our top line, but we have also expanded our income base to include non-funded income. Indeed, Mary, quite great insights to look at there, but I am keen on the Islamic banking market growth. It's the only thing right now in the country and also maybe the continent and also the world as a whole, but let us look at what is driving this shift, especially in Kenya's financial landscape, and also how you differentiate yourself from conventional and other Islamic banking competitors that we have. Thanks, Tabitha. Just first to note that actually Dubai Islamic Bank is the premier Islamic banking in the world. So from our parent company, the expertise for Islamic banking comes in place, and it's our DNA, it's just downloaded. So what is Sharia banking? Sharia banking is ethical banking. So, for example, you're doing a business, you're buying rice, you're selling rice, you're importing medical equipment. As a bank, we partner with you in that business, and we have a very strong relationship with you. And yes, Mary, just to take you a step back on the balance sheet and liquidity there. Yes, the bank reported a 9 percent balance sheet expansion and a strong liquidity position at 32 percent. This means that you are above the statutory requirement, which is, you know, you are above it, which is you are at 32 percent. So for me, I would like to understand, given the current macroeconomic environment, how do you plan to maintain this level of liquidity? And at the same time, ensuring you have optimal returns for shareholders, you can expand this a little bit more. I know a number of factors come into play here. Yeah, thank you very much for noticing that, that we have a strong balance sheet and we have a strong liquidity position. That is very key for us because then that gives our customers confidence that we are here for the long haul. And so what we are, you know, growing into is just to ensure that our customers continue to trust us and they are able to keep money with us. They are able to do their transaction through us. And that way we keep healthy liquidity ratios and we grow with our customers. So then automatically then our balance sheet grows. So our strategy is to keep engaging our customers in terms of reach to ensure that they get convenient services, they get ethical banking products, and so that we build loyalty around it. And that is why you've seen that our ratios continue to be strong, our balance sheet is growing. And how can we say, looking at other macroeconomic environment or factors such as inflation and also the foreign exchange rates, how has that impacted your performance as well? So coming into last year, there was a bit of, there was a lot of volatility actually in the FX market. And you have seen the work that the market and the central bank has done to ensure that this stability in the foreign exchange market is maintained. And that becomes very key for us because then we are able to press our customers in a way that is competitive and we're able to, you know, to offer maybe longer term products in terms of the foreign exchange, like swaps for it and stuff like that. So that ties into the fact that the stability that we have seen, the interest rate environment, the rate market rates have come down, liquidity has been stable, and also the foreign exchange market has stabilized. That has helped us to scale up offering to our customers and to ensure that this is competitive. And in terms of your expansion, we have seen that you've opened new branches in South Sea and also in Nyali. And you do also have a focus on digital solutions. So maybe we can expand a little bit more on what are the bank's long term expansion strategy and also how you plan to leverage on FinTech and digital banking to scale your operations beyond Kenya. Yeah, thank you very much. And yes, we have opened two new branches. And so now we have a count of eight strategically placed to be able to reach our customers. The key focus is to ensure that we have convenience for our customers. And whether it is through digital channels or strategically placing our branches, we are committed to that. So we have opened two branches, as you have said, and we continue to look for opportunities where that becomes a strategic area. But what else have we done? We have also overhauled our entire digital channel offering. And this year in Q2, we are going to launch our omnichannel that gives our customers the convenience to be able to trade wherever they are, whether it's in Kenya, in Africa or worldwide, to be able to access our products in an easy, convenient way. Indeed, and I am also looking at your expansion strategy footprint for 2025 and that you project to sustain profitability in 2025. Maybe looking at some of the potential risks that could challenge these, such as regulatory changes, currency fluctuations that you've talked about, looking at the forex rate exchanges there and also geopolitical shifts. How are you going to mitigate some of these risks while positioning yourself to remain competitive in the country and also regionally? So the first thing I want to confirm is we have a strong capital base that can absorb any emerging risks. But yes, obviously, the market is fluid, and especially you've seen the U.S. aid funding cut and also the tariffs, the U.S. tariffs that are coming across the market, and that has the capacity to disrupt supply chain. Kenya has been housing a lot of this stuff for U.S. aid and U.S. projects, so there is an impact there in terms of flows. But obviously, there are opportunities also in the market. Like you see, the Kenyan rates have come down, and it has been compounded by a reduction in the CBR rate, and the inflation rate is below the – it is within the target range of 5 percent plus or minus 2.5 percent. And so we want to ride on this positive environment for Kenya to be able to upscale our business, to be able to offer our customers exemplary service, and to be able to retain our loyal customers and to continue to offer them ethical, Sharia-compliant banking services. Indeed. And when we talk about the digital financial solutions that you have in place, maybe are there any products that you have come up with or are in the process, are you baking up something that you are likely to see out in the market very soon? And also, how is this going to help you mitigate some of the fraudulent risks that we see when it comes to banking? So we support – so basically, the digital channels include internet banking and mobile banking, and that is why we are doing the Omni channel. So we are using the latest technology to ensure that these Omni channels remain safe, and I invite you to be our customer and to enjoy these services, and you will be able to experience for yourself how safe our internet and mobile banking offering will be. Indeed, indeed. Mary Kanuku, thank you so much for your great insights. And again, happy Ramadan to you.
Theme: Financial Turnaround and Strategic Growth in Shariah-Compliant Banking
DIB Bank Kenya, a subsidiary of Dubai Islamic Bank, has announced a remarkable turnaround in their financial performance, reporting a profit of 103.4 million Kenyan shillings for the year 2024. This marks a significant shift from the 256 million loss incurred in the previous year, showcasing a 140% improvement in their financial standing. The success of the bank has been attributed to the growing customer confidence in Shariah-compliant banking practices and strategic expansion efforts. Mary Kanuku, the Acting CEO & Managing Director of DIB Bank Kenya, sheds light on the key factors that have contributed to this turnaround and provides insights into the bank's future plans and strategies. One of the primary drivers of DIB Bank Kenya's improved performance is the strong customer base that has been cultivated since the bank's inception in 2017. Emphasizing the principles of ethical banking inherent in Shariah-compliant practices, the bank has gained the trust and loyalty of its clientele. Kanuku highlights the importance of investing in staff, systems, and capital to deliver exceptional customer service and innovative products. Another key factor in the bank's success has been its strategic management of costs, operational efficiencies, and diversified income streams. By expanding their income base to include non-funded income and focusing on sustainable growth, DIB Bank Kenya has been able to weather economic challenges and capitalize on emerging opportunities. The rise of Islamic banking in Kenya and globally has presented a unique opportunity for DIB Bank Kenya to differentiate itself in the financial landscape. With Dubai Islamic Bank's expertise and legacy in Islamic banking, the subsidiary has leveraged this foundation to establish itself as a leading Shariah-compliant institution. The ethical principles underpinning Shariah banking have resonated with customers, who seek transparent and inclusive financial services. Looking ahead, DIB Bank Kenya aims to sustain its profitability and expansion trajectory by leveraging digital solutions and FinTech innovations. With a focus on enhancing customer convenience and accessibility, the bank has recently opened new branches in strategic locations and is set to launch an omnichannel platform in Q2 of this year. By embracing technology and prioritizing customer-centric services, DIB Bank Kenya aims to position itself for continued growth and competitiveness. Despite the positive outlook, Kanuku acknowledges the potential risks posed by regulatory changes, currency fluctuations, and geopolitical shifts. To mitigate these risks and maintain a competitive edge, the bank emphasizes its strong capital base, adaptability to market dynamics, and commitment to exemplary service delivery. By capitalizing on a favorable economic environment and upholding its core values of ethical banking, DIB Bank Kenya remains poised to navigate challenges and seize opportunities in the financial sector. In conclusion, DIB Bank Kenya's impressive profit turnaround signifies not only financial resilience but also a strong market presence driven by ethical principles and strategic innovation. As the bank continues to expand its footprint and embrace digital transformation, it remains steadfast in its commitment to delivering Shariah-compliant banking solutions and fostering long-term customer relationships.
"The rise of Islamic banking in Kenya and globally has presented a unique opportunity for DIB Bank Kenya to differentiate itself in the financial landscape. With Dubai Islamic Bank's expertise and legacy in Islamic banking, the subsidiary has leveraged this foundation to establish itself as a leading Shariah-compliant institution."
DIB Bank Kenya, Dubai Islamic Bank, financial performance, Shariah-compliant banking, strategic expansion, Mary Kanuku, Islamic banking market, digital solutions, FinTech, profitability, regulatory changes, customer loyalty