Al Rayan Bank to expand residential investment finance and premier divisions

• Al Rayan Bank will focus on expanding its commercial and premier divisions from 2022
• The Bank has now financed over £1billion in Commercial Property Finance (CPF) since 2015
• Financing assets have increased by 6% to more than £1.86bn over the last twelve months after focusing strategy on residential investment finance.

Al Rayan Bank, the UK’s largest and longest established Islamic bank, has announced details of the next phase of its strategic development.

The Bank will continue its transition to become a financial institution which is focused on premier banking and property, mainly residential investments, to deliver a viable, resilient, Sharia compliant business. Al Rayan Bank’s existing retail banking business will be maintained, and existing home finance customers will continue to be offered competitive product switch rental rates.   

Working closely with its Qatari parent bank, Masraf Al Rayan (MAR), Al Rayan Bank will seek to increase its premier customer base by growing and enhancing the products and services that it offers and leveraging the enhanced scale of MAR. This follows MAR’s merger with fellow Qatar bank Al Khaliji in November 2021 which created one of the largest Sharia compliant banks in the Gulf Cooperation Council (GCC) with over QAR182 billion (£37 billion) in total assets.

Al Rayan Bank’s successful residential investment focused CPF business, which grew by 20% in 2021 is seen as a key driver of future growth. The Bank has seen its CPF portfolio more than double in value since 2015 with recent residential investment deals - such as a £24.5m office to residential investment finance deal in Newbury and Bracknell, and a £19m investment finance deal against 245 residential apartments in Luton - helping to contribute towards more than £240m of CPF business last year.

In 2022, Al Rayan Bank will amend its portfolio risk appetite to ensure it has the flexibility to serve UK and GCC individual and corporate customers effectively.

The Bank will continue to invest heavily in technology including significant investment in technological architecture, infrastructure and governance. The Bank will also continue to follow consumer demand by prioritising investment in its Digital Banking channels.

Commenting on the strategic announcement, Al Rayan Bank CEO Giles Cunningham said, “Al Rayan Bank has grown consistently since it was established in 2004 and today it is profitable and well capitalised; indeed throughout 2021 the Bank saw a significant increase in profitability, driven by the very strong performance of the commercial division.”

“UK banking is amongst the most highly regulated in the world, but it is also fast paced, dynamic and currently undergoing profound change. To ensure that Al Rayan Bank is best placed to provide world class Sharia compliant products and services to our customers, and grow sustainably in the long term, we must become more focussed on the markets in which we operate.”

“Everybody connected with Al Rayan Bank is rightly very proud of its history as the longest established and largest Islamic bank in the UK.  We will always be a Sharia compliant bank and these changes will help ensure the ongoing stability and success that our customers, colleagues and shareholders deserve.”

Commenting on the growth of CPF, Maisam Fazal, Chief Commercial Officer at Al Rayan Bank, said: “Against a backdrop of Covid-related macroeconomic disruption, our CPF business has grown significantly. This is primarily due to the Bank’s focus on large UK residential investment finance agreements of circa £10million. The last two years, with the pandemic, have shown us the resilience of the residential investment sector which has outperformed most other commercial property sectors and thus we will maintain our focus on growth in this market.”

“The strong performance of CPF also highlights increasing customer demand for Sharia compliant residential investment finance products. We’re looking forward to working with our clients and helping them to build more extensive portfolios in the months ahead. We are also planning to expand our CPF product proposition and re-enter some commercial property markets.”

Al Rayan Bank is the oldest and largest Islamic bank in the UK. The Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the FSCS. The Bank is the only Islamic bank in the UK to receive a public credit rating.