Business Day Spotlight
PODCAST | The rise of Islamic banking in SA
FNB Islamic Banking CEO Amman Muhammad discusses what differentiates this growing sector
In this edition of Business Day Spotlight, we look at the development of Islamic banking in SA.
Our host Mudiwa Gavaza is joined by Amman Muhammad, CEO of FNB Islamic Banking, to discuss the issues.
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The discussion starts with Muhammad talking about how the Islamic banking industry has developed over time. He says FNB has the oldest practice among the big four large SA banks, having started 16 years ago. Muhammad has been there for about half of that, having joined the unit in 2012.
Muhammad then details how attitudes around Islamic banking have changed over time. He explains that some of the biggest cornerstones that make Islamic banking different is that there can’t be interest, transactions have to be transparent, and depositors’ funds cannot be used for speculative purposes.
According to the Banking Association SA, total assets in the Islamic banking sector across the country stood at R10.6bn in 2018, growing to R12.4bn in 2019. By June 2020, this was up to R14.6bn.
Muhammad highlights that the sector has grown even through the pandemic. Total deposits in SA, which stood at R23bn in 2018, rose to R37bn by June 2020.
The first Islamic banking product offering at FNB was vehicle financing. With interest not being a factor, FNB buys a vehicle on behalf of a customer and then leases it to that customer for a set period. Upon the last payment, ownership is transferred to the customer, concluding the deal. This is one of the products the bank has been able to come up with. Since then, the unit has grown to offer a host of products and services, mirroring some the main banks’ models, Muhammad says.
As a result of these efforts, he says their offerings have garnered much interest from customers outside the Islamic community.
The discussion also touches on trends during the lockdown, size and scope of the industry at the moment, collaborating with other parts of the FirstRand Group, awards given to FNB Islamic Banking, and Muhammad’s experiences in the industry.
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• Business Day Spotlight is a MultimediaLIVE production.
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