Albaraka Türk General Manager Dr. Adnan Büyükdeniz

“We will have branches in all provinces and big districts” 

Adnan Büyükdeniz says despite its rapid development in recent years, the share of participation banking in the entire banking sector is not at a sufficient level yet. Büyükdeniz adds they will increase the number of branches to 150 in the medium term.

  The awareness about participation banking is lower as compared to traditional banking. Could you tell us about the main features of participation banking? 

Participation banks are those institutions involved in financial sector providing banking services and financing the real economy. As different from conventional banks, participation banks use the funds they collect from savers in commerce and industry, within the principles of interest-free finance, through corporate finance assistance, retail finance assistance, profit/loss sharing, leasing and documents against goods finance and they share the resulting profit or loss with savers. Participation banks also provide banking services that individuals need. Within this framework we can cite such services as providing letter of guarantee, issuing letter of credit, issuing checkbook, all exchange services, issuing traveler’s cheque, foreign exchange trade, domestic or overseas money transfer transactions, credit cards, POS services and bill collection transactions. 

Do you think the share of participation banking in the entire sector is at a sufficient level? What are the works toward increasing this share? 

Participation banking’s share in the entire sector is not at a sufficient level despite its rapid development in recent years. When participation banks are analyzed from their start to the present day, it is seen that their share in the entire banking sector is quickly growing. In Turkey, a portion of population still keeps away from the classical banking system. Participation banks have started to assume an increasing importance in including these people’s savings into economy. The increase in branch openings in recent years has brought considerable advantages in this regard.  As is known, the range of instruments available to participation banks is narrower as compared with classical banking. Despite this, however, there are ongoing efforts in participation banking sector to produce new instruments. 

What features differentiate Albaraka Türk from other participation banks? 

Albaraka Türk is Turkey’s first participation bank. In this regard it has both acquired a critical accumulation of experience and has pioneered in including many products into the system. Our majority shareholder, Albaraka Banking Group, has 11 banks in North Africa and Middle East. At Albaraka Türk we have made significant leaps in international banking by carrying out export and import transactions together with both these banks and a wide network of correspondent banks. Having a considerable customer portfolio who have been working with us for a long time, our bank’s SME (Small and Medium size Enterprise) banking infrastructure is quite developed and its data processing, risk management and guarantee control systems represent one of the most successful structures in his field. Thanks to this, we can both complete our customers’ transactions swiftly and effectively and also keep the quality of assets at a quite high level. 

We observe that Turkish banking sector has tended toward SMEs more in recent years. Do you also attach a special importance to SME banking? 

SME banking comes first among Albaraka Türk’s commercial activities. We have the necessary strength and experience in this field since we have been involved in SME banking from the start. For this reason, banking sector’s switch to SMEs has not affected us negatively. SME banking is a difficult field in Turkey. Its requirements, conditions and customers are different from those of corporate and retail customers. The experience acquired through years has enabled our bank to establish an infrastructure that lends a serious competitive power. 

We are about to enter this year’s last quarter. Will you reach the profit target you set at the beginning of the year? 

We have been passing through a period in which an important global crisis broke out and our country was also affected. Nevertheless we have prepared our budget and formed our expectations thinking 2008 will be a difficult year. For the moment, we think we will attain our growth target that was set to be over 30% and our 59% profit target without needing revision. At Albaraka Türk Participation Bank we believe in a high-quality asset structure and an active cost management. As an indicator of this, the rate of non-performing loans (NET) at Albaraka Türk is below both the overall sector average and also that of participation banking sector. Our capital adequacy ratio is above both the prescribed level and the recommended level. At Albaraka Türk, we think we will reach our year-end targets. 

Could you tell us about Albaraka Türk’s viewpoint on “corporate governance”? 

At Albaraka Türk we attach importance to corporate governance. After going public in 2007, we have formed Corporate Governance Committee acting under the Board of Directors. We have also established the Investor Relations Department working under the Corporate Governance Committee. Our Corporate Governance Committee carries out the practices and controls required by corporate governance principles. Besides, we are having talks with corporate rating agencies in order to join the ISE (Istanbul Stock Exchange) Corporate Governance Index.

 What are Albaraka Türk’s targets for the next five years? 

We plan to expand our network of branches with a balanced branch opening strategy. The number of current branches is 91 and we think of increasing this number to 100 by the end of the year, and to 150 in the medium term. We will have branches in all provinces and big districts. We will continue financing particularly the real economy by making advances in SME banking. In addition to this, we think of focusing on real estate finance in retail finance.