Feb 8 Istanbul-based Halic Leasing is expanding
its sharia-compliant business portfolio to tap demand from small
businesses, the latest sign that Turkey's Islamic finance market
is growing beyond traditional banking services.
Turkey is the world's 17th largest economy with a
predominantly Muslim population of 76 million. Promoting Islamic
finance is a part of government plans to boost commercial ties
with the Gulf and diversify the country's investor base.
Halic is building a portfolio of leased assets and is
targeting new business of around $25 million by the end of the
year, said General Manager Gokcen Sahin.
The firm also aims to attract further investments from
Islamic mutual funds while expanding into construction equipment
later this year, a sector which comprises around a quarter of
Turkey's leasing market, she added.
The plans come after the firm's new shareholders injected
fresh capital at the end of last year and set up a sharia
committee to ensure its products follow religious principles
such as bans on gambling, tobacco and alcohol.
"Some of our customers are very sensitive in this area -
they want to be sure that our products and our funding resources
conform to Islamic principles."
Halic was established in 2004 by Kuwaiti investors but took
new shareholders in October: Turkey's Aktif Bank, the
Saudi-based Islamic Corporation for the Development of the
Private Sector (ICD) and Ijara Management Company.
Islamic finance in Turkey has been predominantly driven by
domestic Islamic banks, known locally as participation banks,
but sharia-compliant leasing could help tap into a large pool of
Most leasing transactions by Halic involve manufacturing
equipment used by Turkish firms that supply the automotive,
food, packaging and durable consumer goods sectors.
With a good quality portfolio, Halic may consider raising
funds via Islamic bonds (sukuk) in the future, she added.
Other Islamic finance efforts in Turkey have also picked up
pace over the past year, including a World Bank programme aimed
at providing long term Islamic financing for SMEs.
After a slow start in 2015, the programme had disbursed
$147.9 million as of December from a total commitment of $250
million, according to a World Bank report.
In November, the ICD extended a $25 million medium-term
Islamic financing to Calik Enerji, the energy arm of
conglomerate Calik Holding.
(Reporting by Bernardo Vizcaino; Editing by Kim Coghill)