Financial Health of Al Rayan Bank of Britain - Term Paper Example

Financial Health of Al Rayan Bank of BritainIntroductionThis is a commercial bank based in the United Kingdom that was started in August 2004. It gives out sharia compliant financial products and services to the British Muslims. It was formerly known as Islamic bank of Britain (Kettell, 2011). It also holds accounts for Muslims and non Muslims. It has four bank branches and three banking agencies found in Manchester, London, Leicester, Luton and Blackburn respectively (Report:Qatar, 2008). Al Rayan bank is developing quickly because it follows five values namely community oriented, sharia compliant, good value, secure and pioneering.

They embrace faith and with different sharia department and committees to embrace Islamic teachings and values, this has encouraged more customers to join the bank.The was originally formed by a group of individual investors from the Middle East who took advantage of fast growing market rate of sharia compliant financial services in Britain. It changed its name in 2014 to have its new parent as Masraf Al Rayan to be part of one the largest Islamic bank in the world.Al Rayan bank financial structureThe bank has segmented itself as a retail and wholesale banking.

Its target group are business oriented individuals and business entities. It is positioning and location is aimed at giving fully the state of art services to its client so that they are satisfied fully (Kettell, 2011). Therefore in viewing the bank structure we are going to analyse the bank financial status basing on the strength, weaknesses, opportunities and threats respectively.StrengthThe bank offers high standard services (Report: Qatar, 2008). The bank has employed highly qualified personnel who are ready to serve at their customers genuinely and acting with utmost good faith.

This is the basis of their retail banking operations.The bank ventured in unique investment type. It invests n developing different types of infrastructure and human resource (Kettell, 2011). The main objective of this kind of investment is to provide a unique state of art of product to its clients.The bank has a strong asset base. Since it became a part of Masraf Al Rayan banks of Qatar it increased its asset size making money bank available for its customers. This means that the bank offers more products to its clients and can do more investment activities.

WeaknessThe bank is faced with a big debt (Cornell, 2007). This debt accrues a lot of interest hence even if there is a lot of cash inflow realised there is still a huge amount of cash out flow that the bank therefore not realising a big returns from the activitiesExisting credit risks affect the bank negatively (Cornell, 2007). This arises from those customers who fail to meet their obligations. It may also arise from their counterparties. This hence affects adversely the banks financial condition, results and future prospects.

The bank has also opportunities it can venture in. The bank should expand in other geographic areas both locally and internationally to add up opportunities for the bank (Kettell, 2011). It can introduce mobile banking to enhance efficiency and come up software application for android and IOS devices. It should continue embracing company’s core value and bring in skill building programs for employees to ensure best service customer care (Report: Qatar, 2008).ThreatsIncreased rate of fraud, this number of fraud cases has increased since the introduction of mobile banking.

Systematic risk which is common in the banking market also faces the bank as it continues to grow (Cornell, 2007). The other common threat is competition from other Islamic banks and other banks.ConclusionDespite the challenges and emerging threats Al Rayan bank has shown tremendous improvement in the past years (Kettell, 2011). This has been achieved by analysing identifying potential strengths and opportunities. Coming up with appropriate mechanism to face the threats and weakness as well as it is competitors.

ReferencesCornell, V. J. (2007). Voices of Islam. Westport, Conn: Praeger Publishers.Kettell, B. (2011). Islamic finance in a nutshell: A guide for non-specialists. Hoboken: John Wiley & Sons.Report: Qatar 2008. (2008). S.l.: Oxford Business Group.