Kenyan Islamic bank eyes regional expansion

MANAMA (Reuters) - First Community Bank, one of Kenya's first two Islamic banks, aims to expand abroad after a launch in its home market exceeded expectations, its chief executive said.

"Within the next year to one-and-half years we should be seeing our first branch outside Kenya," Nathif Adam told Reuters during an Islamic banking conference in Manama.

He said the bank is targeting neighbouring countries Uganda and Tanzania and has already held talks with regulators.

First Community Bank started operations in spring 2008 with a capital base of $16 million and has ten branches.

Adam said it plans to open six more branches by the end of the year due to strong demand from the country's Muslim community, which comprises about 25 percent of the population.

"These are all demand-driven branches... It's the people in major towns telling us... we need the bank," he said.

He said the bank initially aimed to break even after three years of operations, but now expects to recover its investments during the second year.

The Islamic finance industry is seeking to grow outside its main centres in the Gulf Arab region and South East Asia in order to tap into Muslim minorities in Western and African countries.

Its banks cater for customers who want to follow Islamic rules on avoiding direct payment or earning of interest, which are viewed as usury under Islamic law.