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The mid-2000's were a kind of "spring" in UK Islamic finance, with several Islamic banks being set up. It was followed by a long "winter," when some Islamic banks left the market.

Accordingly I was surprised when I learned about a new UK Islamic bank. I wrote about it in my December 2024 column for the magazine "Islamic Finance News."

You can read it below.

A first look at Ahli United Bank (UK) PLC

Just over 20 years ago, the first standalone Islamic bank in the UK, Islamic Bank of Britain PLC, opened for business. Over the next few years, it was followed by four other Islamic banks.

It is hard to remember how optimistic the UK Islamic finance sector specifically, and indeed the whole of the country in general, felt in the years before the global financial crisis of 2007-2008.

The global financial crisis and the recession that it led to were followed by many years of exceptionally low interest rates, an environment in which it is hard for banks to make profits. UK Islamic banking experienced a long winter. The history of the first five Islamic banks can be summarised as follows:

• Islamic Bank of Britain PLC was taken over and is now Al Rayan Bank PLC. Having closed its retail branches, it is reasonably profitable.
• European Islamic Investment Bank PLC suffered years of losses, left the stock exchange, gave up its banking license, and became an alternative investment firm, Rasmala UK Ltd.
• European Finance House Ltd became a subsidiary of Qatar Islamic Bank and continues in business as QIB (UK) PLC.
• Gatehouse Bank PLC also continues in business.
• Bank of London and the Middle East PLC has had many years of small profits interspersed with occasional big losses.

Along the way Abu Dhabi Islamic Bank PJSC set up a UK subsidiary bank, ADIB (UK) Ltd, but after a few years decided to get out of UK banking and surrendered its banking license.

See my columns in the issues below for more details about the above history.

• 3 July 2019 "The terrible financial history of European Islamic Investment Bank plc, now called Rasmala plc"
• 5 February 2020 "The continuous losses of ADIB (UK) Ltd"
• 7 September 2022 "Al Rayan Bank plc becoming internet-only is sensible"
• 5 October 2022 "An update on Bank of London and the Middle East plc"
• 7 December 2022 "A comparison of the UK's two smaller Islamic banks"

However the mood seems to be changing, and I think the UK Islamic banking winter is probably over.

In the Middle East, in early 2024 Kuwait Finance House completed the acquisition of Ahli United Bank BSC of Bahrain, which had a UK banking subsidiary Ahli United Bank (UK) PLC.

That is a conventional bank, but during 2024 is converting to fully Islamic banking, so I decided to look at its results for the last two years of conventional banking.

Overall, I think this is a very satisfactory set of results for a small bank in the UK. It will be interesting to see if the bank remains as profitable once it becomes Islamic.

Mohammed Amin is an Islamic finance consultant and former tax partner at PwC in the UK.