Saudi Arabia’s Islamic Development Bank (IDB) plans to double the rate at which its lending is growing over the next three years in response to the financial crisis, according to Mohammad Tariq, head of treasury at the bank.
“The usual rate of lending growth is 15 per cent a year, but our target is 30 per cent a year over the next three years,” said Tariq on the sidelines of the MEED Capital Markets Conference 2009.
However, IDB will only grow at such a pace if it can find good lending prospects. “We need to be able to find suitable projects to lend to in order to meet that target,” said Tariq.
IDB is currently considering lending $500m to the Al-Qatrana power and water project in Jordan, for which Korea Electric Power Company won the construction contract in July.
The main shareholders of the development body include the governments of Islamic states such as Saudi Arabia, Sudan, Kuwait, Iran and the UAE.
IDB needs to raise $7bn over the next five years to refinance existing debt and fund growth in lending, said Tariq
To do this, the bank will issue sukuk (Islamic bonds) and sell debt to institutional investors. In September, it raised $850m through issuing sukuk.