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What is holding back #corporate #sukuk issuers in the GCC

In the GCC there are only a few corporate entities that currently issue sukuk. GCC governments have so far prioritised external capital market funding for plugging fiscal deficits rather than for corporations. Prevailing subdued oil prices continue to lead to fiscal deficits for GCC nations. According to S&P analysts, governments are yet to be fully convinced of the merits of the private finance model for infrastructure. The GCC corporate and infrastructure sukuk market has yet to exceed double-digit growth in issuance or to attract a wider variety of entities. The Dana Gas restructuring announced in May also influenced sukuk activity in the third quarter of 2017. At the moment, it remains unclear what ramifications the Dana case would have for the sukuk market.

How loyal are Islamic banking customers?

Islamic banking is a growing industry, however still much smaller than conventional finance, even in Muslim majority nations. In the UAE, 76% of residents are Muslim, yet Islamic banks only hold 19% of banking assets. The question is: why would Muslims choose conventional banks when Halal options are available? Research has found that the chief reason was a better rate of return. A recent study shows that 25% of Islamic banking customers preferred conventional banks and products when interest rates were the same. When conventional banks offer 1% better interest rates, the share that would switch to conventional banks rose from 25% to 44%. About 25% of Islamic banking customers came to it because of their employers, while 35% use both Islamic and conventional banks. A group of about 40% of Islamic banking customers are truly loyal to Islamic banking, most likely for religious reasons.

Dana Gas says #UAE court allows it to appeal British #sukuk ruling

Dana Gas announced it will appeal against a British court’s ruling on its $700 million sukuk, after a UAE court lifted an injunction preventing it from participating in the British proceedings. Dana previously said the sukuk was invalid under UAE law and refused to repay holders of the sukuk which matured at the end of October. The energy producer sought a declaration on the sukuk’s lawfulness at courts in the UAE and Britain. Last month, a British court ruled in favour of Dana creditors, deciding the purchase undertaking was valid and enforceable. Dana has said it aimed to appeal against the ruling because it could not take part in proceedings. A hearing in Sharjah on the validity of the sukuk under UAE law is scheduled for Dec. 25.

#SECP notifies #Shariah #Standards No 17, 18 and 23 of AAOIFI

The Securities and Exchange Commission of Pakistan (SECP) has notified for public consultation three Shariah Standards of Accounting and Auditing Organization for Islamic Financial Institutions. These are: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.
The SECP has been playing an active role in the Islamization of the economy. It endeavored to replicate the best international practices in the Islamic financial services. In order to ensure harmonization and standardization in the business practices of Islamic financial institutions, it has been gradually adopting Accounting and Shariah Standards issued by Accounting and Auditing Organization for Islamic Financial Institutions as a benchmark for Islamic financial services while keeping in view the local business context.

#Islamic #banking drives #CIMB’s better-than-expected #results

9 months of financial year 2017 core net profit of RM3.415 billion is above our expectations and in line with consensus expectations accounting for 84% and 77% respectively of full-year estimates. This better-than-expected performance was driven by Islamic banking income which grew by 19% year-on-year. Although a slight dip had been expected. The rest was within our expectations with loans at about 7%, cost to income ratio <52%, and credit costs of about 65 basis points.

UPDATE 1-#Maybank posts 4th straight quarterly #profit gain on #Islamic #banking growth

Malayan Banking Bhd is Malaysia’s biggest lender by assets. It made higher profits for a 4th quarter in a row, which was driven by rising net interest income and growth at its Islamic banking operations.
Southeast Asia’s third-largest economy has recovered in 2017 after a challenging 2016, when growth slumped to its slowest pace since the global financial crisis in 2009. The turnaround has buoyed business for banks. Maybank posted a net profit of $496.70 million for the 3rd quarter ended September, up 13% a year ago. Its net interest income rose 8.6% while Islamic banking income increased by 24.3%. Revenue climbed 2.7%.
Earlier, CIMB Group Holdings, the number two lender of the country, reported a surprise rise in quarterly profit, helped by an improving domestic economy.
Malaysia‘s central bank has said the economy was on track to register growth of 5.2% to 5.7% this year, and may even exceed that estimate.

#Tanzania: Bank of Tanzania Dispels Islamic Bank Closure #Rumours

The Bank of Tanzania has come in motion in order to prevent a possible run on deposits at the sharia-compliant Amana Bank. This happend after reports went publich on social media of the financial institution's imminent closure.
Bank of Tanzania‘s Governor Florens Luoga stated that Amana Bank and other lenders were very stable and there was really no reason for panic over deposits. He confirmed that the bank is continueing with normal operations, and warned anyone speading false information about the future of some banks, including Amana. In these cases stern legal action would be taken. Additionally the Head of marketing and business Dassu Mussa said Amana Bank has sufficient liquidity. "All we can do is to make sure that our business is running efficiently and properly and we are very confident it is doing so."

#Pakistan raises $2.5 bln from #sukuk, #Eurobond sales, sees solid demand

Pakistan gained $2.5 billion from selling two U.S. dollar-denominated sukuk and Eurobond issues in New York, according to senior official. These issues had attracted total offers of $8 billion in the process.
Pakistani authorities however decided to only sell $2.5 billion at, according to officials „affordable rates“. In an interview an delegate said: "We have raised $1 billion through five-year sukuk at rate of 5.625% and $1.5 billion from a 10-year Eurobond maturity at a rate of 6.875%," Federal Secretary Finance Shahid Mehmood said.
These two deals have been the largest in the country's history so far. The 10-year bond was the cheapest bond ever launched by Pakistan. Last year the country borrowed $1 billion in the global sukuk market at 5.5%. It also floated a 10-year, $500 million Eurobond at 8.25% in 2015.
The government appointed a consortium of Standard Chartered Bank, Industrial and Commercial Bank of China, Citibank, Deutsche Bank, Dubai Islamic Bank and Noor Bank as the lead managers for conducting sukuk transactions. Noor Bank thereby will manage the Middle East sukuk bond.

#UAE #Islamic #banking #assets #surge 6% to $146bln in 10 months

Assets of the Islamic banks operating within the UAE totalled to 535 billion AED by the end of last month. That is around 6% growth since the beginning of this year. And it accounts for 20.2% of the total banking assets in the country. These are valued at around 2.639 trillion AED during the first 10 months of 2017, according to figures of the UAE Central Bank.
This obvious growth in Sharia-compliant financial operations in the UAE mirror the significant development of these kind of banking products which have been enjoying impressive growth across the whole region in the last few years.

According to Central Bank figures, the value of credit provided by the Islamic Banks since the beginning of 2017 until October surged to 361 billion AED, a growth of 7.7% against that of December 2016.
Loans and credit facilities provided by Islamic banks make up 22.8% of total loans provided by the entire banking system in the UAE, valued at 1.584 trillion AED by the end of last month.

Public awareness key to boost Islamic finance in #Turkey

According to the General Council for Islamic Banks and Financial Institutions (CIBAFI), Turkey should raise public awareness of Islamic finance to boost the sector's market share. CIBAFI's secretary general, Abdelilah Belatik, called Turkey's target of raising Islamic banks’ share to 20% by 2023 ambitious but achievable. The council’s annual gathering to discuss Islamic finance will be held in Turkey next April. Belatik said that countries like Turkey and Indonesia and regions such as Central Asia and Africa are important as they have a great growth potential in the Islamic finance sector. Belatik said they work with countries which lack the infrastructure and regulation for Islamic finance to show them its role in the economy. He also underlined Islamic finance's significance for financial stability.

In expanding role, IILM plans longer tenor Islamic bonds programme

The International Islamic Liquidity Management Corp (IILM) plans to expand issuance of sukuk beyond its current short-term programme to address latent demand from Islamic banks. Establishing a new medium-term programme would allow the IILM to offer a wider range of highly liquid financial instruments. The IILM currently has around $3 billion in outstanding sukuk and it could gradually increase this to between $3.5 to $4 billion, depending on consistency of demand. Around 60% of demand for IILM sukuk comes from Islamic banks in Gulf countries with the rest split across Asia and international banks. But there is also potential for IILM sukuk in non-member countries, such as Oman and Britain as well as jurisdictions such as Hong Kong and Singapore.

Islamic finance key to Sarawak's infrastructure growth, says RAM Ratings

According to RAM Rating Services, the infrastructure growth in Sarawak is expected to be mainly funded by Malaysia's vibrant sukuk market. This year sukuk has been the preferred funding route for Sarawak-based entities, with majority from the power sector. Issuers from the port, construction, property, manufacturing, plantation, oil and gas support services, financial services and telecommunication sectors have tapped into the sukuk market as well. RAM Ratings deputy CEO Promod Dass said Malaysia's sukuk market will remain a key funding avenue for the infrastructure development in Sarawak. He applauded the Malaysian government and Securities Commission for building a solid foundation for the sukuk market.

Digitisation, it’s all in the family

Emirates Islamic is targeting balance sheet growth and improved profitability along with digitisation. According to Deputy CEO Wasim Saifi, these objectives are complementary. The speedier technology adoption comes naturally due to the bank's close links with Emirates NBD, a technology leader in consumer banking in the UAE. As a subsidiary of Emirates NBD, it has access to all the innovations the parent company adopts. Emirates Islamic has upgraded its core banking platform and introduced an improved mobile banking app with 25 new services. Emirates Islamic is the first and only Islamic Bank in the UAE to support both Apple Pay and Samsung Pay. As part of the new product roll out, the bank has launched QuickRemit to India and will launch the service to Pakistan and other remittance corridors soon.

MoU signed to support creation of #Sukuk sector in #Kenya

Nasdaq Dubai and the Nairobi Securities Exchange have signed a Memorandum of Understanding (MoU) to facilitate the creation of a Sukuk sector in Kenya. The MoU was signed in Dubai by Hamed Ali, CEO of Nasdaq Dubai, and Geoffrey Odundo, CEO of the Nairobi Securities Exchange. Hamed Ali assured that by cooperating and sharing expertise, the two Exchanges will provide powerful support for the growth of Islamic finance in Kenya. Geoffrey Odundo said the development of the Islamic capital markets can provide significant support for funding national development while strengthening international relationships. Other recent steps for the sector include a Sukuk transaction on Nasdaq Dubai’s Murabahah financing platform carried out by the Africa Finance Corporation.

The Sharia-compliant #gold standard - one year on

Interest in gold has soared since the Shariah standard for gold was introduced almost a year ago. The standard was approved as a collaboration between the Bahrain based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and The World Gold Council (WGC) in London. Natalie Dempster, managing director at the WGC, says a number of existing gold products have now been certified as Shariah compliant and are being marketed as such. Several new regionally issued products are also under development. Adopting a Shariah standard has implications not just for the Muslim world but the UAE itself. Dubai in particular is rising as a purchase and investment destination. This has led to the emergence of institutions such as Noor Bank, Regal Assets and others that will buy and store bullion on behalf of clients from around the world.

King Abdullah Financial District set for Phase I launch

The first phase of the King Abdullah Financial District project is due to be launched next year. The business hub in Riyadh has been under construction since 2006 and will soon get a fresh lease of life under the management of the kingdom’s sovereign wealth fund. The Saudi Public Investment Fund (PIF) will take over the management of the King Abdullah Financial District from the Public Pension Agency. As outlined in the Saudi Vision 2030 plan, the new hub is to be an economic free zone with visa exemptions and a direct connection to the airport. The government is now exploring new incentive options to attract financial institutions to occupy space in the district. The 73-building development has been restructured to reduce office space and increase the number of residential units.

ICD and BSIC Niger cooperate to finance SMEs in #Niger

The Islamic Corporation for the Development of the Private Sector (ICD) and BSIC Niger have entered into an agreement to finance SMEs in Niger. The line of financing agreement was signed for the amount of €9m under the Wakala structure. The collaboration will focus on developing SMEs, improving the living standard of the population by creating jobs, generating tax revenues for the government and promoting Islamic Banking in the country. Abakar Adoum, Managing Director of BSIC, said the signing of the agreement marked the beginning of a lasting partnership and SMEs will enjoy a mentoring that meets their needs at acceptable costs. SME clients will get access to a a 5-year line of financing. Adoum believes that other forms of partnership, like the opening of an Islamic window, will also develop in the near future.

Islamic finance can play key role in PPP delivery

The fast-growing Islamic finance industry can play a significant role in closing the infrastructure gap through public-private partnerships (PPP). According to the World Bank, shari‘ah-compliant assets have grown exponentially in the past two decades, accumulating nearly $1.9 trillion in assets. The Gulf Cooperation Council has the largest share of shari‘ah-compliant assets, at 42% of the global total, followed by Middle East and North Africa with 30% and the rest of Asia at 22%. Islamic banking and Islamic deposits grew faster than their conventional equivalents in Qatar, UAE, Saudi Arabia, Malaysia, Indonesia and Turkey. Developing countries in Asia will need to invest $26 trillion from 2016 to 2030, or $1.7 trillion per year to eradicate poverty and respond to climate change. The infrastructure needs of Sub-Saharan Africa exceed $93bn annually. Islamic finance instruments like Istisna and Ijarah can be used for large, longer-term financing arrangements, such as financing for power projects, infrastructure and transport equipment.

Dubai's Emirates REIT to meet investors ahead of debut dollar #sukuk - lead

Emirates REIT will hold fixed income investor meetings until Dec. 1 ahead of a debut dollar-denominated five-year sukuk sale. The issuance is expected to range between $350 million and $425 million. The company has mandated Standard Chartered as sole global coordinator, and Dubai Islamic Bank, Emirates NBD Capital, Standard Chartered and Warba Bank as joint lead managers and bookrunners to arrange the meetings ahead of the planned issuance.

The rise of the Islamic capital market

The Financial Services Authority (OJK) recently licensed Indonesia’s first full-fledged Islamic fund management company, Paytren Asset Management (PAM). This newly established Islamic fund manager is another milestone in the development of the country’s Islamic capital market.

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