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Saudi Islamic banks’ financial metrics sound, says Fitch Ratings

According to Fitch Ratings, Saudi Islamic banks’ financial metrics deteriorated mildly in 2019 but remained sound. As for conventional banks, the rating agency noted that the impaired financing ratios continued to increase in 2019. Islamic banks have lower impaired financing ratios and financing impairment charges than conventional banks due to their lower proportion of corporate banking. Islamic banks’ profitability remained above conventional banks’ in 2019. Strong deposit growth at Islamic banks in 2019 allowed their financing/deposits ratio to drop below their conventional peers’. Saudi Islamic banks remain well capitalised, with an average Common Equity Tier 1 ratio of 17.8% at end-2019. According to Fitch, if the current economic disruption continues, weaker asset quality and profitability are likely to put pressure on capital.

The Islamic Corporation for the Development of the Private Sector signed a collaboration MoU with FINTERRA Pte Ltd

Mr. Ayman Sejiny, the CEO of The Islamic Corporation for the Development of the Private Sector (ICD) and Mr. Satesh Khemlani, the Managing Director of Finterra, signed a Memorandum of Understanding to achieve sustainable business growth. Both organizations have common beneficiaries and share similar social impact development goals. The collaboration with Finterra is based on its highly powered blockchain solutions for Islamic social finance under the names of SadaqahChain®, WAQFChain® and ZakatChain®. The MoU was digitally signed during a virtual signing ceremony. The parties will explore opportunities of blockchain in OIC member countries in close collaboration with national licensed crowd-lending/crowd-funding operators.

#Philanthropy in emerging market countries and the opportunity for radical transformation

The global coronavirus crisis has exacerbated existing inequalities and laid bare the fissures in our societies. If philanthropic actors were able to ignore this state of affairs before, they no longer can. If we are to first survive, then thrive, we can no longer afford to shy away from supporting radical changes in the world. "The Role of Philanthropy in Society" study demonstrates the transformative potential of philanthropy. The study reveals a charitable impulse that is rooted historically and culturally in all of the countries in the study. Funding for progressive work does exist, but is limited. In all of these countries it has traditionally come from foreign funders. One of the major developments in emerging market countries has been the rise of corporate philanthropy. Common to all country papers emerging from the study is a mistrust of NGOs by donors who see civil society as unaccountable. Individual giving holds promise, as well as community philanthropy.

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Sheikh Saleh Kamel deceased

Sheikh Saleh Kamel was among the founding fathers of the modern Islamic banking industry and founder of the Albaraka Group.

May Allah accept his deeds and reserve a place in Jannah.

Inna Lillahi wa inna ilayhi raji'un

AAOIFI concluded first global Islamic Finance Virtual Forum on COVID-19

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) organized its first Islamic Finance Virtual Forum on "Covid-19 Economic Implications, Islamic Finance and the Way Forward". It was organized in collaboration with Islamic Research and Training Institute (IRTI), College of Banking and Financial Studies (CBFS) and Minhaj Univeristy. The forum's three sessions were attended by more than 1,200 people while thousands more joined by live streaming on multiple online channels. Shaikh Mufti Taqi Usmani, Chairman of the AAOIFI Shari’ah Board delivered his keynote speech which highlighted the importance of riba-free system. Distinguished session panelists emphasized that the power of ideas has a greater impact compared to the power of size. It was suggested that a long term socially-driven Waqf sukuk would be a good idea for a sukuk issuance and called for a collective effort to work out a revenue generation aspect of it.

Dubai Islamic Bank donates AED16 million to Zakat Fund projects

The Dubai Islamic Bank donated AED16 million to the Zakat Fund. Abdullah Aqeeda Al Muhairi, Secretary-General of the Zakat Fund, praised the bank for its donation as well as for its positive humanitarian and charitable role in improving the life of needy people. He also called on Islamic banks and institutions to follow the initiative of the Dubai Islamic Bank to provide zakat money to deserving groups and help the Zakat Fund achieve its goals.

Pandemic may force GCC banks to cut dividends, drive future M&A

Banks in the Arabian Gulf could be forced to scrap 2020 dividends as profits plunge in 2020 due to the coronavirus pandemic. The region's lenders are unlikely to require additional capital should loan defaults soar, despite facing headwinds related to the impact of COVID-19 and lower oil prices. According to S&P Global Ratings, the 23 banks in the Gulf Cooperation Council (GCC) have assets totaling $1.5 trillion at 2019-end and can absorb up to $36 billion in extra provisions before their capital bases start to erode. S&P sees that a significant deterioration in the finances of some banks could spur a second wave of consolidation among Gulf lenders. However, bank analysts are more skeptical, citing a lack of plausible potential takeover targets in Gulf countries except for the UAE, which is still overbanked.

#Saudi Arabia raises $1.53bln in local sukuk -statement

Saudi Arabia has raised 5.755 billion riyals ($1.53 billion) in sukuk. The first tranche of the sukuk issue is 3.8 billion riyals, and the total tranche size is 6.549 billion, maturing in 2025. The second tranche has a size of 1.95 billion riyals, and a total tranche size of 10.296 billion, maturing in 2030.

First sharia crypto exchange opens in #UAE

A new sharia-compliant crypto exchange has announced plans to launch in the UAE. Sustain Exchange hopes to offer sharia-complaint and ethical services to give Muslims a space in which to invest in the crypto market. An initial coin offering is planned for June and security tokens issued during the offering will serve as the key to accessing the exchange’s services. Sustain Exchange will introduce an independent sharia advisory to maintain compliance with sharia principles. To this end it has appointed an Islamic fintech scholar to its board, Mifti Faraz, director of Amanah Finance Consultancy.

#Bangladesh’s first digital crowd-funding platform Ekdesh launched

Bangladesh launched its first digital crowd-funding platform Ekdesh for raising funds and disbursing them as zakat or financial aid. Information and Communication Technology Division State Minister Zunaid Ahmed Palak inaugurated the platform via an online inauguration program. People of the country can donate to the prime minister’s relief fund, the Islamic Foundation, or other non-government organizations through this platform to help the poor people or small businesses. Several organizations like Brac, Bidyanondo Foundation, Center for Zakat Management, Centre for Rehabilitation of the Paralysed (CRP), and Sajida Foundation have already joined the platform.

Rules amended to facilitate Sukuk-II issuance

Pakistan's Power Division has amended the Energy Sukuk Rules aimed at facilitating issuance of Rs 200 Sukuk-II through Pakistan Stock Exchange (PSE). On May 6, 2020, the government approved a new mechanism/criterion for disbursement of payments to the power generators. The Power Division has to disburse Rs 300 billion (Rs 200 billion + Rs 100 billion) through CPPA-G to Power sector entities including the power generators in private and public sector for system operation during the summer season.

Islamic Finance and Prospects for Weathering COVID-19

COVID-19 continues to have profound implications for the global economy. All around the world, the lockdown has contributed to rising unemployment, reduced incomes, and increased food insecurity. Private sector workers and the self-employed are disproportionately affected by the downturn. Many experts warn that this could be severe and long-lasting. The pandemic has highlighted the need to rethink the provision of healthcare services. New conversations on supply chains and critical infrastructure are also required. To this end, sukuk could provide innovative and sustainable sources of finance for recovery. Pandemic sukuk can leverage Islamic practices, such as zakat and waqf, to develop financial mechanisms that target both recovery and sustainability. Potential target investors could include companies and diaspora communities.

International Islamic Trade Finance Corporation releases 2019 Annual Development Effectiveness Report

The International Islamic Trade Finance Corporation (ITFC) released its 2019 Annual Development Effectiveness Report (ADER). In 2019, ITFC approved US$5.8 billion trade financing. Of this, US$5 billion was disbursed towards improving the livelihoods of millions of people in line with the UN Sustainable Development Goals (SDGs). Disbursement in Asian and CIS member countries of the Organization of Islamic Cooperation (OIC) stood at US$2.6 billion, while in African OIC countries, total disbursements amounted to US$2.4 billion. In 2019, ITFC signed framework agreements worth US$4.8 billion with 9 countries and mobilized US$1.2 million through grants for trade development interventions in agriculture, financial institutions, capacity building and trade promotion.

Gulf banks could see second wave of mergers after pandemic dust settles

The impact of the novel coronavirus on the global economy is growing and continues to shock the markets. S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the COVID-19 outbreak. It comes as no surprise that the pandemic will halt the growth of GCC Islamic and conventional banks this year as they focus on preserving asset quality rather than business expansion. The delay of Expo 2020 for Dubai and potential cancelation of the pilgrimage season for Saudi Arabia, may result in a stronger impact on the regional economies. When the dust settles and the full effect of current conditions on banks’ financials is visible, there could be a second wave of mergers and acquisitions in the region.

NMC Health administrators are said to have started selling off assets

Administrators of NMC Health have started selling off assets of the troubled Middle Eastern hospital operator as they seek funds to pay back creditors. Administrators are planning to start a sale process for NMC’s lucrative fertility business as soon as June or July. They are considering eventually selling most of the company’s assets, potentially including the flagship hospital business, which is the biggest private health-care provider in the Middle East.

BIBF and UK firm Cogneum developing platform to converge Shariah governance and UN SDGs

The Bahrain Institute of Banking and Finance (BIBF) is working with UK-based developer Cogneum on a Shariah governance software platform. The cloud-based platform is meant to allow Islamic banks and financial institutions to streamline their internal Shariah governance processes, facilitate the integration of Maqasid al Shariah and the UN SDGs in their workflow. The software will help reduce charitable write-offs by Islamic banks due to Shariah non-compliance issues. The partners will initially target the platform for retail Islamic banks. BIBF director Mujtaba Khalid said the Shariah governance framework of the software solution will be based on AAOIFI Standards but can also be customized as per the banks’ Shariah governance manual. He added that the platform can also help organisations in the areas of green bonds, sukuk and sustainability risk reporting.

Virus crisis highlights potential role of Islamic finance in reaching sustainable development goals

Amid an ongoing severe global healthcare crisis some research institutions and scientific entities are wondering if and how the world will change after the virus has eventually subsided. A new report issued last week is shedding light on the anticipated fundamental changes of the corporate world in terms of economic and social sustainability. The report is entitled "Islamic Finance and the SDGs: Framing the Opportunity" and is released as the first edition of the new "Thought Leadership Series" by the Islamic Finance Council UK (UKIFC) in partnership with the International Shariah Research Academy for Islamic Finance. The report states that the Islamic finance industry could play a key role in contributing to achieving the SGDs formulated by the United Nations. The UKIFC acknowledges that Islamic finance institutions are just at an early stage of engagement with the SDGs. Steps to be taken were therefore an improvement in understanding of how any given organization can effectively engage with the SDGs.

#Indonesia to Roll Out Relief Fund for Banks to Ease Impacts from Pandemic

The Indonesian government has issued a regulation for the relief fund to the banking sector to cope with the financial impacts of the Covid-19 outbreak. The regulation states that the government may channel fund to the so-called participating banks. The participating banks will in turn pass the fund on to the “executing banks”, smaller banks who meet certain requirements. President Joko Widodo has earlier urged banks to loosen their terms on debtors and restructure loans as many are unable to repay in time amid massive job losses or salary cuts due to the outbreak.

Albaraka Türk's 5th International Calligraphy Competition Exhibition on Instagram

The fifth International Albaraka Calligraphy Competition Exhibition meets art lovers on Instagram. Albaraka Türk continues to boost its success in culture and art events as well as in participation banking. The fifth edition of the bank’s International Calligraphy Competition Exhibition was postponed due to the coronavirus pandemic and later went online on Instagram. The works in the competition have been decorated with illumination and included in the collection. The exhibition has been given a new form with unique content and presented to art lovers on Albaraka Sanat's official Instagram account ( https://www.instagram.com/albarakasanat/) with over 70 stories in total.

World’s first Halal network launched aiming to tap $5 tr market

The world’s First Halal Angels Network was launched to help investors, businesses, entrepreneurs and startups during the COVID-19 pandemic. The Network would provide huge market opportunities to tap the $5 trillion worth Halal consumer global market. It is founded by Indian American Dr. Tausif Malik, who is a serial entrepreneur based out of Pune, India, and Chicago, USA. He said India is the biggest manufacturer of Halal consumer goods and has huge market opportunities in the Middle East, North Africa, and Southeast Asia. Halal Angels Network would be the 1st Angels Network backed by Blockchain technology. The areas of interest for investments would be future technologies (Blockchain, Fintech AI, etc), Modest Fashion & Cosmetics, Retail, Pharmaceuticals, Food Cafe & Restaurants, Processed Food & Tourism.

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