GCC

Diversification in the #Gulf

The banking sector in #Kuwait remains solid, robust and unaffected by regional events. The operating environment can be described as low-risk thanks to the country’s central bank regulatory role and conservative approach. Kuwait International Bank (KIB) has risen to become one of the most established in Kuwait. The bank's CEO, Loai Muqames, says diversification into the retail sector took priority with the launch of stand-alone retail banking operations. Since adopting a unified CRM system the quality and efficiency of the customer service has dramatically increased. KIB partners with Kuwait’s telecom providers to offer SMS banking for those account holders without a mobile internet connection. KIB is also investing in those sectors related to the $100bn government funded national development plan currently in motion. These sectors include infrastructure, oil and gas, energy, and real estate.

Lower liquidity not driving drop in #GCC #sukuk volumes

According to S&P Global Ratings, the lower liquidity level in the GCC is not the main reason for a drop in the region’s sukuk issuances in recent years. The volume of sukuk was muted last year, particularly compared with conventional bond issuance in GCC countries. S&P believes the complexity of structuring sukuk is the main reason behind muted sukuk issuance in 2016 and it will continue to weigh on volumes in 2017. S&P also estimates GCC sovereigns financing needs at around $275bn over the next three years, the majority of which pertains to Saudi Arabia. While sukuk comprise only a small amount of total outstanding issuance, various governments established the necessary legal frameworks for their issuance.

2016 sees Islamic banks take a larger share of the #UAE’s #car #loan market

Applications for Islamic car loans in the UAE grew by 64.79% from 2015 to 2016. Despite growth in Islamic car loans, car loans based on traditional finance were more popular among UAE residents in 2016. Emirates NBD’s Feature-Packed Auto Loan was the most applied-for car loan in 2016. The second most applied-for auto loan of 2016 was that of HSBC, the third, fourth and fifth most applied-for car loans of 2016 were from Islamic banks. Emirates Islamic’s Auto Finance product came in third place, while Noor Bank’s Auto Finance and Ajman Bank’s Car Finance came in fourth and fifth respectively.

Investment Corporation of #Dubai Successfully Completes Issuance of $1 Billion #Sukuk

The Investment Corporation of Dubai (ICD) has completed the issuance of a US$1 billion 10-year sukuk. The $1billion sukuk will be listed on the Nasdaq Dubai exchange and is the first to be issued from the region in 2017 and the second for ICD since 2014. International investor participation was robust with 26% of the issuance subscribed by investors based in the United Kingdom and Europe and 15% by investors based in Asia. Regional investor participation consisted of 58% of the total subscription with the remaining 1% of the investors based around the rest of the world. CEO Mohammed Al Shaibani said the issuance proves the ICD’s ability to provide a stable foundation that supports the ongoing success of Dubai.

Dubai Islamic Bank to meet investors ahead of possible #sukuk

Dubai Islamic Bank will meet fixed income investors in London on Feb. 6 ahead of a potential sukuk issuance. A five-year benchmark issue, which usually means upwards of $500 million, might follow. The lender has appointed Bank ABC, Dubai Islamic Bank, Emirates NBD, HSBC, KFH Capital, Maybank Investment Bank Berhard, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered Bank as joint lead managers and bookrunners.

#Dubai Islamic Economy Development Centre announces updated strategy for 2017-2021

The Dubai Islamic Economy Development Centre (DIEDC) announced the launch of its refreshed strategy for 2017-2021. Making the announcement, Sheikh Hamdan said the first part of the strategy includes identifying new key performance indicators (KPIs) for monitoring the growth of important sectors. The second component is enhancing Dubai’s status as a reference for Islamic finance, Halal sector and Islamic lifestyle that includes culture, art, fashion and family tourism. Sultan bin Saeed Al Mansouri said the DIEDC’s latest goal is to demonstrate the positive impact of Islamic economy. It is necessary to establish the structural framework of the ecosystem. Finance, production and consumption must feature in it as integrated systems aligned with the UN Sustainable Development Goals. Al Mansouri pointed out the need for universally accepted standards across Islamic economy sectors and stressed that the UAE will focus on refining these standards.

Awqaf and Minors Affairs Foundation signs #agreement with Islamic Development Bank

Awqaf and Minors Affairs Foundation (AMAF) has signed a Memorandum of Understanding (MoU) with the Islamic Development Bank (IDB) to collaborate in areas related to endowment services enhancing the prosperity of Muslim societies. Tayeb Al-Rais, Secretary General of AMAF, and Dr Bandar Al Hajjar, Chairman and President of IDB, signed the MoU in Jeddah, Saudi Arabia. The two parties will work towards maximising the availability of Islamic banking services to the endowment sector. AMAF and IDB will also explore the possibilities of forging endowment partnerships and engaging third parties. Other areas of cooperation include building successful marketing strategies and providing advanced endowment tools for banking, finance, and investment.

Poverty amid plenty in the #Gulf

The UN appointed Special Rapporteur on extreme poverty in the Gulf has concluded his mission on 19th January. In his report Dr. Mohamed Ramady highlights that poverty encompasses non-financial targets that encompasses women’s right to work and move freely, inhibiting factors that lead to family poverty. It is meaningless to adopt an absolute line given a large variance in GCC GDP per capita, ranging from around $ 25,000 in Saudi Arabia to $ 95,000 in Qatar. National poverty line figures accordingly vary from $ 1,300 per month to $ 5,000 levels. Cash payment handouts to reduce subsidies to balance national budgets are short-term measures. The key to poverty eradication is education, access to work and removal of social restrictions. To varying degrees, all the Gulf countries have given emphasis to ensuring more female work and civil and political participation. The UN Report also highlighted an uneven corporate social responsibility to carry out effective training and offer more opportunities for female workers and handicapped employees.

Alinma Bank CEO: Infrastructure, Low Oil Driving Lending

#Saudi-based Alinma Bank’s chief executive officer, Abdul Mohsen Al Fares discusses the bank's earnings and lending growth. Alinma Bank achieved a new record in the last quarter. Growth drivers include the infrastructure projects that started two years ago and will take other three of five years to complete. In terms of net interest margins, Al Fares believes that the recovery will come gradually. As interest rate is rising, the margin will also go up. Alinma Bank has expansion plans for 2017, it currently has 164 branches across the kingdom and it plans to open 12 new branches this year.

Emirates #RealEstate #Fund procures AED 700 million Shari’ah compliant finance facility

The #UAE-based Emirates Real Estate Fund (EREF) has procured a AED700 million ($190.6 million) Shari’ah compliant finance facility with Emirates NBD. CEO of Emirates NBD Asset Management Tariq Bin Hendi said the facility would enable the bank to complete strategic acquisitions to boost the value of the fund. Over the last 24 months the fund has invested over $163 million in real estate acquisitions including Binghatti Terraces in Dubai Silicon Oasis, Arabian Oryx House in Al Barsha Heights, part of Burj Daman Office Tower in the DIFC and a residential building in Remraam, Dubailand. The partially undrawn facility is a five-year, profit-only Mudharabah facility with a 10% repayment of principal in its fourth year.

KFH welcomes CBK’s Sharia Supervisory Governance for banks – Regulations instill confidence in Islamic banking: Duwaishan

Kuwait Finance House (KFH) has welcomed the Central Bank of Kuwait (CBK)’s instructions and regulations regarding the role of Sharia Supervisory Boards in Islamic banks. Islamic Banks would be given until December 31st, 2017 to fulfill the requirements. Isa Abdullah Duwaishan, Executive Manager Shariah Control & Advisory at KFH, stated that the executive team of the board encompasses qualified Shariah controllers who audit the compliance and commitment of all bank departments to sharia rules. He reiterated the efforts of continually improving the skills of Shariah controllers and the Shariah staff in the bank through engaging them in specialized training courses. KFH's Shariah Supervisory Board issues Fatwa and Shariah reports that are viewed as a reference to other banks.

#Saudi Binladin seeks extension on SAR10bn Grand Mosque financing

Saudi Binladin Group (SBG) is negotiating with banks an extension of up to two years on a 10 billion riyal ($2.7 billion) Islamic credit facility used to pay for building work at the kingdom’s Grand Mosque in Mecca. Contractors in Saudi Arabia have had to deal with delays and late payment after the government trimmed spending to adjust to the impact of lower oil prices. Mecca’s mayor Osama bin Fadl Al-Bar told Reuters in September that the expansion would be completed in either 2017 or 2018. But the timeline for the mosque has now been delayed. SBG had received some of the backlog of payment owed to it by the government in recent months, but a large portion remains outstanding.

Bank AlJazira profits drop by almost a third

#Saudi Arabia’s Bank AlJazira has reported a drop in profits of 32.25% to SAR 872 million for 2016. Profits for Q4 2016 were down 4.4% on a year ago to SAR 152 million. Earnings per share were down from SAR 3.22 to SAR 2.18. However, the loans and advances portfolio contracted by 0.18% to SAR 42 billion. The bank attributed the fall in net income to a decrease in operating income by 14%. There is also a decrease in net special commission income, net trading income and other operating income against an increase in net exchange income and net banking fees. Total equity as of end-2016 was SAR 8,104 million, comparing with amount of SAR 7,413 million the previous year, an increase of 9%.

ADIB issues capital-protected equity #investment structured note

Abu Dhabi Islamic Bank (ADIB) has launched its First Shari'ah compliant equity investment structured note of the year 2017. The note is linked to a basket of undervalued blue chip companies from diversified sectors including healthcare, technology & telecommunications. The investment note has a maturity of one year and minimises investment risk by providing 100% capital protection to the capital invested. The note is currently open for subscription until 22 January, 2017 with a minimum investment requirement of $30,000. ADIB’s last three matured equity investment notes have yielded returns of 4.2%, 4.8% and 6.2%, respectively.

#Bahrain’s Nogaholding approaches banks for debut #bond programme

Nogaholding, the investment arm of Bahrain’s National Oil and Gas Authority (NOGA), has approached banks with the aim of setting up an international bond programme. The bond programme could be either for conventional bonds or for sukuk, but since Nogaholding’s latest U.S. dollar fund-raising exercise was an Islamic loan, a sukuk programme seemed more likely. A spokeswoman for Nogaholding declined to comment. In March last year, the company raised a $570 million murabaha facility with a five-year maturity. The 2016 loan backed projects such as the Bahrain LNG Import Terminal, a modernisation programme for Bahrain Petroleum, and expansion of facilities at the Bahrain National Gas Expansion.

#Saudi Arabia plans #bond deal to help finance budget deficit

Saudi Arabia plans a new Islamic bond issue in a sale that could come as early as February. The sharia-compliant sukuk will form part of a pipeline of bond sales to finance the kingdom’s budget deficit and invest in economic diversification away from oil. Last year, Saudi Arabia set a record for developing countries with its first sovereign bond sale, attracting $67bn in investor bids for a $17.5bn issue. Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said diversification is natural for any emerging market, but the fall in oil prices have made it a necessity for exporters like Saudi Arabia. Lower oil prices have led to a drop in government reserves held in banks, which in turn has had an impact on their willingness to lend, so they have to look for alternative sources of financing.

#GCC #debt issuance likely to swell in 2017 as governments and corporates seek funding

Debt issuance from the GCC is expected to surge in 2017 with sovereign issuers leading while conventional bonds outstripping sukuk both in terms of amounts raised and number of issues. The key drivers to bond issuances in the GCC during 2016, which more than doubled to $66.5 billion (Dh244.5 billion), was primarily the sovereign bond issuances by Saudi Arabia, UAE and Qatar. Saudi Arabia’s first international bond issuance valued at $17.5 billion in October last year was the biggest recorded emerging market bond. Saudi Arabia has indicated further bond issuances in the near term and the Kingdom has a target debt-to-GDP ratio of 30% by 2020 as compared to 13.2% for 2016. Banking sector contribution to bond issuance witnessed a steep decline from 22% in 2015 to 15% in 2016, although the size of the total offering increased by 36% $11.7 billion.

Sultanate has invited banks to arrange Potential dollar or #sukuk bond:Sources

#Oman is preparing an international bond sale, as the country seeks to plug a budget deficit caused by low oil prices. The sultanate has sent invitations to banks to arrange the sale of a dollar or Islamic bond and responses are due this week. A fresh sale would be the latest in a series of issues by the oil-producing state. The sultanate sold US$2.5bn worth of bonds in June last year and tapped the bonds for an additional US$1.5bn in September. It was reported to have raised US$1bn from the international loan market last January and will get RO600mn from local debt in 2017. Oman is also seeking to reduce expenditure and from this month will impose new tariffs on its biggest electricity consumers. The state’s budget deficit is estimated by the International Monetary Fund to narrow to 10.3% of gross domestic product this year, from 13.5% in 2016.

Meydan receives AED 1 billion in Islamic financing

Abu Dhabi Islamic Bank (ADIB) has acted as the sole bookrunner on a AED 1 billion Islamic financing facility for the Meydan business group. Dubai Islamic Bank and Al Hilal Bank were both mandated lead arrangers for the financing, which matures in December 2018. The deal was structured to meet Meydan’s financing objectives, on the back of its ongoing District One Project, a master-planned luxury residential neighbourhood in Mohammed Bin Rashid City in Dubai. Commenting on the transaction, ADIB's CEO Tirad Al Mahmoud said this deal demonstrates ADIB's ability to bring together diverse elements with a particular focus on high-growth companies and the real estate sector. Earlier this year, Meydan raised AED 1 billion Islamic financing through a dual tranche offering, comprising a AED 700 million Sukuk issue and a AED 300 million term facility, both maturing in 2024. ADIB acted as the sole coordinator of the transaction.

Dubai Islamic Bank says holding company sells stake in Jordanian bank

Dubai Islamic Bank (DIB) sold its stake in Jordan Dubai Islamic Bank. DIB held 20.8% in Jordan Dubai Islamic Bank through a 40% shareholding in MESC Investments. MESC Investments had completed the sale of its stake in Jordan Dubai Islamic Bank to Jordan-based Bank Al Etihad and Etihad Islamic Investment Company. The value of the sale was not disclosed.

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