GCC government officials confirmed that value-added tax (VAT) will be introduced as of January 1, 2018, a statement from EY said at the conclusion of the EY-hosted annual MENA Tax Conference in Dubai on March 16. The MENA tax conference featured a session on preparing for VAT in the GCC, providing status updates on the tax implementation and the actions that companies in the region need to take. The introduction of VAT will diversify government revenue sources and reduce reliance on oil revenues to finance government expenditures. The additional revenues collected are likely to fund programs for the development of job opportunities for nationals and improve education and healthcare in the GCC.
The Islamic Financial Services Board (IFSB) is organising a Seminar on Islamic Finance with the theme, "The Real Economy and the Financial Sector" on 24 May 2016 in Madrid, Spain, supported by the Banco de Espana and in collaboration with the IE Business School, Spain. This Seminar is part of the IFSB European Forum series, held in prominent financial centres in Europe. The one-day 'Seminar on Islamic Finance' is designed to encourage broad interaction among the delegates to explore the potential re-alignment of economic policy frameworks in a manner that strengthens the linkages between the real economy and the financial sector.
Alinma Jeddah Economic City Fund has secured shari'a compliant financing of up to SAR 3.6 Billion from Alinma Bank on December 10 2015. Formulating the financial model of the project with Alinma Bank was finalized based on a financing strategy that fulfills the project's needs in accordance with the first business plan covering the first phase of the project which is expected to take five years. The objective of the financing is to provide funding to build and develop the infrastructure for phase one of Jeddah Economic City project and to continue the construction of Jeddah Tower.
Bahrain-based Ithmaar Bank has announced that its retail banking subsidiary in Pakistan, Faysal Bank Limited, has registered a record profit for 2015. Faysal Bank registered a profit, after tax, of US$ 41mn (PKR 4.2bn) during 2015, a 70 percent increase over the profit reported for 2014. During the year, the bank's operating income increased by 95 percent, growing from US$ 35mn (PKR 3.5bn) in 2014 to US$ 67mn (PKR 6.9bn) in 2015. Total assets increased by 11 percent to US$ 4bn (PKR 430bn) as of 31 December 2015, compared to US$ 3.7bn (PKR 388bn) as at 31 December 2014. Faysal Bank also announced a cash dividend of PKR 1 per share (10 percent of share par value) for 2015.
Madinah Gov. Prince Faisal bin Salman launched on Monday a 14-story complex costing SR52 million that would house all the region's charities. Speaking at the opening, Prince Faisal, who is also chairman of the Charitable Society for Social Services, said the complex would have state-of-the art facilities that would streamline services to the needy. Abdul Barie bin Awadh Al-Thibaiti, secretary general of the society, said the new building would generate much-needed funds for charitable activities. He said the 30-year-old organization helps more than 6,000 students a year on a five-year budget of SR33 million.
The future of Islamic bonds in the Middle East and North Africa (Mena) seems "excellent" in the medium-to-long term, but lack of supply and right price is "stifling" demand and liquidity in the market, according to NBAD. Finding that oil prices will be a key determinant of sukuk returns in 2016, NBAD said the uncertainty over the likely trajectory in the US interest rates, the bear market in oil, and increasing fiscal concerns across the region all contributed to a bearish tone in the market, causing many issuers to remain on the sidelines. Although GCC sukuk investors remain natural buyers, they have tightened their credit quality criteria, and become much more price sensitive.
The Middle East and Northern African (Mena) sovereigns are expected to borrow an equivalent of $134bn from long-term commercial sources in 2016. This compares with borrowing of $143bn in 2015, which was more than double the $68bn that the region is expected to be borrowed in that year, Standard and Poor's "Mena Sovereign Debt Report 2016" noted. However, the ratings agency noted that its updated estimate for 2015 includes an additional $30bn in borrowing by Iraq. It has included Iraq in the survey for the first time, having assigned it sovereign credit ratings in September 2015. All in all, it is estimated that GCC countries' borrowing at $40bn in 2015 rather than the $5bn S&P projected in March 2015.
The region's thriving asset management sector saw a further addition towards the end of last year with the launch of Abu Dhabi Global Market (ADGM). The new financial centre is likely to mark a bold step for the emirate's plans to attract new firms and develop the local asset management sector. As the UAE's richest emirate, Abu Dhabi is already home to a large number of wealthy investors and a thriving financial services community. Despite the close proximity of northern neighbour Dubai's highly successful DIFC, industry participants have welcomed the addition of the ADGM to the region. Abu Dhabi is home to the region's largest sovereign wealth fund (SWF) in the Abu Dhabi Investment Authority, and a number of other multi-billion dollar funds also call the emirate home.
The progress rate of the second phase of the social housing project "Omar Al Mukhtar" in Sidi Hassine Sijoumi (capital western suburbs) is now 65% and the project will be completed by late August 2016. The handover of keys is expected before the end of 2016, noted the Minister of Public Works, Housing and Spatial Planning Mohamed Salah Arfaoui, at a visit Tuesday to the site of the project along with Qatari Prime Minister and Minister of the Interior Sheikh Abdullah bin Nasser bin Khalifa Al Thani. The project with an estimated cost of nearly 54 million dinars financed by Qatar through a donation (40%) and a free-interest loan (60%) will help build 810 social residential units.
Growing demand for asset-based investments in times of fiscal insecurity in major economies in the world and the fact that still only a small portion of the estimated $11.5tn worth of wealth owned by Muslim individuals, institutions and governments is managed by Islamic financial institutions has turned the attention of investors towards Islamic wealth management. According to Malaysia-based International Shariah Research Academy for Islamic Finance (ISRA), there is a lot of potential to tap for Islamic wealth managers: As of the fourth quarter of 2015, total global Islamic assets under management were "just" $58bn and the number of Islamic funds worldwide stood at a meagre 1,053. This compares to $56.4tn of wealth owned by all high-net worth individuals globally combined and to more than 9,200 investment funds in the US alone.
There are nearly 500,000 high net worth individuals (HNWIs) in the GCC alone; these clients hold roughly $1.7 trillion of assets. A large majority of them are Muslims. If you look at the larger banks, be it in Switzerland, or in other established jurisdictions, it is mainly in the conventional banking space that wealth management solutions are offered to clients. The low oil prices have had an impact on liquidity and the cost of funds. As the demand for Islamic wealth management solutions is primarily from the GCC region and the sentiments in the region are weak due to the low oil prices, investors could take the wait and watch approach.
GFH Financial Group (GFH) has announced its full year financial results for 2015 with a consolidated profit of US$ 29 million before provisions of US$17 million, and a net profit of US$ 12.0 million, signaling sustained profitability for the Group. Total consolidated income for 2015 was US$85 million, as compared to US$90 million in 2014. Net profit for 2015 was US$ 12 million compared to net profit of US$ 27.3 million for 2014. Commercial banking income attributed to US$57.8 million and investment banking income attributed to US$20.1 million, while real estate has contributed US$5.6 million. The Group reported a loss of US$ 5.95 million for the last quarter of 2015 compared to a profit of US$ 4.2 million for the last quarter of 2014.
Euris Group wants to develop Islamic Finance in Europe. The firm designed a banking concept and is now promoting its project, a Shari'ah compliant private bank in Luxembourg. The European market remains fragmented and far from comprehensive. To fill the gap, it's necessary to build a pure player, i.e. a fully fledged Islamic bank in the Eurozone. From there, a lot will remain to be done: entering the retail and commercial banking space, providing Takaful solutions to European customers and exploring the relevant investment banking opportunities, especially when it comes to European Sukuk. Euris Group chose Luxembourg because it occupies a central position at the heart of the Eurozone.
Bahrain-based Al Baraka Banking Group B.S.C (ABG) announced that its total operating income reached one billion dollars in 2015 for the first time since the start of the Group activities 12 years ago due to continued growth in income-generated business at all the Group units, while the net income for the year reached US$ 286 million in 2015, an increase of 4% on the net income achieved in 2014. Similarly, balance sheet items witnessed moderate increases as total assets increased by 5%, total finance and investments by 4%, customer accounts by 2% while total equity increased by 1% as at the end of December 2015 in comparison with the end of December 2014.
Al Baraka Bank Egypt, part of Bahrain's Al Baraka Group (ABG), is planning to pump one billion Egyptian pounds (US$127.7 million) to support Egyptian SMEs, its chairman Ashraf El-Ghamrawy said. The investments, with a five percent interest rate, are in favour of the central bank's initiative to advocate small and medium-sized enterprises. Earlier, Egyptian President Abdel Fattah al-Sisi said the banking sector would inject 200 billion Egyptian pounds ($25 billion) to support small and medium businesses. Within this year, Al Baraka Bank Egypt plans to sign a new partnership worth 200 million pounds with the Social Fund for Development (SFD) to finance small and medium businesses led by the Islamic Development Bank (IDB).
The General Council for Islamic Banks and Financial Institutions (CIBAFI) tackles the profound structural problems in the Islamic Micro and Small and Medium Sized Enterprises (MSME) finance industry. The recent CIBAFI Global Islamic Bankers Survey from 83 Heads of Islamic banks in 35 countries revealed that MSME finance serves as the second key driver of sustainable growth of Islamic banks. Nonetheless, expanding this business line depends on the development of external factors of this market segment, as well as on how Islamic financial institutions can enhance their technical infrastructures in serving MSMEs. CIBAFI has therefore started the initiative to organize a series of Roundtable Meetings on the topic.
RAWABI Vallianz Offshore Services (RVOS), an equally-owned joint venture between Rawabi Holding and Vallianz Holdings Limited, has appointed Alinma Investment Co., Saudi Fransi Capital, Saudi Hollandi Capital and GIB Capital LLC as Joint Lead Managers and Book-Runners for its first issuance of a SR1 billion Shariah - compliant sukuk. The sukuk were sold through a private placement to sophisticated investors in full and are to be used to partially finance the marine assets of RVOS over a period of five years. Rawabi Holding provides a range of products and services in the fields of oil and gas, petrochemicals, engineering and construction, power and manufacturing in the Kingdom of Saudi Arabia and the Middle East. Vallianz Holdings Limited is a provider of offshore support vessels and integrated marine solutions to the oil and gas industry.
Emirates Foundation and Abu Dhabi Islamic Bank (ADIB) have partnered in support of financial literacy through Emirates Foundation's programme 'Esref Sah', which aims to educate youth on ways to manage their current and future financial and asset base. The three-year agreement was signed by Mohanna Al Muhairi, Chief Operations Officer of Emirates Foundation , and Mohamed Ali Al Fahim. Region Head, Corporate Banking. With a commitment of AED 1.5 million, the agreement, which offers both financial and knowledge-sharing technical support, is in line with the Foundation's business philanthropy model. On the other hand, this partnership comes as part of ADIB's UAE vision to invest in development programmes.
Faisal Islamic Bank of Egypt's volume of business has increased by 7.4 percent to register EGP 56.141 billion (US$7 billion) at the end of January 2016. The indicators also revealed that the bank's volume of business hit EGP 52.259 billion at the end of January 2016. Furthermore, the total assets of the bank increased by 7.6% from EGP 51.756 billion in January 2015 to EGP 55.701 billion in January 2016. In addition, the bank's current accounts and saving pools rose 7.5% to record 49.494 billion, compared to 46.048 billion in the same period of the previous year. However, the Liquid assets gained 6.6% to LE 3.081 billion, up from LE 2.889 billion in the same period a year earlier. Meanwhile, the bank accounts inched up 3.5% to 1.157 million, up from 1.117 million a year earlier.
Bank Nizwa SAOG has signed an agreement to provide a structured financing facility of USD 50 million to Hydrocarbon Finder E&P LLC (HCF), an independent Oil & Gas exploration & production company. The Bank's Shari'a-compliant package is tailored to meet the requirements of HCF, which has been granted concession rights by the Government of Oman for oil & gas exploration, development and production within an onshore geographical area in Oman termed as Block 7. Hydrocarbon Finder E&P LLC is part of the Services & Trade (S&T Group), an Oman based business conglomerate. The Facilities agreement was signed by Dr. Jamil El Jaroudi, CEO of Bank Nizwa and Brig. Gen. (Retd) Sulaiman Al Adawi, Group Chairman of the S&T Group, on February 10th in Muscat.