Asia

Banks' lending activity remains robust

According to CIMB Group Holdings group CEO Tengku Datuk Seri Zafrul Aziz, banks are doing as much as they can to balance lending to customers with responsible financing. He said commercial banks would want to grow their loans to maximise returns, but that must always be balanced against the banks’ risk metrics. To promote financial inclusivity, CIMB Bank Bhd and CIMB Islamic Bank Bhd have set aside at least RM12bil for the B40 group to access to facilities such as home, automotive, Amanah Saham Bumiputra and personal financing from 2019 to 2020. CIMB Bank and CIMB Islamic’s are assisting the B40 segment via the lowest-in-market financing rate of 2.9% per annum, under Bank Negara’s RM1bil Fund for Affordable Homes, to help those in the B40 group buy their first residential property. Based on data from Bank Negara, the industry’s loan growth rebounded slightly to 4.6% year-on-year in May from 4.5% in April, ending a five-month downtrend.

#Malaysia’s Islamic fund manager BIMB signs UNPRI to incorporate ESG into investments

Malaysian Islamic fund manager BIMB Investment has become an official signatory of the United Nations-supported Principles for Responsible Investment (UNPRI). BIMB Investment is the only bank-backed Islamic asset manager in Malaysia to be a UNPRI signatory. The UNPRI group works to understand the investment implications of environmental, social and governance (ESG) factors and supports its network in incorporating these factors into their decisions. BIMB Investment CEO Najmuddin Mohd Lutfi said that the company has integrated more than 250 ESG metrics in its investment process since 2015. The company currently manages over 1 billion Malaysian ringgit of ESG assets. At the moment there are around 2,300 signatories to the UNPRI. Other signatories from Malaysia include Xeraya Capital, Navis Capital Partners, the national retirement fund KWAP, sovereign wealth fund Khazanah, and Corston-Smith Asset Management.

#Philippines to fast-track Islamic finance regulations – media

Philippines’ central bank will fast-track the issuance of Islamic finance regulations in the country as soon as the Islamic banking law is approved by the president. Philippines has been accelerating the growth of its Islamic economy sectors in the last couple of years. The country’s interest in Islamic finance is two-fold: to attract Shariah-sensitive foreign investments and capital from Islamic countries, as well as to provide its approximately 10 million domestic Muslim population with an Islamic banking option. The country also hopes to increase its exports to Muslim-majority countries and has been developing its halal infrastructure to support this goal. Its national halal certification scheme was launched last year and in February the Department of Science and Technology opened the Philippine National Halal Laboratory and Science Centre.

Virtual banks can attract more millennials to Islamic banks

According to Professor Datuk Dr Azmi Omar, President of the International Centre for Education in Islamic Finance (INCEIF), it is necessary to address millennials, as they constitute a significant proportion of the Malaysian population. Therefore, Islamic banks must be smart enough, in either that they create another subsidiary, a virtual bank, or roll out more of their services in terms of virtual applications. He added that virtual Islamic banks will attract millennials, but not everyone will go for digital banking. It is an alternative. In March this year, BNM governor Datuk Nor Shamsiah Yunus said the central bank had had some preliminary discussions with a few banks, with virtual banks overseas. In its report on Islamic Banking Moody's noted that Malaysia planned to issue new virtual banking licenses by end-2019. This could increase competition for deposits, especially among Islamic banks with weaker deposit franchises.

#Malaysia’s MIDF, Al Rajhi Bank #merger hangs in balance

The planned merger of Malaysian Industrial Development Finance (MIDF) and Al Rajhi Banking and Investment Corp (Al Rajhi Malaysia) is now uncertain as the shareholders have missed the June 27 deadline. The shareholders of the two companies have sent a request to Bank Negara Malaysia (BNM) seeking more time to further negotiate the merger plan. In March 2019, BNM had already granted three months’ additional time for the proposed merger. Al Rajhi Bank is likely to stay on as a shareholder in the proposed merged entity while PNB would remain its largest shareholder. After the completion of this merger process, MIDF is expected to become an Islamic bank. The merger plan, if it succeeds, would lead to a financial services entity with a combined asset value of MYR 14.09 billion.

Islamic banking industry continues to offer financing to eligible Malaysians: Aibim

The Association of Islamic Banking and Financial Institutions Malaysia (Aibim) has ensured that its member banks will continue to provide access for Islamic finance banking products. Aibim’s president Datuk Adissadikin Ali assured that customers who are eligible will not be deprived from access to financing. He added that customers should also recognise the need to make sound decisions based on their own affordability and in line with their financial conditions. Last year, Islamic banks approved a total of RM37.7 billion, representing 36.7% from the total financing for the purchase of residential properties. They also approved RM12.4 billion of personal financing and supported RM1 billion funding for the small and medium enterprises (SMEs).

Bank Muamalat to grow revenue from Islamic pawnbroking

Bank Muamalat Malaysia aims to grow its revenue from Islamic pawnbroking (Ar-Rahnu) by up to RM50million. The bank's second pawnbroking campaign was launched on June 20 and will run for 10 months until March next year. Bank Muamalat consumer banking division head Zury Rahimee Zainal Abiden said the bank aims to tap the interest of up to 50,000 people in comparison to only 27,000 during the previous campaign period. Throughout this campaign, Bank Muamalat is offering a one kilogramme gold wafer as the main prize, 100 gramme gold wafer for the second prize and 50 gramme gold wafer for the third prize. Bank Muamalat is also offering a prize of a gold wafer on a monthly basis for more than 200 selected customers throughout this campaign period. From the first campaign the bank recorded up to RM26.9million of revenue from the gold business with an average of 2,700 new accounts every months. Bank Muamalat has more than 1.2 million customers and this segment of the business contributed 8% to the group earnings.

US startup PayJoy unlocks smartphone loans for Asia's unbanked

American startup PayJoy makes it easier for people without a bank account or credit profile to purchase a smartphone on installment. The phones and loans are provided by third parties. What PayJoy provides is proprietary software that locks the phone if payments are not made on time, making the device unusable. Once the missed installments are paid, the phone is unlocked and can be used as normal. According to PayJoy, its technology can do more than just put smartphones in users' hands. Customers' payment histories are reported back to local credit bureaus, which serves to build up credit profiles. PayJoy aims to expand in emerging markets such as Asia, particularly in India and Indonesia. In most markets, PayJoy partners up with local mobile makers, distributors and lending institutions. The company then takes a cut from every loan originated using its technology, a business model that lowers costs as well as risks for PayJoy.

HSBC #Malaysia launches ESG Islamic structured product

HSBC has launched its first environmental, social and governance (ESG) Islamic structured product in Malaysia. The product offered by HSBC Amanah provides customers the opportunity to invest in a product that matches their values when it comes to environmental and social causes. It pays fixed coupon of 3.90% per annum (three years tenor) and 4.50% per annum (four years tenor) in the first two years of the investment. Payout at the end of third and fourth year is subject to Hang Seng Corporate Sustainability Index performance. Hang Seng Corporate Sustainability Index tracks the performances of Hong Kong listed companies that excel in corporate sustainability. The CEO of HSBC Amanah Malaysia Arsalaan Ahmed said the introduction of the ESG Islamic Structured Product clearly demonstrates HSBC’s pioneering strength in Islamic finance, particularly with regard to product innovation.

WATCH: Islamic finance institutions serve a crucial role for BRI

The crucial role of Islamic finance in financing China’s Belt and Road Initiative (BRI) pays homage to the Silk Road and symbiotic relationship between China and the Islamic world prior the 15th Century. Rightfully so, as BRI is the 21st Century’s New Silk Road. Introduced in 2013 by Chinese President Xi Jinping, BRI consists of overland roads and railway systems – The Belt – and maritime highways – The Road. It allows the seamless and efficient transportation of people, natural resources, products, and capital to flow to and from mainland China. The sheer magnitude of BRI finds itself in its financing. A crucial role exists for Islamic financial institutions due to the emerging market of the Middle East, Africa, and South-Asia (MEASA). Jiang Xiheng, Vice President at the China Center for International Knowledge on Development (CIKD), stated the importance of having the United Arab Emirates as a partner in BRI.

Maybank Islamic wants to link up Gulf Cooperation Council with Asean

Maybank Islamic wants to be the bridge for the Islamic banking sector between the Gulf Cooperation Council (GCC) and the ASEAN region. CEO Datuk Mohamed Rafique Merican expressed confidence that the company would be able to play the role in facilitating the trade, as well as flow of funds for financial activities between the two regions. Last year, MIB announced that it might receive regulatory approvals to set up its Dubai branch in the first half of 2019. Maybank Islamic has strong footprints in Islamic finance, particularly in Malaysia, Indonesia and Singapore. Being the largest Islamic bank in Malaysia, Maybank Islamic has about RM225 billion worth of assets as at Dec 31, 2018 (FY18). Its total gross financing for FY18 advanced 8.1% year-on-year to RM176.8 billion and its Islamic financing contributed 58.7% to the group's total financing.

BML launches complete range of Shariah-compliant business financing products

Bank of Maldives (BML) Islamic launched a range of Shariah-compliant financing products. BML Islamic Retailers’ Financing allows businesses with average monthly sales of MVR 50,000 to finance up to three times the monthly sales volume, and a repayment period of 48-months for financing facilities and 12-months for Wakala based overdraft facilities. Additional security is not required for financing up to MVR 500,000. BML Islamic Business Development Financing offers flexible collateral requirements for working capital, refurbishment, property development or to buy new machinery. BML’s Deputy CEO Mohamed Shareef stated that the new products show the Bank’s commitment to the growth of Small and Medium Enterprises in the country.

Ethis Group Comments on Receipt of Islamic Equity #Crowdfunding License in #Malaysia

The Securities Commission Malaysia revealed updated regulations as well as the approval of 8 new "Regulated Market Operators" serving the investment crowdfunding market. Best known for its impact investing in Indonesia, Ethis Ventures launched last year its Global Sadaqah platform and expects to launch its new Ethis Equity platform in Malaysia in Q1 2020. Ethis Group Chief Investment Advisor Maritz Mansor said they are very excited to have this chance to open up a new asset class to all levels and types of investors. Umar Munshi, Managing Director of Ethis Ventures, said SMEs and startups in Malaysia had few avenues for raising funds. He added that the Shariah-compliant alternative was missing and Ethis Equity aims to fill the gap. In Ethis Equity the minimum investment will be low which means that ordinary people can invest alongside professional investors.

Najib's SRC trial: Interesting use of Islamic banking facilities, inter-posed charitable trusts to break-up cash flows into discrete unconnected packages -evidence can prove problematic for ANZ's Shayne Elliot

Two diagrams published by the Malay Mail illustrate the cash flows relied on by the prosecution to prove the charges against Najib Razak. The diagrams reveal the use of Islamic banking facilities and inter-posed charitable trusts to break-up what can appear to be simple linear flows into discrete seemingly independent packages. These arrangements create problems for many, but especially the ANZ Banking Group whose management oversaw these transactions. ANZ CEO Shayne Elliot continues to distance himself from the problem, claiming that he was not a member of the AMBank board of directors when these transactions were executed, but in fact he was.

At fintech meet, Guan Eng says only Pakatan provides the tolerance needed for innovation to thrive

Malaysia's Finance Minister Lim Guan Eng said the country finally gained the tolerance element needed for digital innovation when Pakatan Harapan (PH) became the federal government. In his speech at the Securities Commission Fintech Roundtable 2019 the minister also cited a 2018 World Bank report that described Malaysia as having produced some of Southeast Asia’s most successful digital startups. He added that the government had also committed RM50 million towards a co-investment fund for ECF and P2P investments. ECF and P2P are two relatively recent developments in Malaysia that have opened up additional avenues of funding for microbusinesses and startups that may not yet qualify for traditional loans from commercial banks.

Alliance Islamic Bank launches social #crowdfunding platform

Alliance Islamic Bank launched its first social crowdfunding platform to create greater socioeconomic impact for the financially disadvantaged. The new platform is named SocioBiz and targets individuals seeking to raise funds to start or expand a business or learn a new life skill to earn a living. Alliance Islamic Bank had signed a memorandum of collaboration with Islamic fintech venture builder, Ethis Ventures Malaysia, and beneficiary partners, Yayasan Kebajikan Negara, Yayasan Noor al-Syakur and Pertubuhan Kebajikan Islam Malaysia. SocioBiz targets to identify and promote at least two recipients each month on the platform. So far SocioBiz has rolled out six campaigns and raised over RM23,000 through its platform.

Malaysia leads global sukuk issuance

Malaysia continued to maintain the leadership as the largest issuer of sukuk globally with a total of US$13.9 billion in the first three months of 2019. This means a market share of 35.2% from the overall issuance of US$39.5 billion during the period. This also represented an increase of 54.4% compared with US$9 billion that Malaysia issued in the first quarter of 2018.

Islamic financing marketplace Alami bags funding led by Singapore-based tryb

Indonesian startup Alami has closed an undisclosed pre-seed round led by fintech investor tryb. The company’s peer-to-peer (P2P) platform recently obtained a P2P registration from the country’s Financial Services Authority and is set to soon expand its business into the Shariah-compliant P2P financing space. The fresh funds will be used for product development and market expansion. Indonesia has the largest Muslim population in the world, but the country's Shariah finance sector has historically lagged behind other markets with large Muslim populations. Alami CEO Dima Djani said tryb’s South-East Asian fintech expertise provides strong validation of its business model and key support for its growth plans.

Sharia-compliant #fintech startup nets funding in round led by Singapore’s Tryb

Indonesian sharia-compliant fintech startup Alami secured funding in a pre-seed round led by Singapore-based VC firm Tryb. Alami, which recently obtained a P2P registration from Indonesia’s Financial Services Authority (OJK), operates a platform for Islamic financing. Tryb principal Herston Powers said the sharia fintech market was a huge and untapped market in Indonesia with significant growth prospects. Both companies look to propel the sharia finance sector in Indonesia, which currently has the largest Muslim population in the world with about 90% of its 260 million people being Muslims.

SC sees good year ahead for #sukuk

Malaysia could see more Islamic capital market funds raised this year as sukuk activity has picked up in the first quarter of 2019. According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, sukuk issuances are picking up over last year’s level. The government recently announced the revival of the East Coast Rail Link and the Bandar Malaysia projects, brightening investor sentiment which has been dampened lately. According to SC data, Malaysia’s Islamic capital market was valued at RM1.88 trillion or 61% of the nation’s overall capital market as at end-2018, down from RM1.9 trillion the year prior. Malaysia is the world’s largest sukuk issuer, having accounted for 51.6% of global outstanding sukuk as at endJune 2018.

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