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Maybank Islamic Bhd is optimistic of up to 12% growth this year, news that bode well for its parent Malayan Banking Bhd’s (Maybank) aspiration of 15% return on equity (ROE) for 2014. Maybank Islamic accounts for 40% of the group’s revenue and profit for the first-quarter ended March 31, 2014 (1Q14). In 1Q14, total income grew 26% to RM1.319 billion. Nevertheless, pretax profit and zakat for the same period dropped 7% to RM315.1 million, mainly due to the increase in the overhead expenses. This was disclosed at Maybank Islamic launch of its MasterCard Ikhwan Card-i, the bank’s first Mastercard offering.

Standalone Islamic bank versus Islamic window operations is the most prolific debates found in the Islamic finance industry today. The debate is healthy and worthwhile having, if it is done merely to determine how to best meet the various stakeholders’ expectations in a particular jurisdiction. However, it becomes totally time wasting if it is done on the basis of determining which one is more credible or “more Shariah-compliant”. Malaysia is pretty much the only country in the world that has comprehensively legislated and regulated how financial institution may provide Islamic banking products and services. In a jurisdiction, however, that does not have such a structured and established framework, banks must operate within the existing banking framework. Standalone Islamic bank or Islamic window, both are equally good and credible.

Since Shariah itself is very wide, selectiveness is needed so the most relevant aspect of Shariah is being exposed to the students of Islamic finance. The starting point has to be “Usul Al- Fiqh” which embodies the study of the sources of Islamic law and the methodology for its development. The second most important aspect of Shariah that is relevant to Islamic finance has to be laws of contracts. While these two aspects of Shariah form the main body of Shariah knowledge in Islamic finance, it is imperative for the students to appreciate the various Shariah issues that are begining to emerge in the market. Then there is the technical knowledge, which covers the basic theories of finance itself as well as banking, insurance, capital market and wealth management.

Malayan Banking (Maybank) has set up Maybank Islamic Asset Management (Maybank IAM) company in London. Maybank IAM's CEO Azmeen Adnan said the company aims to become a key player and catalyst in the development of the global Islamic asset management landscape. The company now offers a fixed priced Shariah real estate backed fund, the Amanah Hartanah Bumiputra, which has gained popularity among investors. In addition, it is managing direct equity portfolio mandates for haj funds and direct mandates investing in Asean countries. Collectively, a total of US$8 billion (RM25.17 billion) worth of Islamic assets under management resides within Maybank. Maybank IAM is owned by Maybank through Maybank Asset Management Group.

Malaysian takaful players are poised for a dearth in talent and must prepare their human resource (HR) requirements to avert the inevitable situation within the next five years. This is due to the fact that takaful players will have to hire more people following the introduction of the Islamic Financial Act (IFSA) 2013 which requires them to separate their family and general takaful businesses into separate entities. There is already a shortage of valuable industry personnels not just in the takaful industry but also in the conventional insurance industry now and this will be exacerbated when the IFSA comes into force.

Malaysia continues to take the lead in the Asean takaful industry with 71% share of gross takaful contributions, according to a report by Ernst & Young. Malaysia has a largely underinsured population with a low insurance penetration rate and strong government support for the Islamic finance sector. With a proven model and regulatory clarity, the country is set to further build on this leadership position. At present, Malaysia’s takaful sector derives nearly 78% of its net contributions from the family takaful business. However, globally the recent trends suggest an deceleration of the industry. Hence, expansion of the takaful industry is relatively slowing as firms struggle for scale and face growing competition, but the sector is still poised to sustain double-digit growth, said the report in its overall findings.

Ethical investment which has similarities with Islamic based investments has reached US$32 trillion (RM105.6 trillion) in size in the US and the European Unión, according to Nicholas Kaiser, a global investment manager specialising in the issues of ethical and Islamic investment. Though the number of very wealthy Islamic investors in the US were scarce compared to investors in conventional funds, he said his Amana funds are doing very well in the US. The funds attracted American citizens from all backgrounds and Muslim investors are only a small number of the investors in the Amana fund, he added. Nevertheless, it appears that while Amana’s success is the result of the discipline of its Islamic investment nature, investing in Islamic stocks does not necessarily bring profit to the investors.

Bank Muamalat Malaysia has announced the rolling out of the country’s first-ever Shariah-compliant solar photovoltaic (PV) financing scheme valued between RM20 million and RM30 million within the next 2-3 years. Deputy CEO Musa Abdul Malek said that for the first year, the bank may disburse from RM10 million to RM15 million of the funds to 1,000 homeowners, who will be fitting their homes with solar PV systems, which will be grid connected and reap from the country’s solar PV Feed-in-Tariff (FiT) system. However, he said the Smart Green Mortgage Solar PV FiT Plan with its design based on the murabahah structure, is a mortgage plan that does not a have a high-end margin for the bank with a mere 1% yield. The Bank Muamalat package for solar PV is the second in the Malaysian market after Alliance Bank announced its solar financing package in June.

Amanie Advisors Australia Pte Ltd, which is part of the Malaysian Amanie Advisors Group, has proposed to raise multiple short-term sukuk to cover Australia’s manufacturing ecosystem as part of the strategy to win funds from the Gulf area. Amanie founder and group chairman Dr Mohd Daud Bakar said the structures used in Islamic finance transactions mirror very closely the types of funding that are currently in demand in Australia, particular with respect to real economic activity which include leasing, financing of mining activities and farming. Amanie's idea involves funding from the whole value chain of any business, for examples electricity production. This is a totally new way of approach in the Islamic finance industry, which seems to have been well accepted in Australia. The short-term sukuk will involve the banks in the value chain, reduce the dependency of farmers and producers from conventional or private funds though the risk is quite high but the third party acts as the underwriter.

The lack of experienced staff and the recent explosive demand for Shariah-compliant products makes it especially hard for the Islamic finance industry to find new employees. The global phenomenon is that an estimated one million professionals are required to fill various positions in the Islamic finance institutions worldwide by 2020. Managers face the challenge of staff being poached on a regular basis. Companies should consider a much more open approach to talent management by facilitating long-term career development by facilitating internal mobility and moves between suppliers, customers and even the competitors. Moreover, the current shortage of trained and qualified manpower in the Islamic finance sector has led to an eventual spiralling of wages, which in the long term does not benefit the industry. Getting the right people in the right roles is central, so pinching has become common place to meet those ends.

Sukuk sales in 2013 will pick up speed to beat last year’s record because of the relative resilience of Islamic debt to surging global bond yields, said HSBC Holdings plc and Deutsche Bank AG, the top two underwriters. Issuance will reach US$55 billion to US$60 billion (RM191.88 billion), from US$46.5 billion in 2012. The prospect of the Federal Reserve tapering its monetary stimulus has pushed the average yield on global sukuk up 68 basis points this month to 4.06% on Monday. That compares to an 110 basis point increase to 6.17% for emerging-market debt. The Shariah market has many “buy-and-hold” investors, reducing price swings. The high borrowing costs in the conventional markets contributed heavily to the current growth of Shariah-compliant sales.

The global family of takaful market is projected to grow by over 160% in the next five years to hit US$5 billion (RM16.02 billion), World Takaful Conference CEO David McLean said recently. Though the bottom line profitability on the general takaful front is facing stiff competition, at a global level, the growth in family takaful continues to outweigh the growth observed in both general takaful and conventional life insurance. The contributions from Malaysia make up around 56% of the total global family takaful contributions. Recent reports indicate that the Malaysian takaful industry is expected to grow by 20% per annum for the next two years as consumer acceptance grows and regulatory changes provide a stronger and more stable infrastructure for the Shariah-compliant insurance industry.

Guidance Investments (GI) has launched a RM150 million Shariah-compliant investment fund for equipment leasing for the Saudi Arabian market in partnership with Lembaga Tabung Haji (TH). This Tabung Haji acted as the capital provider, while the US-based ATEL Capital Group, the equipment leasing company is to provide the machineries for the Saudi market. TH CIO Abd Kadir Sahlan said that his company has committed a total of RM150 million in the private equity fund in support of ATEL in this venture. The funds will be disbursed in phases over the next two to three years, depending on the deployment of the portfolio in the Saudi market. At the same time, Guidance Investments has formally launched its operations in Malaysia with the opening of its headquarters in Kuala Lumpur.

State investment company Khazanah Nasional Bhd is gearing for more innovative investment options to follow its landmark portfolios in the sukuk marketplace. It plans to publish a coffee table book to share its success stories thus far. In recent weeks, Khazanah was in the news when it selected three banks to help arrange a sale of US$1 billion (RM2.98 billion) of convertible Islamic bonds. The Shar iah- compl iant bonds, or sukuk, would be exchangeable into shares of companies controlled by Khazanah. The company has launched innovative sukuk across Asia including the first global sukuk in US dollars, in Singapore dollars and in the yuan exchange. A rough estimate shows that Khazanah has helped raise US$3.5 billion for companies based in Singapore, Malaysia and Hong Kong, among others.

As Malaysians welcome their newly elected and returned Members of Parliament as well as state assemblymen, there is hope that people develop a better understanding and acceptance regarding different aspects of Islamic finance. People might better understand the different financial institutions that are undertaking Islamic financial activities in the market. Moreover, they might stop accusing Islamic financial institutions in general of merely emulating and replicating the products and services of conventional financial institutions. Legislators play a significant role in creating the right platform for a more inclusive Islamic financial market and we have not communicated enough on their roles in making Islamic finance in Malaysia the best in the world all these years.

Takaful Ikhlas Sdn Bhd has appointed a new chief executive officer of the general and family takaful company - Ab Latiff Abu Bakar. The appointment became effective on January 7th 2013. Latiff has a Bachelor Degree in Business Administration from the University of Portland, USA. He has furthermore over 20 years of experience in the field including senior management positions in insurance and takaful companies. Before joining Takaful Ikhlas, he was head of takaful in an international insurance company.

CIMB Group Holdings Bhd received its underwriting for global and local sukuk issuance fall in 2012. Meanwhile, the market share of HSBC Bank plc grew significantly during the same period. The total issuance for global sukuk of CIMB fell from US$7.77 billion in 2011 to US$6.21 billion (RM18.82 billion). As a result, its ranking dropped to second place and its market share eased to 12% from 17.7% in 2012. HSBC reached first place with total global issuance increasing to US$11.35 billion from US$4.88 billion in 2011. Its market share rosealmost double to 21.9% from 11.1% in 2011.

As the global hub of Islamic finance, waqaf and zakat (tithe) management are key areas of growth for Malaysia. In a public lecture titled "Our Markets, Our Values — A principles-based approach to creating value in Muslim majority markets" in Kuala Lumpur, Iqbal Khan - CEO of Fajr Capital Ltd - pointed out that the goof position of Malaysia and the already existing regulations provide a stable ground for a number of areas of growth in terms of Islamic finance. His lecture particularly stressed on developments and key issues in the Muslim-majority markets.

According to Tan Sri Dr Zeti Akhtar Aziz, governor of Bank Negara Malaysia (BNM), Socially responsible investment (SRI) will appeal significantly to Islamic finance. In particular, the recent global financial crisis has played an important role. He further explains that apart from financial returns, SRI accords primary consideration to the impact on economic activity and on the broader society as well. This way, the important dimensions of environmental sustainability, social responsibility and governance can be incorporated.