Islamic Banking

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#Turkish participation banks' #profit #soars 36 pct in first half

The Participation banks achieved a profit of approx. $223.29 million in the first half of 2017 with an increase of 36 % compared to the same period the year before. According to information put together by the non-consolidated financial statements of Albaraka Türk, Kuveyt Türk, Türkiye Finans Participation Bank, Vak?f Participation and Ziraat Participation, the total assets of participation banks increased by 7.7 % compared to the end of last year, exceeding $41.52 billion. In the first half, the net profit of the sector increased by 36 %.
Among the participation banks, Kuveyt Türk achieved the highest net profit in the first half, followed by Türkiye Finans Participation Bank, Albaraka Türk, Ziraat Participation and Vak?f Participation. By the end of June, Kuveyt Türk was the leader of the sector, followed by Türkiye Finans Participation Bank and Albaraka Turk.
Speaking to Anadolu Agency regarding the first half results and expectations of the participation banks, Melik?ah Utku, chairman of the Participation Banks' Association of Turkey (PBAT), stressed that the participation banking sector is in a significant development process and has serious potential in Turkey.

The #continuing allure of #Islamic #finance

The total Islamic finance industry was estimated at around $ 1.9 trillion in assets for the year end of 2016, and it pales into insignificance compared with traditional finance. However of special interest is the growing popularity of Islamic finance from both the Muslim and non-Muslim financial institutions and investors. Islamic assets are very much concentrated in the banking sector which holds $1.5 trillion in total, with the Islamic bonds or sukuks worth $320 billion, and investment funds and insurance or so called takaful worth $56 billion and $25 billion respectively.
The majority are purchase and sale or murabaha and leasing or ijara transactions. Some major Gulf companies are turning to the sukuk market to raise funds, with Saudi Aramco and the Government of Saudi Arabia both successfully launching sukuk tranches which were heavily oversubscribed.

#Master in Islamic Finance

The Islamic Corporation for the Development of the Private Sector (ICD) in collaboration with IE Business School offers a training program for the development of executives across the Islamic finance industry. The Master in Islamic Finance program has a blended format, combining on-site periods in Spain and Saudi Arabia with dynamic, interactive online modules to minimize the time away from work. The length of the training is 13 months and intake starts in October 2017. Throughout the program, participants will obtain practical knowledge of high-level financial tools, develop practical Islamic Finance technical skills and acquire leadership skills. Upon program completion participants receive a University Private Degree from IE Business School and IE Universidad. IE Business School is a school within IE Universidad, which is a University officially accredited by the Spanish education authorities.

DFSA pens Hong Kong #fintech innovation deal

The Dubai Financial Services Authority (DFSA) and Hong Kong’s Securities and Futures Commission (SFC) have signed an agreement to cooperate on Fintech innovation. The two public entities said the agreement will further strengthen the efforts of both authorities to develop an innovation-friendly ecosystem and regulatory environment. This continues a trend by both countries to ink bilateral relationships to boost emerging technology within the financial sector. The agreement was signed in Hong Kong by DFSA chief executive Ian Johnston and Ashley Alder, chief executive of the SFC. This step follows the introduction of regulations formalising a tailored regime for loan and investment crowdfunding platforms earlier this month. It also follows the launch of the FinTech Hive at DIFC and its Innovation Testing Licence (ITL).

#Nigerian central bank aims to grow Islamic banking sector with new regulations

The Nigerian central bank is setting up two new financial instruments to provide liquidity support for non-interest financial institutions. The new regulatory measures are designed for the proliferation of sukuk and takaful. Among the banks in Nigeria, only Sterling Bank, Stanbic IBTC and Jaiz Bank offer Islamic services. Jaiz, the only fully-fledged Islamic lender on the list, opened its doors in 2012. The Nigerian central bank stipulated several conditions for offering Islamic finance in October. Non-interest lenders must have a liquidity problem to be able to access a new discount window, which will offer it at zero interest, though lenders must post collateral.

BNM to measure VBI adoption in Islamic FIs

Bank Negara #Malaysia is developing a scorecard with Islamic banking players that will measure the adoption of value-based intermediation (VBI) initiative. According to deputy governor Abdul Rasheed Abdul Ghaffour, the VBI marks the next step to realise the full potential of Islamic finance. The VBI Community of Practictioners (COP) includes nine Islamic banking institutions, Bank Islam, Bank Muamalat, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq. While VBI shares similarities with ethical finance, ESG (environmental, social and corporate governance) and SRI (sustainable, responsible, impact investing), the distinguishing factor is the Syariah aspect. Business propositions from new sectors such as small and medium-sized enterprises (SMEs) would benefit from financial applications based on potential value creation and not just their credit scores.

#Nigeria to offer liquidity support to boost Islamic banking

Nigeria’s central bank is setting up two financial instruments to provide liquidity support to boost Islamic banking. The central bank has been working to set regulatory ground rules for sukuk and takaful to try to emulate the success of the industry in Malaysia. Islamic banking services are currently offered by the Islamic window of Sterling Bank, Stanbic IBTC and Jaiz Bank, but Nigeria wants to increase the sector. The country is gradually opening up to Islamic finance to bring non-interest banking to over 80 million Muslims. In October the regulator granted liquidity status at its discount window for banks' investment in Islamic bonds issued by national governments, and for banks’ liquidity ratios. Nigeria launched a 100 billion naira ($318 million) debut sovereign sukuk in the local market in June to help develop alternative funding sources.

Bridging the $300b #infrastructure #gap with Islamic finance

In #Nigeria about $300 billion (N108.75 trillion) is required to close the country's infrastructure gap. To close the gap, the Federal Government has turned to the Islamic Development Bank (IsDB). Some financial analysts are warning that this is capable of undermining the nation’s constitution and its secularity. While insisting on the need to defend Nigeria’s secularity, some of them pointed out that there are other viable options and numerous non-religious lending institutions Nigeria can turn to for help. For example, public affairs analyst, Barr Obiora Akabogu, said Nigeria could fall back on the Sovereign Wealth Fund (SWF) to raise cash. Nigeria’s pension fund, which stood at N6.02 trillion as at last November, is another viable option to build infrastructure. Others have recommended the Public-Private Partnership (PPP) model for designing, building, financing and operating new infrastructure.

Applying VAT to Islamic finance products can get complicated

Some countries have introduced laws to level the playing field between Islamic and conventional finance when it comes to the relationship between VAT and financial products. Whereas countries like Malaysia and Singapore have legislated to level the playing field between conventional and Islamic finance by recognising its religious underpinning, the United Kingdom have dealt with the issue in a not dissimilar manner but with a secular approach. Customers have enough difficulty understanding conventional finance. Investment in training to ensure product sales persons can comfortably communicate their Islamic finance offerings will be essential.

Islamic finance, a big chance to back SDGs

The #Indonesian National Alms Agency (BAZNAS) agreed to support the widening of electricity access to the poor in Jambi province in July. This marked the first official disbursement of the Islamic zakat fund to support the sustainable development goals (SDGs) in Indonesia.

#Qatar's new food security depot receives $439mln in funding

Qatar Islamic Bank (QIB) has agreed a 1.6 billion Qatari riyal ($439.4 million) funding deal with Al Jaber Engineering (JEC) to finance a large food security facility at the new Hamad Port. The new food security facility is being built on a 530,000 square metre site and contains facilities that can be used for storing, processing and manufacturing of various foods. The complex will house rice silos, oil storage tanks and associated infrastructure. The funding deal was signed by QIB's CEO, Bassel Gamal, and JEC CEO Osama Hadid. Gamal said the bank was proud to finance JEC’s food security facilities project which is of strategic importance to the country. Hadid added that JEC would be responsible for both the design and construction of the new food security facility. Hamad Port is a $7.4 billion project which has been built to the south of the country's capital, Doha.

Talent deficit in Islamic finance affects quality #sukuk issuance

The shortage of high-quality sukuk in the Islamic finance market is a result of the deficit in virtuous talent, according to Datuk Mohammad Faiz Azmi, Former Malaysian Institute of Accountants (MIA) president. He also said there was a lack of safe assets at present, leaving issuances by the government always oversubscribed. He added that the opportunity now existed for sukuk issuance from Indonesia, which has a lot of infrastructure plans such as to build more roads, have trains, ports, better airports and others. In a recent Bank Negara strategic paper, the central bank revealed that the annual growth rate of the Islamic finance industry had slowed from 24.2% in 2011 to 8.2% last year. Mohammad Faiz said MIA has launched the Mini Pupillage Programme to create a pool of knowledgeable and specialised talents in the area of Islamic finance.

DGCX to launch region’s first Sharia compliant Spot #Gold contract

The Dubai Gold & Commodities Exchange (DGCX) and Ayedh Dejem Group have agreed to develop and launch the Middle East’s first Sharia compliant Spot Gold contract to be traded on an international exchange. This development is reflective of the growing potential of the Saudi Arabian and wider GCC regions Sharia compliant gold markets. Ayedh Bin Dejem, Chairman for the Group, said this cross-border collaboration offered access to the regional gold and commodities market. It provides customers with improved hedging and investment solutions in compliance with Sharia law. DGCX Chief Executive Gaurang Desai added that Amanie Advisors LLC, the leading global Islamic Finance advisory firm, have been selected to advise on the initiative. The launch of this product appealing to a wider range of investors in the region is an ideal way for the Exchange to extend its reach.

Islamic finance industry hampered by global economic conditions

The Islamic Financial Services Board (IFSB) released its IFSB Industry Stability 2017 Report. It states that global economic volatilities, consistently low oil prices and reduced demand for credit are among the factors that currently weigh on the Islamic financial service industry. The study says that 2016 marked another year of slower growth amid adverse macro-economic conditions. They include adjustments in the value of global Islamic banking assets in US dollar terms on the back of exchange rate depreciations in countries such as Malaysia, Turkey and Indonesia, as well as the persistent lack of global standardisation, and lower liquidity and profitability compared to the conventional banking sector. According to the IFSB, the global size of the Islamic financial service industry has not changed much, with total Islamic finance assets just slightly increasing to $1.89tn from $1.88tn. Another factor that affected asset growth was the currency depreciation in Iran, the world’s largest Islamic finance jurisdiction in terms of assets.

Islamic finance and SRI share a lot of common ground

Socially responsible investment (SRI) and Islamic finance share significant common ground. Both spheres of investment demand the businesses chosen for investment are socially useful, not detrimental to humanity, and compliant with humanitarian ethics. SEDCO Capital has incorporated the Sharia-compliant investment approach with its responsible investment strategy and created the concept of prudent ethical investing (PEI). At the heart of PEI lie the environmental, social and governance criteria (ESG) that are integrated into financial analyses. SEDCO Capital is not only Sharia-compliant but also evaluates ESG aspects as part of its investment process. PEI is merging these two forces to embrace a more sustainable economic development model that is expected to attract non-Muslim SRI investors into the Islamic finance market.

WAIFEM, CBG commence regional #training on interest-free Islamic banking

The West African Institute for Financial and Economic Management (WAIFEM), in collaboration with the Central Bank of The Gambia (CBG) started a five-day regional course on interest-free Islamic banking. Director General of WAIFEM, Professor Akpan H. Ekpo, stated that the objective of the course is to provide a broad understanding of the rudiments of Islamic banking. In particular, it will provide clarity on the Shariah requirements and the avoidance of Riba in modern-day banking business. 1st deputy Governor of the CBG, Dr Saikou Jabbie, said the Gambian Government entered into partnership with the Islamic Development Bank to develop the necessary infrastructure for Islamic banking in the country. He noted that the Central Bank even developed an investible Islamic instrument called the Sukuk AL Salam in 2007. On his part, Professor Ekpo thanked the Central Bank and its staff for their support to WAIFEM and its activities. WAIFEM is rated as a centre of excellence in capacity building and training, and it caters for the capacity needs of the private sector.

How can Islamic finance benefit #Azerbaijan?

Islamic finance is still a nascent industry in Azerbaijan, even though the country’s large Muslim population indicates great potential demand for its services. The key hurdle that limits any meaningful expansion of Islamic finance in the country is the absence of a comprehensive regulatory framework. It is therefore important to develop a full-fledged legal framework that is specifically tailored for monitoring, guiding, and supervising the Islamic banking system. Islamic finance, as an ethical form of finance, can do an enormous amount of good. Islamic finance forges a closer link between real economic activity that creates value and financial activity that facilitates it. Islamic finance can attract investors from GCC and Asia to Azerbaijan. However, the country continues to face multiple challenges, such as a lack of public awareness and a talent shortage in Islamic finance. Still, favorable regulation remains the key to Islamic finance growth in Azerbaijan.

Islamic finance sharpens its profile in Southeast Asia

#Malaysia’s eastern region Sarawak will host this year’s World Islamic Economic Forum (WIEF) from November 21 to 23. According to Sarawak’s Deputy Chief Minister Awang Tengah Ali Hasan, the state will use the forum as a platform to promote Islamic investment opportunities in various industries. He added that Sarawak was currently also undergoing a rural transformation programme and had designated 77,000 hectares of land for the development of a halal hub. The deputy minister said the WIEF will also focus on strengthening the partnership between Muslim and non-Muslim communities. The conference is expected to attract about 2,000 potential participants and representatives of various sectors. In another development, Islamic finance will soon make its foray into Cambodia, which is home to an estimated 300,000 Muslims. Two Malaysia-based Islamic financial institutions are expected to open their first branches by the end of the year and in 2018. Another recent highlight for Islamic finance was the Brunei Darussalam Islamic Investment Summit 2017 held on August 2 and 3.

Islamic #FinTech Strengthens Ties with European Partners

Abu Dhabi Global Market (ADGM) has announced two new partnerships with non-profit organizations from London and Zurich. The first alliance is with the Swiss Finance and Technology Association (SFTA). The second one is the British think tank Responsible Finance and Investment Foundation (RFI). The Swiss partnership will strengthen the collaboration between local FinTech businesses and will provide new opportunities for knowledge transfer. ADGM also signed an agreement with the London-based RFI. Both parties will work together to assist young FinTech entrepreneurs in testing and introducing innovative products under the ADGM Reglab program. In addition to that, RFI and ADGM will also set up an open platform to share knowledge and expertise. According to Blake Goud, the CEO of RFI, FinTech can have a leading role in transforming the way Islamic institutions connect with their clients. In his view, this partnership can encourage and support emerging FinTech companies to adopt ethical, responsible and Islamic approaches.

Third #Moroccan Participatory #Bank to #Launch #Islamic #Finance #Activities

The Maroccoan Bank Al Yousr, the participatory subsidiary of the BCP Group in partnership with Guidance Financial Group has opened its headquarters in the capital Casablanca. After the approval and publication of the compliance notices on the 20th July relating to the model of an account agreement and the Mourabaha Immobilière contract issued by the Shariah Committee on Participatory Finance, Bank Al Yousr officially started its banking activities beginning of August.
The participatory bank is the third of its kind to start its activities, after Bank Assafa, a subsidiary of Attijariwafa Bank, and Umnia Bank of CIH Bank.

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