Islamic Banking

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Islamic finance assets will grow 72% to $3.78trn

The total size of the global Islamic finance assets is projected to grow by nearly 72% to $3.78 trillion (Dh13.87 trillion) by 2022 from $2.2 trillion (Dh8 trillion) last year. According to the Islamic Finance Development Report, Malaysia topped followed by Bahrain, the UAE, Oman, Pakistan, Kuwait, Saudi Arabia, Jordan and Brunei in terms of industry growth. The report studied key trends across five indicators: quantitative development, knowledge, governance, corporate social responsibility and awareness. Khaled Al Aboodi, CEO of the Islamic Corporation for the Development of the Private Sector, said Islamic finance was still tiny in comparison with the global financial industry, but the industry's rapid development suggested it would continue to grow.

VBI to take Islamic finance to next level of growth

#Malaysia is introducing value-based intermediation (VBI) to take its Islamic finance industry to the next level of growth. As a first step, Maybank Islamic initiated the pilot launch of its rent-to-own (RTO) home scheme, called HouzKEY, targeted at properties priced under RM1 million. For now, the product is limited to the bank’s employees but should become available to the public early next year. The bank is aiming for a portfolio size of RM1 billion within the first year. According to experts, this is just the beginning of more RTO schemes to come as several other Islamic banks are expected to launch their own versions. BIMB Holdings group CEO Malkit Singh Maan says the bank is hoping to launch its RTO product for affordable homes in the first quarter of next year. Other VBI products that banks may offer in the future are green technology financing and green sukuk.

The disruptive impact of #Islamic #fintech

Fintech is fast gaining traction in the financial services industry, as both start-ups and traditional companies proactively incorporate methods to stay in the lead. In Malaysia, the national bank itself supports the role of fintech in Malaysia’s overall finance industry. According to Bank Negara Malaysia assistant governor Marzunisham Omar, the next growth phase of Islamic finance requires the industry to ride the fintech wave. AmInvestment Bank CEO Raja Teh Maimunah Raja Abdul Aziz said Islamic banks do not have an option not to adopt fintech. The only way that Islamic banks or Islamic funds or Islamic crowdfunding can reach out is to adopt mobile technology. She revealed that AmInvestment Bank is currently experimenting with its clients to use Distributed ledger technology (DLT) for the issuances of bank guarantee.

Cleric to parents: Encourage children to study Islamic finance

Tajudeen Yusuf, President at the Institute of Islamic Finance Professionals (IIFP), has advised parents to encourage their children to study Islamic finance. Yusuf gave the advice on Sunday at the 34th Triennial Conference of the Muslim Association of Nigeria (MAN). The theme of the national conference was "Path to National Economic Recovery, Growth and Development – The Islamic Perspective". According to Yusuf, Islamic Finance helps to redistribute wealth and reduce income inequality, as well as promotes inclusiveness through stakeholders participation. At the conference a new national executive was elected to run the affairs of the organization for the next three years. They include Alhaji Tajudeen Ojikutu (President), Dhikrullah Yagboyaju (Vice President), Ganiu Salawu (Secretary) and Nurat Adebayo (Public Relations Officer).

How loyal are Islamic banking customers?

Islamic banking is a growing industry, however still much smaller than conventional finance, even in Muslim majority nations. In the UAE, 76% of residents are Muslim, yet Islamic banks only hold 19% of banking assets. The question is: why would Muslims choose conventional banks when Halal options are available? Research has found that the chief reason was a better rate of return. A recent study shows that 25% of Islamic banking customers preferred conventional banks and products when interest rates were the same. When conventional banks offer 1% better interest rates, the share that would switch to conventional banks rose from 25% to 44%. About 25% of Islamic banking customers came to it because of their employers, while 35% use both Islamic and conventional banks. A group of about 40% of Islamic banking customers are truly loyal to Islamic banking, most likely for religious reasons.

#Islamic #banking drives #CIMB’s better-than-expected #results

9 months of financial year 2017 core net profit of RM3.415 billion is above our expectations and in line with consensus expectations accounting for 84% and 77% respectively of full-year estimates. This better-than-expected performance was driven by Islamic banking income which grew by 19% year-on-year. Although a slight dip had been expected. The rest was within our expectations with loans at about 7%, cost to income ratio <52%, and credit costs of about 65 basis points.

UPDATE 1-#Maybank posts 4th straight quarterly #profit gain on #Islamic #banking growth

Malayan Banking Bhd is Malaysia’s biggest lender by assets. It made higher profits for a 4th quarter in a row, which was driven by rising net interest income and growth at its Islamic banking operations.
Southeast Asia’s third-largest economy has recovered in 2017 after a challenging 2016, when growth slumped to its slowest pace since the global financial crisis in 2009. The turnaround has buoyed business for banks. Maybank posted a net profit of $496.70 million for the 3rd quarter ended September, up 13% a year ago. Its net interest income rose 8.6% while Islamic banking income increased by 24.3%. Revenue climbed 2.7%.
Earlier, CIMB Group Holdings, the number two lender of the country, reported a surprise rise in quarterly profit, helped by an improving domestic economy.
Malaysia‘s central bank has said the economy was on track to register growth of 5.2% to 5.7% this year, and may even exceed that estimate.

#Tanzania: Bank of Tanzania Dispels Islamic Bank Closure #Rumours

The Bank of Tanzania has come in motion in order to prevent a possible run on deposits at the sharia-compliant Amana Bank. This happend after reports went publich on social media of the financial institution's imminent closure.
Bank of Tanzania‘s Governor Florens Luoga stated that Amana Bank and other lenders were very stable and there was really no reason for panic over deposits. He confirmed that the bank is continueing with normal operations, and warned anyone speading false information about the future of some banks, including Amana. In these cases stern legal action would be taken. Additionally the Head of marketing and business Dassu Mussa said Amana Bank has sufficient liquidity. "All we can do is to make sure that our business is running efficiently and properly and we are very confident it is doing so."

#UAE #Islamic #banking #assets #surge 6% to $146bln in 10 months

Assets of the Islamic banks operating within the UAE totalled to 535 billion AED by the end of last month. That is around 6% growth since the beginning of this year. And it accounts for 20.2% of the total banking assets in the country. These are valued at around 2.639 trillion AED during the first 10 months of 2017, according to figures of the UAE Central Bank.
This obvious growth in Sharia-compliant financial operations in the UAE mirror the significant development of these kind of banking products which have been enjoying impressive growth across the whole region in the last few years.

According to Central Bank figures, the value of credit provided by the Islamic Banks since the beginning of 2017 until October surged to 361 billion AED, a growth of 7.7% against that of December 2016.
Loans and credit facilities provided by Islamic banks make up 22.8% of total loans provided by the entire banking system in the UAE, valued at 1.584 trillion AED by the end of last month.

Public awareness key to boost Islamic finance in #Turkey

According to the General Council for Islamic Banks and Financial Institutions (CIBAFI), Turkey should raise public awareness of Islamic finance to boost the sector's market share. CIBAFI's secretary general, Abdelilah Belatik, called Turkey's target of raising Islamic banks’ share to 20% by 2023 ambitious but achievable. The council’s annual gathering to discuss Islamic finance will be held in Turkey next April. Belatik said that countries like Turkey and Indonesia and regions such as Central Asia and Africa are important as they have a great growth potential in the Islamic finance sector. Belatik said they work with countries which lack the infrastructure and regulation for Islamic finance to show them its role in the economy. He also underlined Islamic finance's significance for financial stability.

Islamic finance can play key role in PPP delivery

The fast-growing Islamic finance industry can play a significant role in closing the infrastructure gap through public-private partnerships (PPP). According to the World Bank, shari‘ah-compliant assets have grown exponentially in the past two decades, accumulating nearly $1.9 trillion in assets. The Gulf Cooperation Council has the largest share of shari‘ah-compliant assets, at 42% of the global total, followed by Middle East and North Africa with 30% and the rest of Asia at 22%. Islamic banking and Islamic deposits grew faster than their conventional equivalents in Qatar, UAE, Saudi Arabia, Malaysia, Indonesia and Turkey. Developing countries in Asia will need to invest $26 trillion from 2016 to 2030, or $1.7 trillion per year to eradicate poverty and respond to climate change. The infrastructure needs of Sub-Saharan Africa exceed $93bn annually. Islamic finance instruments like Istisna and Ijarah can be used for large, longer-term financing arrangements, such as financing for power projects, infrastructure and transport equipment.

The rise of the Islamic capital market

The Financial Services Authority (OJK) recently licensed Indonesia’s first full-fledged Islamic fund management company, Paytren Asset Management (PAM). This newly established Islamic fund manager is another milestone in the development of the country’s Islamic capital market.

Islamic finance calls for more talents

Over the last few years, Islamic finance has witnessed a remarkable growth at 15 to 20% Compounded Annual Growth Rate (CAGR). The industry's rapid growth undoubtedly creates a huge demand for new expertise. Like other countries, Malaysia also needs a significant boost of Islamic finance talents. Based on Bank Negara Malaysia’s Financial Sector Blueprint 2011-2020, the financial sector would require an additional 56,000 employees of whom 22,400 are specifically needed to support the Islamic sector by 2020. According to a survey by the Finance Accreditation Agency (FAA), 80% of the respondent countries believed that the available Islamic finance talents do not satisfy industry needs. Malaysia has taken the lead and established three training institutions. They are the Islamic Banking and Finance Institute Malaysia (IBFIM), the International Centre for Education in Islamic Finance (INCEIF) and the International Syariah Research Academy for Islamic Finance (ISRA).

SECP okays Shariah-compliant trading counter at PSX

The Shariah Advisory Board (SAB) of the Securities and Exchange Commission of Pakistan (SECP) has reviewed the proposal of Shariah-compliant trading counter. The main feature of the proposal is to convert the T+2 settlement into T+0 settlement mechanism in the Shariah-compliant securities listed on the Pakistan Stock Exchange (PSX). The Shariah Advisory Board has granted approval of the proposed trading counter. The board also reviewed and granted approval of three AAOIFI standards: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.

#Djibouti : Ismaïl Omar Guelleh a foi en la finance islamique

Le Global Islamic Finance Award, remis le 6 septembre au président Ismaïl Omar Guelleh, récompense la formidable croissance de la finance islamique à Djibouti. Depuis la libéralisation du secteur bancaire, en 2006, les trois acteurs du pays, Saba Islamic Bank, Salaam African Bank et East Africa Bank, sont parvenus à s’octroyer 25% des comptes et 21% du total des actifs de la place. En 2016, pour veiller à la régularité des produits financiers, le pays a d’ailleurs installé un Comité national de la charia. Depuis six ans, la Banque centrale de Djibouti organise le grand rendez-vous africain de la finance islamique, l’International Islamic Banking Summit in Africa (IIBSA), dont la prochaine édition aura lieu en 2018.

Madina Kalimullina: "Islamic banking recognized in #Russia"

In this interview Madina Kalimullina, adviser on Islamic economics, speaks about the Moscow Halal Expo and Islamic banking in Russia. Although legislation for Islamic banks is still missing, special groups in the Central Bank and the State Duma have been working on this topic. Today the state officially recognizes the concept of partner banking, which can be called Islamic banking. At the Moscow Halal Expo a halal installment plan was proposed, which removes all elements prohibitied from the point of view of Islamic standards. Over the last 8 years all international Sharia standards of Islamic financing were translated into Russian. So banks are gradually testing new products. This year's exhibition has two main topics. The first is cryptocurrencies and the second is multi-level marketing.

National Bank of Fujairah Structures Shari’a-Compliant Financing Solution for Malabar #Gold

National Bank of Fujairah (NBF) announced the completion of a Shari’a-compliant bullion financing transaction with Malabar Gold. It is the first bullion financing in accordance with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards on gold in the UAE. This partnership follows the launch of the AAOIFI Shari’a Standard on Gold in December 2016. The standard lays out a clear guidance on the permissibility to trade in gold in a shari’a compliant manner. It also enables Islamic finance institutions to develop new gold-based products and transactions. Vince Cook, NBF’s CEO, said he was delighted to be at the forefront of this major transaction in the gold and jewellery market. He thanked for the support of partners Malabar Gold, Amanie Advisors and World Gold Council.

Developing #Indonesia as Islamic finance hub

The world’s financial landscape has changed fundamentally over the last few years. Islamic equity funds experienced strong growth during the second half of the 1990s. In 1996, there were 29 Islamic funds, valued at US$800 million. Nowadays, Indonesia plans to become a leading Islamic finance hub. The Jakarta Islamic Index has 30 sharia shares accounting for Rp 2.1 quadrillion with 32.7% of market capitalization.

Islamic finance in #Malta

In 2008, the Malta Financial Ser­vices Authority was the first EU regulator to issue guidelines on Islamic finance, which were updated in 2015-2016. In 2016, the Malta Stock Ex­change launched an Islamic Equity Index in order to attract investment and business from the Middle East. From a legislative aspect, Malta is already well-geared to welcome new structures that provide for Islamic finance. Malta is the only EU member country whose regulatory framework provides for protected cell companies and incorporated cell companies. Thus it may easily accommodate Takaful insurance solutions. Islamic investors are given the opportunity to set up their funds as Special Purpose Vehicles, Undertakings for Collective Investment in Transferable Securities, Alternative Investment Funds or Professional Inves­tor Funds. Islamic finance institutions may also generate funds by listing on the Malta Stock Exchange.

Reserve Bank says no to Islamic banking: All you need to know

After examining the details of Islamic banking, Reserve Bank of India (RBI) has decided not to pursue the matter any further. It all started in late 2008 when former RBI governor Raghuram Rajan had stressed on the need for a closer look at the issue of interest-free banking in the country. Later, an inter-departmental group (IDG) set up in the RBI examined the legal, technical and regulatory issues for introducing Islamic banking in India. It recommended an "Islamic window" in conventional banks for gradual introduction of Sharia-compliant banking. However, no deadline was given for the proposal. This Sunday the central bank has refused to go on with the idea saying the decision was taken after considering the opportunities available to all citizens to access banking and financial services.

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