Islamic Banking

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#Kuwait's Warba Bank part of IDB's USD 1.2 billion venture

Warba Bank announced that it will be partaking in a USD 1.25 billion five-year joint venture with the Islamic Development Bank (IDB). Warba Bank said that subscription for the deal had attracted regional and international financial institutions. The amount of issued bonds reached over 136%, around USD 1.7 billion. Warba Bank indicated that it would reap around 2.6% of annual income due to the deal. The IDB issued around 53% of the bonds to investors from the MENA region and Europe, while 47% of the bonds target investors from Asia.

#Malawi approves #Islamic #Banking, Sharia-compliant services

The Malawi government has approved to embrace the Islamic banking system, however not through fully fledged Islamic banks, but through the "window model" only. According to Reserve Bank Governor Dalitso Kabambe, bank supervisors will shortly be engaging with each bank to prove guidance on reporting requirements of Sharia-compliant products and services. Kabambe promised that as soon as the guidelines are developed, they will be shared with each bank. In relation to this, the Muslim Association of Malawi recently invited an expert in Islamic Finance who facilitated the meeting. The South African Mufti, Ismail Ebrahim Desai, a renowned scholar in Islamic Finance advised the government on issues of proper regulation and supervision.

Sultan Nazrin Says Relentless Support For #Islamic #Finance Is Critical

The Sultan of Perak State, Sultan Nazrin Muizzuddin Shah, spoke at the opening ceremony of the 14th Kuala Lumpur Islamic Finance Forum (KLIFF) 2017. He said Islamic finance has come far but there are at least six challenges at the moment. He said challenges at present include lower oil prices and changes in the global regulatory and supervisory framework. Sultan Nazrin said Islamic finance managed to cope better than its secular counterpart in terms of growth, albeit from a smaller base. Sultan Nazrin addressed the six challenges faced by the industry. In his view, the Islamic banking industry needs to improve profitability, the industry needs to maintain high standards of loan quality and corporate governance. Islamic capital markets need to grow at a faster pace, the negative trends of corporate issuances of sukuk need to be reversed. The Islamic equity market and takaful insurance need more development. Sultan Nazrin reminded that Islamic finance community must not be deviated from the objective of doing good.

Bank Negara: Islamic finance will focus on quality growth

#Malaysia is second only to Saudi Arabia in terms of Islamic banking in the world. Of the US$71 billion Syariah-compliant asset funds managed, 33% are in Malaysia. The country’s central bank, Bank Negara Malaysia (BNM) continues to raise awareness of Malaysia as an international Islamic financial centre. According to BNM assistant governor Marzunisham Omar, the next area of focus is quality growth. The 16 Islamic banks and 11 takaful operators are seeing value-returns by embarking on initiatives through Value-Based Intermediation (VBI). VBI is a business strategy by Islamic financial institutions, driven by a desire to create value rather than focus on short-term objectives. VBI is a business strategy of the institution to drive growth and sustain growth. It is a collaborative effort by the central bank together with Islamic banking institutions. Today nine Islamic banks are already involved and the central bank is working to develop a value-based scorecard to measure the success of banking institutions.

#Islamic #finance climbs higher on UNDP agenda

The 72nd session of the UN General Assembly was held from September 19 to 25 in New York. The event was co-organised by the Islamic Development Bank (IDB) and the UN Development Programme (UNDP). It emphasised that the successful implementation of the SDG (Global Goals) require a significant amount of financial resources. The UNDP once more mentioned Islamic finance and how it could be tapped as a scalable funding source for global development. According to Magdy Martínez-Soliman, UN assistant secretary general, the gap in SDG financing is currently estimated at $2.5tn every year. He noted that official development assistance alone is not an adequate source of financing, but Islamic finance could effectively come to the rescue. As a key driver, the IDB has established the Global Islamic Finance and Impact Investing Platform (GIFIIP) to create the framework of the investing ecosystem. The GIFIIP’s role is also the matchmaking between Islamic finance investors and other players, such as business incubators, development organisations and inclusive business ventures seeking capital.

#Algeria: 6 government banks to offer Islamic banking by 2018

Algeria’s Prime Minister, Ahmed Ouyahia, announced that Islamic banking is to be approved in two public government banks before the end of this year and will be approved in four other banks in 2018. According to Ouyahia, this funding was inevitable because of the country's difficult economic and financial situation, and it will be limited in time because it will continue till no later than 2022. Algeria has about 29 banking institutions, seven of them are government-owned public banks, and more than 20 foreign banks from the Gulf countries, others are French and one is British. The Algerian government has applied Islamic banking in a limited way through the Zakat Fund of The Ministry of Religious Affairs and Wakfs, that was launched in 2003. The country has been facing an economic crisis for three years due to the fall in oil prices. Its foreign exchange earnings fell from 60 billion dollars in 2014 to 27.5 billion dollars at the end of last year.

#Brexit suspense casts shadow over #UK as an Islamic finance hub

Uncertainty over the UK’s future status as a financial hub after leaving the European Union (EU) is already casting a shadow over London’s Islamic finance sector. It is estimated that London would lose at least 10,000 banking jobs and 20,000 roles in financial services as clients move €1.8tn of assets out of the UK. The banking exodus would also hit the Islamic finance sector in London, which is the largest globally in a non-Muslim jurisdiction. London currently hosts more than 15 large banks that operate Islamic finance windows and dozens of related service providers. A banking lobbying group has already urged the UK government to introduce post-Brexit laws that make sure that demand for Islamic finance services does not diminish. As long as the UK gives no clear direction whether and how it would excel as a financial hub, competitors will continue positioning themselves as alternative locations. Within the EU, Luxembourg and Dublin, and partly Frankfurt, have good chances to take on roles as Islamic finance hubs for Islamic finance institutions with business in the EU.

MSM okays 35 Sharia compliant firms

Muscat Securities Market (MSM) adopted a list of Sharia compliant companies for the second quarter of 2017. The list of companies includes 35 public shareholding companies: Al Saffa Food, Al Anwar Ceramic Tiles, Al Izz Islamic Bank, Al Jazeera Services, Al Kamil Power, Al Madina Takaful, Al Maha Ceramics, Bank Nizwa, Computer Stationery Industry, Dhofar Beverages and Food Stuff, Gulf International Chemicals, Gulf Mushrooms Products, Gulf Quarries, Majan Glass, Muscat Gases, Muscat Thread Mills, National Biscuit Industries, National Real Estate Development, Oman Cables Industry, Oman Cement, Oman Fisheries, Oman Flour Mills, Oman International Marketing, Oman Packaging, Oman Refreshments, Omani Telecommunications, Ooredoo, Port Services Corporation, Raysut Cement, Salalah Port Services, Shell Oman Marketing, Takaful Oman Insurance, United Power, and Voltamp Energy. The list is reviewed every three months by adding standards-compliant companies and eliminating those that lost their eligibility.

Silk Bank to grow in Islamic banking

#Pakistan's Silk Bank plans to expand its Islamic banking business amid growing demand for Shariah-compliant financial products in the country. The State Bank of Pakistan has given approval to the bank for opening of 20 Islamic and 15 conventional branches this year. Silk Bank CEO Shaukat Tarin said the bank was going to reduce the size of corporate banking, but increase consumer and SME segments. The bank’s consumer banking portfolio continued to grow, while its non-performing loans fell by Rs10 billion in January-June 2017. The bank also made its commitment to revive the mortgage business in the current low interest rate environment. Shuja Alvi, head of investment at Silk Bank, said the bank continued to make heavy investments. Since acquisition, the sponsors have invested Rs430 billion in the bank through multiple funding.

Deposits of Islamic banks grow 10pc

The State Bank of #Pakistan (SBP) issued the Islamic Banking Bulletin for April-June. It reveals that deposits of the Islamic banking industry increased by Rs156 billion or 10% quarter-on-quarter to Rs1,720bn. Deposits of the overall banking industry grew 6.5% over the same period. The share of Islamic banks’ deposits in overall banking industry’s deposits increased to 13.7% at the end of June from 13.2% a quarter ago. This growth helped Islamic banks improve their asset base. The share of Islamic banks’ assets in overall banking assets was 11.6pc at the end of June. Investments also improved thanks to sukuk worth Rs71bn that the government issued in June. Net investments of the Islamic banking industry increased Rs48bn or 9.9% in April-June to Rs537bn. SME financing increased to 3.2% and the share of agricultural financing stood at 0.4% at the end of June.

Hong Leong Islamic lends RM350m to TERAJU

Hong Leong Islamic Bank (HLISB) has pledged RM350 million for the Bumiputera Agenda Steering Unit (TERAJU) via its new Bumiputera companies programme. Of that amount, RM225 million will go to working capital and the balance for asset acquisition. The programme aims to increase Bumiputera SME's participation in the Malaysian economy by enabling small medium enterprises (SMEs) to scale up and compete in the open market. HLISB chief executive officer Jasani Abdullah said the bank targets to provide financing facilities to between 20 and 30 companies annually. He pointed out HLISB would be focusing on industries such as construction and infrastructure, telecommunications, agriculture, manufacturing and green technology sectors. Meanwhile, TERAJU chief executive officer Datuk Husni Salleh said HLISB's participation would assist Bumiputera participants to expand locally and overseas.

Conditions Conducive for Islamic Finance Expansion in #Morocco- Al Baraka Bank

Bahrain’s Al Baraka Bank deems that the regulatory framework in Morocco is conducive for the launch of an Islamic finance venture. The Bank’s Chief Executive, Adnan Ahmed Yousif said Al Baraka targets the expanding Islamic finance in Morocco in effort to diversify assets and revenues in Africa. Morocco is attractive for Islamic banks because of a competitive landscape that is free from large western lenders. Yousif added that reforms were being considered, but complete tax neutrality towards Islamic finance contracts was still needed. Bahrain’s Al Baraka group forged a partnership with Morocco’s BMCE Bank of Africa to create AL Baraka Maroc, which aims at creating a network of 25 agencies in Morocco.

Six #Islamic #banks collaborate to develop #waqf #fund

Six Malaysian Islamic banks have agreed to jointly develop a waqf fund which focuses on projects in four areas — economic empowerment, education, health and investment.
The banks are namely: Affin Islamic Bank Bhd, Bank Islam Malaysia Bhd, Bank Muamalat Malaysia Bhd, Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat), Maybank Islamic Bhd and RHB Islamic Bank Bhd . They have signed a Waqf Fund Strategic Collaboration Agreement.

Rise of #Islamic #finance meets #human #capital #gap

The strongly growing popularity of Islamic banking and Islamic finance and its increasing global spread has led to a considerable undersupply of talent in this sector. Both the Middle East and Southeast Asia, but also new regions currently adapting to the alternative finance system such as in Africa and Central Asia are effected.

Estimations are that there is a shortfall of between 8,000 and 10,000 in main Islamic finance fields in Gulf Cooperation Council countries alone, plus more in peripheral sectors such as law and regulatory affairs, financial technology, insurance and others. Altogether, as the industry continues to grow, at least 56,000 people will be needed to serve the Islamic financial sector in the coming years, according to the Finance Accreditation Agency of Malaysia.
“Islamic banking assets in six core markets – Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey – are estimated to reach a combined asset volume of $1.8tn by 2019,” says Dr. Amat Taap Manshor, the FAA’s CEO. “But the human capital meant to support the industry is still in its infancy, and shortages will be felt most acutely in the capital market sector,” he added.

#PNB expanding #Islamic #finance agenda: Wahid Omar

Permodalan Nasional BHD is pushing for much bigger Islamic financial activities in order to turn Malaysia into a centre of global Islamic banking. In an interview to mark his one-year stint in the country’s largest unit trust fund, group chairman Tan Sri Abdul Wahid Omar explains how PNB and its strategic companies will intensify efforts to boost syariah-based investment and financing products.
Regarding the Islamic finance agenda being so important to PNB it was asked, if it is tied to the government’s objective of making Malaysia the Islamic financial hub of the world.
Mr. Tan Sri Abdul Wahid Omar answered: „Indeed, if you look at the aspirations of our unitholders, they want syariah-compliant unit trust funds. I think this was why back in 2008, there was a fatwa that investments made in Amanah Saham Nasional Bhd were permissible. This fatwa was issued at the national level and 10 states adopted the fatwa, excluding Selangor and Penang. Over the past year, we had been engaging with the Selangor Mufti Department and based on those engagements, they revised their fatwa positively. So starting from April, investments in ASNB funds are “harus”.

#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.

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