Islamic Banking

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#Iran to chair Islamic finance body IFSB in 2017

Iran's central bank will take chairmanship of the Islamic Financial Services Board (IFSB) for the year 2017. Shut out of the global system by sanctions, Iranian banks are eager to resume business with foreign lenders with deals ranging from funding infrastructure to insuring foreign trade. The IFSB Council said late on Wednesday it had appointed Iran's central bank governor Valiollah Seif as chairman, with Bangladesh Bank governor Fazle Kabir as deputy chairman. Iran's entire banking system follows Islamic principles, there are 34 Islamic banks that held total assets of 14,451 trillion rials ($448 billion) as of March. This represents around a third of total Islamic banking assets globally, although Iran's version of Islamic finance can differ with what is observed in other Muslim-majority countries.

#Sukuk Market In 2016: Year In Review

Global currency sukuk continued to expand in 2016. Increasing issuances were observed in U.S. dollar, Indonesian rupiah, and Pakistani rupee sukuk, though there were decreases in Malaysian ringgit and Bangladesh taka sukuk compared with last year. The U.S. dollar and Malaysian ringgit sukuk continued to dominate the sukuk market. The Dow Jones Sukuk Index added 17 new sukuk with a total par amount of USD 13.5 billion into the index. Sovereign sukuk continued to dominate the issuance, including USD 2.5 billion from Indonesia, USD 1.5 billion from Malaysia, USD 1 billion from Turkey, and USD 500 million from Oman. The biggest corporate sukuk issuances were USD 1.5 billion from IDB Trust, USD 1.2 billion from DP World, and USD 1 billion from Emirates Islamic Bank. Among all the new issuances, 33% was from the United Arab Emirates.

#Indonesia looks to Islamic schools to spur Sharia banking

In an effort to boost the industry, Bank Indonesia has decided to work with Islamic boarding schools known as pesantren. Anwar Basori, Bank Indonesia's head of Islamic Finance and Economy, said there is a lot of potential in the 27,000 pesantren, which have about 3.6 million students. The central bank said it is finalizing a roadmap for the program under which it will work with the Religious Affairs Ministry to help the business units of pesantren to become financially independent. The schools operate in various business areas, including mini-markets and cattle farms, and provide extracurricular entrepreneurship and Islamic finance education to students. Anwar said that the roadmap would be implemented in early 2017, starting with a pilot project.

RHB aims to be among top three in Islamic banking

RHB Bank is eyeing the top three spot in the Islamic banking space for its syariah complaint unit. RHB Islamic Bank CEO Datuk Adissadikin Ali said growth in the recent past years had been strong and that the bank could continue riding on this growth. He said the contribution of Islamic banking assets to the group’s total assets is 25% and that the aim was to grow this figure to 40% by the year 2020. The group syariah business is identified as one of RHB’s key growth areas under its Ignite 2017 transformation programme. The bank intends to achieve by 2017 a return on equity of more than 14%, double contributions from Singapore to 10%, have 30% in overseas contribution, scale growth in small and medium enterprises, and have Islamic banking accounting for 30% of its assets.

#Iran, #Russia explore setting up Islamic bank: report

Russia and Iran are exploring the establishment of an Islamic bank as the two countries expand their economic cooperation. According to Russian Energy Minister Alexander Novak, the banks are exploring the mechanism, but the related decision has not been made yet. State-linked Russian lenders Vnesheconombank, Sberbank and Tatfondbank have been developing Islamic financial products of their own over the past year. Iran is keen to diversify funding options for its companies. At present, most financing in Iran is sourced from domestic lenders with only a small portion sourced from foreign sources and the debt capital markets.

Islamic finance industry growth remains resilient

According to the Islamic Finance Development Indicator (IFDI), global Islamic finance development declined to 8.8 in 2016 from 9.9 in 2015. The report was prepared by Thomson Reuters and the Islamic Corporation for the Development of the Private Sector (ICD) and was released at the World Islamic Banking conference (WIBC) 2016. Malaysia, Bahrain and the UAE continue to dominate the IFDI report for the 4th consecutive year. However, Malaysia posted a slight decline in its overall IFDI performance in 2016. Outside of the top 15, noteworthy emerging countries that have moved up the IFDI rankings are South Africa, Morocco, Tanzania, Japan and Russia. Among the regions with high potential in Islamic finance is West Africa. Unprecedented oil price storm hindered Islamic finance performance, but not asset growth. Despite lower financial performance, Thomson Reuters maintains a positive outlook for the industry projecting Islamic finance assets to reach $3.5 trillion by 2021.

#Malaysia-#Bahrain Should Lead World's Islamic #Fintech

Malaysia and Bahrain should take the lead in exploring the potential of introducing the world’s first Islamic financial technology (fintech). According to Bahrain Economic Development Board (EDB) Director David Parker, the favourable initiatives undertaken by regulators from both countries provide a positive edge for Islamic fintech. In Malaysia, Bank Negara Malaysia Governor, Datuk Muhammad Ibrahim said a regulatory framework to enable the adoption of fintech would likely be announced by year-end. During the 23rd Annual World Islamic Banking Conference held here, Bahrain Central Bank Governor Rasheed Mohammed Al Maraj hinted that the bank would soon issue regulations to facilitate fintech solutions. Bahrain Islamic Bank CEO Hassan Amin Jarrar described the need to introduce Islamic fintech to the world Islamic financial market as "critical" and if Malaysia and Bahrain do not take the first step, other big countries will snatch away the advantages.

Islamic bank Al Baraka eyes $300 mln Tier 1 #sukuk issue in Q1 2017 -CEO

Al Baraka Banking Group is targeting the sale of capital-boosting sukuk worth $300 million in the first quarter of 2017. The announcement was made on the sidelines of an Islamic banking conference by the group's CEO Adnan Ahmed Yousef. He also added that the issue would enhance the bank's core Tier 1 capital. Al Baraka had a total capital adequacy ratio of 15.15 percent as of June 30, according to a regulatory disclosure on its website.

#Bahrain continues to stand out in Islamic finance development

According to the Thomson Reuters Islamic Finance Development Report 2016, Bahrain leads the GCC’s Islamic finance development for the fourth consecutive year. The report is jointly produced by Thomson Reuters and the Islamic Corporation for the Development of the Private Sector (ICD). Bahrain ranks first globally in terms of Governance due to its well established regulatory environment and governance mechanisms. The regulations cover Islamic financial institutions including Islamic asset management and Sukuk. Bahrain is among the top ten countries for the other indicators as well. For the Knowledge indicator, its Islamic finance ecosystem is supported by 17 providers offering Islamic finance related education including universities and institutions. Meanwhile, its Islamic financial institutions continue to contribute socially, with US$ 18.5 million charity, zakat and Qardh al Hasan funds disbursed in 2015.

Islamic banking to boost financial #inclusion in #Morocco

The Moroccan government granted state-owned Crédit Agricole of Morocco (CAM) approval to open a subsidiary of the Islamic Development Bank (IDB). In addition to IDB, three foreign banks are looking to launch subsidiaries with domestic partners after Moroccan officials encouraged partnerships rather than fully owned subsidiaries. Morocco could see additional Islamic products introduced into the domestic market if new regulations are passed. Morocco will also see the introduction of mobile-to-mobile payments next year, which is expected to extend banking coverage, as well as reduce the number of cash transactions. New regulations will allow non-bank entities and individuals to open accounts to expand e-payments to transactions such as retail, utility and mobile phone payments.

#Sukuk maintains positive outlook; undeterred by continued slowdown

Thomson Reuters has released the findings of its fifth consecutive Sukuk Perceptions and Forecast study. Despite a bleak 2015, market players remained hopeful for a robust year ahead. Core markets have adapted to ongoing low oil prices, while apprehension over expected global interest hikes has begun to subside. However, the decision from Bank Negara Malaysia (BNM) to cut short-term Sukuk issuances continues to dampen Sukuk supply. Total Sukuk issued in the first 9 months of 2016 dropped further by 18.46% to $39.8 billion from $48.8 billion for the same period in 2015. According to Thomson Reuters' Managing Director, Nadim Najjar, the global Sukuk market continued to drop in terms of volume and value during 2016. The report found that both potential demand and supply of Sukuk are expected to grow, with demand substantially exceeding supply until 2021.

Online #gold platform HelloGold endorsed as Shariah-compliant

#Malaysian fintech HelloGold is the first online gold platform to be endorsed as Shariah compliant by the Shariah Supervisory Board of Amanie Advisors. CEO Robin Lee showcased the savings platform at the global launch of the Shariah Standard on Gold at the World Islamic Banking Conference. According to Lee, with this platform everyone can buy gold and users are able to buy investment grade gold easily through their smartphones. He added that gold is a particularly good safe haven investment against foreign exchange risk and market shocks. Over the last 12 months, gold has risen by 17% against the Malaysian ringgit, 10% against the Thai baht, 9% against the Indonesian rupiah, 17% against the Philippine peso and 12% against the Singapore dollar. The HelloGold app is now available for use in Malaysia and is currently available on Google Play.

Islamic Development Bank prices $1.25 billion #Sukuk issuance

The Islamic Development Bank (IsDB) has successfully priced a $1.25 billion, five-year Sukuk under its $25 billion Trust Certificate Issuance Programme. The Sukuk was priced at par at 2.263%, to be payable on semi-annual basis. This issuance marked the Bank’s second benchmark issuance in 2016. In terms of the final allocation, the distribution was well diversified with 72% allocated to the Middle East and North Africa (MENA) region, 25% to Asia and 3% to Europe. Central banks and official agencies were allocated 90% followed by 10% to banks. IsDB’s CFO Ahmet Tiktik thanked the member countries and expressed his hope that this funding will continue to support their developmental needs.

#Islamic #banks slowly #embrace #green #finance – survey

Islamic banks are gradually embracing socially responsible finance, from renewable energy to microfinance efforts, helping unlock new funding sources for environmentally-friendly projects, an industry survey shows. The two sectors have developed separately from each other, but green projects could benefit from tapping Islamic banks in countries like the United Arab Emirates and Malaysia, where they now hold a quarter of total banking assets.
Around two-thirds of financing in Saudi Arabia follows Islamic principles, which forbid investing in gambling, tobacco and alcohol. This resembles the screening methodology used by ethical funds in Western markets. Green finance is increasingly important for Islamic banks seeking to differentiate themselves from their conventional peers, the Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI) said in a report.

#Meezan Bank, #ISRA sign #MoU to promote #Islamic #financing

Meezan Bank, Pakistan's first and largest Islamic bank, has recently signed a multi-faceted Memorandum of Understanding (MoU) with the International Shari'ah Research Academy for Islamic Finance (ISRA), aimed at jointly expanding the role of Islamic finance through collaborations on various aspects of this field.
This comprehensive MoU further sets out a clear roadmap for research into the domains of Shariah and Islamic finance that should be facilitated by exchange of best practices in research and training. Meezan Bank would also be providing joint services with respect to arrangement of seminars, conferences, workshops and short-term courses.
While commenting on this agreement, Irfan Siddiqui said: "This MoU recognises the critical need for addressing the Islamic finance challenges through collaborations and partnerships in order to meet the heightened demand for Islamic banking products and services. The Meezan Bank is committed to develop and promote Shariah-compliant finance industry and we are quite hopeful that this agreement would enhance opportunities through increased exposure and knowledge sharing."

#Islamic #bank opens in #Glasgow and already has 2000 customers

Britain's first Islamic law compliant stand-alone High Street bank has opened for the first time in Scotland.
Al Rayan Bank, formerly the Islamic Bank of Britain (IBB), which has just over 2000 customers north of the border, has opened an office in Glasgow. The West Midlands-based bank will not pay or charge interest and is founded on an Islamic financial model in which the customer and the bank share the risk of any investment on agreed terms, and divide any profits between them. The move north comes some 12 years after IBB opened its first branch on Edgware Road in London.
A bank spokeswoman said that a key reason for the move was that it was able to form a partnership in Glasgow with the Islamic Finance Council, the advisory and developmental body, with which it shares its office location in Fitzroy Place, Glasgow. Cabinet secretary for economy, jobs and fair work, Keith Brown said: “Al Rayan Bank’s welcome decision to expand its operations into Scotland for the first time highlights the real opportunity offered by ethical finance. This announcement reflects Scotland’s growing profile in ethical finance."

#Accounting meets #religion in challenge for #Islamic #banks

Reconciling accounting standards and religious principles is challenging the Islamic banks and their regulators as they adapt to new international book-keeping rules due to come into force in 2018. The new rules, known as IFRS 9, will leave their mark on all major products used by Islamic banks - from simple savings accounts to Islamic bonds - and impact their bottom-lines. Banks around the globe are gearing up to implement IFRS 9 from January 2018, posing a particular challenge for many Islamic finance contracts as they change the way financial assets are classified and measured, requiring lenders to book expected losses in advance. The problem for most Islamic financial products is that their accounting treatment can often diverge from the actual economic substance of a transaction, a key concept behind IFRS 9. This has prompted the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to set up a working group to look at ways to revise its rules

Sharia-compliant Sacco makes waves in northern #Kenya

A Shariah-compliant Sacco that promises to cushion pastoralists from incurring losses during droughts has opened a second branch in Wajir town. Crescent Takaful Sacco (CTS), the first Shariah-compliant Sacco in Kenya, seeks to engage and provide financial inclusion to the poor in northern Kenya. The Wajir branch is the first outside Nairobi. CTS has various products tailor-made for the arid and semi-arid region such as the Mifugo Kash-Kash product that links pastoral traders to potential markets. According to the Sacco’s Chairman Hassan Bashir, livestock traders are eligible for up to 70% financing through the product. The product is mainly delivered using the Islamic contracts of Mudharaba and Musharaka. In both contracts, the profit share is pre-agreed upfront and a distinct profit margin is charged on each delivered transaction.

ITFC plans to provide $1B in funds for #Turkish SMEs

The International Islamic Trade Finance Corporation (ITFC) has signed an agreement with Turkey's Small and Medium Industry Development Organization (KOSGEB) to support SMEs. The group plans to provide $1 billion for Turkish companies. The Memorandum of Understanding (MoU) was signed by ITFC CEO Hani Salem Sonbol and KOSGEB President Recep Bicer. The MoU also examines the possibility of providing Islamic Trade Finance solutions to SMEs in Turkey. The suggested cooperation program includes developing joint programs for capacity building activities for SMEs in Turkey and Reverse Linkage Programs for transferring KOSGEB's know-how to other OIC member countries.

The rise of the #Sukuk

The financial crisis of 2008-09 shifted the world's focus towards greater accountability, enhancement in transparency, improvement in governance and a strict limit on leveraging. This has persuaded the world to look towards Islamic finance as a viable financial alternate. The asset-backed nature of Islamic financial transactions, in addition to the prohibition on speculative activities make it a more stable system than its conventional counterpart. Sukuk is being used by many developing countries as a tool of fiscal policy for economic development. Projects like roads, railways, airports and hospitals etc, are particularly appropriate for Sukuk financing. The Pakistani government has issued total 18 domestic Sukuk and three international Sukuk. The financing of infrastructure developmental projects can be achieved through issuance of Sukuk.

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