Malaysia

#Malaysia begins Islamic stock lending

Malaysia’s stock exchange (BMSC) has launched a framework for Islamic stock lending. The introduction of Islamic stock lending aims to provide a Shariah-compliant alternative to the securities borrowing and lending negotiated transaction framework (ISSBNT). According to Bursa Malaysia, Islamic stock lending will provide a more facilitative trading environment and improve trading liquidity. Any person approved by BMSC to be an approved supplier may enter sell its own securities. An approved user is required to have a minimum of RM 50 million (USD 12.2 million) in shareholders funds. Initially, close attention will be given to extending Islamic exchange traded funds in particular, as well as enhancing levels of liquidity.

Realising SDGs through Islamic finance

According to Sultan Nazrin Muizzuddin Shah, Islamic finance has a variety of social finance tools which can be used to increase funds and mobilise donations from a diverse range of sources. Through zakat, sadaqah and waqf, Islamic finance enshrines sustainability, responsibility and generosity. The International Federation of Red Cross and Red Crescent Societies (IFRC) is now looking to the tools of Islamic finance for humanitarian funding. The United Nations’s Sustainable Development Goals (SDGs) are also concerned with protecting the planet and conserving the environment. Malaysia has paved the way for green sukuk and this may become the catalyst for further responsible investments all over the world.

Muslim countries should tap into #green #sukuk market, says CIMB Islamic

According to CIMB Islamic Bank CEO Rafe Haneef, Muslim countries and customers with such affinity should tap into the green sukuk market, given the estimated US$45 trillion demand for such assets. He added that green sukuk, was very much part and parcel of shariah compliance, which should be halal and sustainable. In the context of global sukuk, the total size per year is about US$45 billion to US$50 billion, so green bonds are already five times the size of sukuk. RAM Rating Services deputy CEO Promod Dass said there was US$3 trillion worth of green investment needs in Asean from 2015 to 2030. Maybank Group global banking head Datuk Muzaffar Hisham opined Malaysia was in the right direction of participating in the green sukuk sector. He added that appetite for green investment was growing, the only question remaining was how to accelerate it.

Bursa #Malaysia launches Islamic Securities Selling and Buying Negotiated Transaction

Bursa Malaysia launched the first Shariah-compliant alternative to the Securities Borrowing and Lending Negotiated Transaction (SBLNT) framework, called Islamic Securities Selling and Buying Negotiated Transaction (ISSBNT). The new ISSBNT framework is based on the SBLNT model and is expected to provide a more facilitative trading environment for securities. Bursa Malaysia CEO Datuk Seri Tajuddin Atan said market participants would now have an alternative avenue which is compliant with Shariah principles. The model was chosen because it is more widely used by the market due to its flexibility. Tajuddin noted that ISSBNT is expected to bring an uplift of around 5 to 10% growth in funds transaction in the next 12 months.

The new #sukuk way for efficient construction financing

#Malaysian real estate developer SkyWorld is raising some RM50mil under tranche one of the RM600mil sukuk musharakah programme for its SkyAwani Residence development in Kuala Lumpur. The novel sukuk transaction is the first securitisation of progress billings combined with affordable housing. RAM Ratings Services has assigned a preliminary AA3/stable rating for the sukuk, while Danajamin Nasional is guaranteeing the support facilities. Developed, arranged and advised by NewParadigm Capital Markets, the project has achieved 100% sales. According to NewParadigm executive director Danny Kwan, the primary objective of this financial programme is to monetise the unbilled sales upfront rather than later. It provides for more efficient cashflow management for the residential developer.

Ratings scheme planned for #Islamic #endowments

Islamic institutions in Bahrain and Malaysia are developing a ratings scheme for Islamic endowments, or awqaf. The Bahrain-based Islamic International Rating Agency and the Malaysia-based International Institute of Islamic Waqf (IIIW) hope that greater accountability in the management of awqaf can help integrate them into Islamic financial markets. This could mobilize idle assets which are estimated to be valued between $100 billion and $1 trillion across the globe. Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims. Most Awqaf do not disclose financial figures, but their underperformance is believed to be considerable since they have traditionally been run by administrators rather than investment managers.

First Shariah-compliant commodity ETF launched by Affin Hwang AM

Affin Hwang Asset Management (Affin Hwang AM) has launched its first Shariah-compliant exchange traded fund (ETF) with investment results that closely track the performance of gold prices. The new TradePlus Shariah Gold Tracker will invest a minimum of 95% of its net asset value in physical gold bars purchased from the London Bullion Market Association (LBMA). The remaining balance is invested in Islamic money market instruments and Islamic deposits for liquidity purposes. Affin Hwang AM managing director Teng Chee Wai said the fund provides an efficient entry point to gain exposure to gold by tracking the LBMA Gold Price AM index. Certified by advisory firm Amanie Advisors, each unit of the fund is physically-backed in a secure vault. Investors are provided with an option for physical redemption, for a minimum redemption unit block of 500,000 units, which is equivalent to an estimated 5kg of gold.

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.

#Takaful #Malaysia forms partnership with Ambank Islamic

Syarikat Takaful Malaysia said it has formed a partnership with AmBank Islamic and will market its general takaful products across the country. The takaful operator said that general takaful products for motor, fire/house and personal accident will be distributed across Ambank Islamic's distribution channels. The two companies will also promote new general takaful solutions tailored to Ambank Islamic's customers. Takaful Malaysia group CEO Datuk Sri Mohamed Hassan Kamil said he was delighted to bring the group's general takaful solutions to serve the evolving needs of AmBank Islamic customers.

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.

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.

Islamic finance key to Sarawak's infrastructure growth, says RAM Ratings

According to RAM Rating Services, the infrastructure growth in Sarawak is expected to be mainly funded by Malaysia's vibrant sukuk market. This year sukuk has been the preferred funding route for Sarawak-based entities, with majority from the power sector. Issuers from the port, construction, property, manufacturing, plantation, oil and gas support services, financial services and telecommunication sectors have tapped into the sukuk market as well. RAM Ratings deputy CEO Promod Dass said Malaysia's sukuk market will remain a key funding avenue for the infrastructure development in Sarawak. He applauded the Malaysian government and Securities Commission for building a solid foundation for the sukuk 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).

Maybank Islamic launches rent-to-own #housing #scheme

Maybank Islamic has launched a rent-to-own (RTO) housing scheme. Named HouzKEY, the product is targeted at first-time house buyers and those who want to upgrade their homes. According to Maybank Islamic's CEO, Datuk Mohamed Rafique Merican, HouzKEY addresses the growing issue of concern for affordable home ownership. The new product will initially be made available to Maybank employees and is slated to be rolled out to the general public in early 2018. HouzKEY is the first such RTO product in the country fully enabled on a digital platform, with the application and submission of supporting documents being required to be made online. To be eligible, applicants should have a household income of at least RM5,000 and commit to a minimum rental tenure of five years. They will have the option to purchase the property after one year at a pre-agreed price.

MBSB-AFB Islamic banking entity to start off with RM42 bil assets, says CEO

Malaysia Building Society Bhd (MBSB) is expected to start off its new banking entity in the second quarter of next year with RM42 billion in Islamic assets. The company has recently secured an Islamic banking licence by acquiring Asian Finance Bank (AFB) in a RM644.95 million deal. MBSB’s banking subsidiary will be the country’s second largest standalone Islamic lender after Bank Islam Malaysia, which had assets of RM54.25 billion as at June 30. After the merger MBSB will continue to be the listed holding entity, while AFB will be the wholly-owned subsidiary that runs the banking business. According to MBSB's CEO, Datuk Seri Ahmad Zaini Othman, the banking entity will have a similar composition, with 70% in retail banking and 30% in corporate banking. Also, it will solidify its presence in the property, housing and infrastructure segments.

Global #sukuk likely to hit US$90b this year

Global sukuk issuance will likely reach US$85 billion-US$90 billion (RM356-377 billion) in 2017, driven by stronger issuance from Saudi Arabia, Malaysia, Qatar, Bahrain and Oman. RAM Rating Services said Saudi Arabia and its GCC neighbours had raised sukuk worth US$42 billion at end-October, which was a 215.3% increase from a year ago. Malaysia recorded RM138.7 billion worth of sukuk issuance as at end-October, which exceeded RAM’s full-year projection. Bank Negara Malaysia’s decision to maintain overnight policy rate at 3.0% could spur more sukuk issuance before the end of the year after hinting that monetary policy might be tightened next year.

Bank Islam issues its third #Sukuk #Murabahah RM300 million

Bank Islam Malaysia Bhd (BIMB) had obtained approvals from Bank Negara Malaysia and the Securities Commission Malaysia to establish the third subordinated Sukuk Murabahah programme with the issuance of RM300 million. BIMB said the sukuk has tenure of a 10-year non-callable five years with maturity date on November 12, 2027. BIMB noted the proceeds shall be utilised to finance Bank Islam’s Islamic banking activities, working capital requirements and other corporate purposes.

MBSB buys Asian Finance Bank for RM645m, set to be an islamic bank

#Malaysia Building Society Bhd (MBSB) is buying Asian Finance Bank (AFB) for RM644.95 million in cash. MBSB stated that the proposed merger would result in it becoming a full-fledged Islamic bank. MBSB entered into a conditional share purchase agreement with the shareholders of AFB. MBSB will pay RM396.89 million in cash and RM255.51 million via the issuance of 225.51 million new MBSB shares at RM1.10 each. The cash option was based on a valuation of 1.2 times AFB net assets valued at RM496.12 million as at December 2016, while the shares option was based on a valuation of 1.5 times the accepted net asset. MBSB said the proposed merger was expected to be completed by the first quarter of 2018. The subsequent tranches of the proposed transfer of assets and liabilities and disposal of the residual should complete in three years from the first tranche transfer.

Malaysian Islamic banking to heat up as smaller lenders #merge

Malaysia Building Society (MBSB) is a step closer to becoming a full-fledged Islamic bank after the proposed acquisition of Asian Finance Bank (AFB). If the merger takes place, the tie-up between non-bank MBSB and AFB would create the country's second largest Islamic bank.

HSBC hopes for more Islamic financing in Southeast Asia #rail #projects

HSBC Bank #Malaysia hopes to see a lot more Islamic financing instruments used in the development of the Southeast Asia railway network which connects China to the region. CEO Mukhtar Hussain said HSBC had a unique value proposition in this matter, being the first bank to issue sukuk in Malaysia. The railway network involves building more than 3,000 km of rail lines from China’s Yunnan province through Laos, Cambodia, Thailand, Malaysia, Singapore and Indonesia. It is one of China’s seven main transport routes under the Belt and Road Initiative (BRI). The project adopts a public-private partnership financing approach, one that puts the financing requirements efficiently to the private sector and therefore can relieve the pressure from the nations’ budget.

Syndicate content