IslamicFinance.de

Faith-based mutual funds typically screen out stocks of companies that violate the tenets of a given religion or religious denomination. In looking at faith-based funds, be aware that the stock-picking methods vary widely from fund to fund. And potential investors should avoid making assumptions about a fund’s screens or its stance on a moral issue based solely on its expressed religious affiliation. Faith-based funds will use positive and negative screens to focus their investment power on enterprises they deem worthwhile and financially sound. However, for the most part, the screens that faith-based funds use have a minimal impact on the overall stock choices available to them, and are therefore no excuse for poor fund performance over time.

Dubai Islamic Bank, the UAE’s largest Islamic lender, is refocusing on growth, says CEO Adnan Chilwan. This year, Chilwan expects a double-digit rise in DIB’s financing portfolio for the first time since 2008. Chilwan says that in early 2014 DIB’s ratio of non-performing assets will fall below 10%. DIB is reaping the benefits of a rebounding local real estate market, but Chilwan says he is not fuelling another bubble in the sector. He also says the bank aims to reduce the proportion of its portfolio dedicated to real estate financing to between 22% and 25%. According to Chilwan, an important part of efforts to sustainably grow the bank’s revenues has been a greater focus on retail: including personal and car finance, as well as mortgages.

General and family Takaful companies are soon going to withdraw their constitutional petition against the Securities and Exchange Commission of Pakistan (SECP), 23 conventional insurance companies and the federation of Pakistan after a prolonged fight with the regulator to restrict competition in the Islamic insurance industry. Takaful operators are said to have struck a deal with their conventional insurance counterparts, which will allow the latter to run Shariah-compliant insurance business through parallel window operations. Some of the biggest players, including State Life, EFU Life, Jubilee Life and Adamjee Life are reported to be eager to launch their Islamic window operations. In fact, some of these companies have vowed publicly to launch window operations within three months of the lifting of the SHC’s restraining order.

Asia needs to invest about $8 trillion in overall national infrastructure, the use of cross-border financing and investment through Islamic finance will help to widen the investor base and lower the cost of financing for well-structured investments, the Asian Development Bank said. In recent years, Islamic finance has been enjoying growth rates of 20 per cent a year, most of which comes from Asia. Increased activity is expected in Thailand, China, Bangladesh and India as well as more traditional market such as Malaysia, Indonesia and Pakistan. The conference on Islamic Finance for Asia, opening in Manila on Monday, aims to create greater awareness on the potentials and opportunities brought about by Islamic finance to the region.

The Anti-Corruption Commission (ACC) of Bangladesh has filed 12 cases against 53 officials of five banks and the Bismillah Group for their alleged involvement in the embezzlement of funded loans worth over Tk9.9bn. The list of the accused included 13 people from Bismillah Group, 12 Janata Bank officials, eight Prime Bank officials, seven Premier Bank officials, five Jamuna Bank officials and eight Shahjalal Islami Bank officials. According to the probe report, Bismillah Group, in association with the bank officials, embezzled the money through loans against trust receipts using names of fake foreign buyers. They secured cash incentives against fake export documents, taking advantage of inland bills purchases and overpricing non-existing export items. The inquiry also found that the group laundered money abroad.

Malaysia's Malayan Banking (Maybank) has launched an Islamic asset management unit to cater to growing investor appetite for sharia-compliant investment products. Maybank asset management will leverage the Maybank group's network of business lines, which range from consumer banking to Islamic insurance, as well as its geographical presence across Asia. It aims to launch Asian-themed investment funds using a bottom-up investment strategy, with products to be marketed primarily in Malaysia and Indonesia. Maybank acquired Indonesian asset management firm PT GMT Aset Management, and it will also explore opportunities in the Middle East through Maybank Investment Bank's stake in Saudi Arabia's Anfaal Capital, according to Nor Azamin Salleh, chief executive of Maybank asset management.

Dear Reader,

IslamicFinance.de is still edited by myself, Michael Saleh Gassner. In the same time the website became part of the family's publishing house, Al Kitab.

Myself I moved to Geneva for professional reasons, working as Islamic private banker. IslamicFinance.de remains to be a private passion.

Best regards,

Michael Gassner

London's Shariah-compliant start-up Cobalt Underwriting has now written its first risk, via its agreement with capacity provider XL Group, to cover the deal to acquire a high-profile property portfolio. It has underwritten a property acquired by PARC Property Holding, advised by Amiri Capital, to acquire Park Crescent West. Cobalt CEO Richard Bishop believes the agreement serves to demonstrate that insurance should have a place at the forefront of the government's plans to promote Islamic finance in London. Furthermore, he reminded Islamic business leaders that insurance capacity that meets their needs is available in London.

The Law Harmonisation Committee is working to encourage use of Malaysian rules for cross-border Islamic deals instead of English law. Regulations are being amended to remove loopholes that discourage Shariah deals to make the nation the preferred place to settle disputes. Malaysia still has a single set of laws that govern both Shariah-compliant and non-Islamic commercial contracts, and they can sometimes render Islamic deals less competitive. However, Malaysian law is unlikely to displace English legislation in other deals, although it may find some acceptance among offshore investors who have businesses or investments in the country.

First Gulf Bank (FGB) has increased its stakes in Aseel Islamic Finance, through a purchase agreement which has raised the bank’s ownership from 40% to 100%. With a paid-up capital of AED 800 million, Aseel is now FGB’s Islamic banking and finance arm, planning to develop more products for small medium enterprises. Aseel Islamic Finance will maintain an independent board of directors with Hana Al Rostamani as the Chairperson, while Javed Afzal was appointed as the Chief Executive Officer.

Dear Readers,

Venture Capital has often been regarded as the ideal tool for Islamic finance, particpating in profits and losses of innnovative companies.

Now a major assessment has been done by Cambridge Associates in terms of performance, comparing it to the wider stock market. Result: No outperformance. Considering the lack of liqudity it seems to be much less attractive to professional investors than thought.

See: http://www.cambridgeassociates.com/pdf/Venture%20Capital%20Index.pdf

The lack of success also is induced by lack of transparency and fee models taking away the eventual outperformance. This is for the US market of course. Experiences in less advanced markets could be better or even much worse.

It still has other benefits, as diversifying risk, promoting overall growth and eventuall fostering social benefits.

In order to protect the investor, proper disclosures must be integrated to grow this industry in a healty manner. Further the focus on impact investing will ensure that value is created and risk better managed. What impact investing means could be read here:

See: http://www.thegiin.org/cgi-bin/iowa/home/index.html

Qatari lender Barwa Bank expects a sharp increase in its 2013 net profit, driven mainly by billions in infrastructure spending by the Gulf state and growth in its debt advisory and asset management business. The unlisted lender is awaiting regulators' approval a public floatation as part of two share sales planned to raise more than 2.05 billion riyals. It posted a profit of 345 million riyals ($94.75 million) for 2012, a 41 percent increase from the previous year. Moreover, Barwa Bank, through its fully-owned investment banking arm, The First Investor (TFI), plans to partner with local investors in Qatar to invest in the healthcare sector. The bank also manages a Shariah-compliant Gulf equities fund, with 113 million riyals in assets. The fund has returned 19 percent to investors since inception in late 2012.

Bank AlJazira was granted the Ideal Institution in Support of Social and Developmental Action Award at a special ceremony held during the 30th meeting of GCC Council of Ministers of Social Affairs, organized recently in Bahrain. Nabil bin Dawood Al-Hoshan, CEO of Bank AlJazira, received the award from Bahraini Minister of Social Development Fatima bin Mohammed Al-Balooshi. The award comes after the bank was nominated by the Saudi Ministry of Labor and Social Affairs, in recognition of its efforts and programs in social responsibility.

Bahrain Islamic Bank (BisB) has reported a net profit of BD3.8 million ($10.1 million) during the first nine months of the year from a net loss of BD20.8 million during the same period last year. Net profit for the third quarter this year amounted to BD1.4 million versus a net loss of BD4.9 million during the same quarter last year. This is after setting aside provisioning amounting to BD3.4 million for the quarter under review as against BD5.4 million during the corresponding previous period. The bank made an operating profit of BD12.9 million during the first nine months of the year. Operating profit for the third quarter was BD4.8 million. Chairman Abdul Razaq Al Qassim said the results reflect a prudent policy and all earnings represent principal activities involving the bank's assets.

Kuwait Turkish Participation Bank Inc has been granted a licence by the Qatar Financial Centre ( QFC ) Authority, with effect from September 15 2013, to establish a branch in the QFC . The bank expects to open its QFC branch in about two months. It is licenced to undertake deposit taking; providing and arranging Islamic credit facilities dealing in Islamic investments and managing Islamic investments. The bank is a Turkish Islamic bank with 62 percent owned by Kuwait Finance House, Kuwait, 9 percent by PIFSS, Kuwait, 9 percent by Islamic Development Bank, Saudi Arabia, and 18 percent by Turkish Awqaf. It is the first and only Turkish bank to have a presence in Qatar.

Moody's Investors Service has upgraded by one notch the global foreign and local-currency deposit ratings of Kuwait-based Boubyan Bank (Boubyan) to Baa1 from Baa2. At the same time, Moody's has upgraded Boubyan's standalone bank financial strength rating (BFSR) to D+ from D, equivalent to ba1 baseline credit assessment (BCA) from ba2. All ratings assigned to Boubyan carry a stable outlook. Moody's rating upgrade primarily reflects the strengthening of asset-quality and coverage metrics and improvement in capitalisation levels. However, these strengths are moderated by high concentration risks and challenges stemming from rapid growth.

Fitch Ratings has affirmed UAE-based Abu Dhabi Islamic Bank 's (ADIB) Long-term Issuer Default Rating (IDR) at 'A+' with a Stable Outlook, and Viability Rating (VR) at 'bb'. The bank's IDRs, Support Rating and Support Rating Floor reflect
Fitch's opinion that there would be an extremely high probability that support would be provided by the UAE authorities if needed. In addition, Fitch believes that support would be forthcoming from the Abu Dhabi government (AA/Stable/F1+). Although Fitch expects the overall asset quality issues and exposure to a seasoning financing book to continue to present challenges in the short term, these are manageable. Fitch believes that the VR remains sensitive to any deterioration in asset quality, capital or profitability.

Abu Dhabi Islamic Bank (ADIB) has arranged a £20 million (Dh118.02 million) structured Islamic financing transaction to fund the development of Westbourne House, a prime 1980s commercial property in central London, combining office and retail space. ADIB’s financing package for Westbourne House was specifically tailored to meet the investors’ aims of acquiring, refurbishing and reselling high-value luxury properties to overseas buyers. The deal marks ADIB’s debut in London’s real estate market at a time when the British government is promoting the city as a centre for Islamic finance.

Turkey's Islamic finance industry is being reshaped as banks widen their product range and new competitors prepare to enter the market, according to a Thomson Reuters study. Promoting Islamic finance in Turkey is part of government plans to boost commercial ties with the Gulf and diversify the country's investor base. Last year Islamic banks reached a combined $36 billion in assets, representing a 5 percent share of total banking assets. The study estimates Islamic bank assets could reach between $80 billion and $120 billion by 2017. For this to occur, however, the industry will need to do more to educate customers. Moreover, banks and companies would also need to take advantage of new rules that facilitate issuance of various types of Islamic bonds.

EIIB-Rasmala, a venture between London-based European Islamic Investment Bank and Dubai's Rasmala Group, plans to widen its range of Islamic investment products with the hope of doubling assets under management over the next two years. The firm, which manages over $1 billion in assets, sees growing mid-market opportunities for its Islamic asset management and investment banking business lines, chief executive Zulfi Hydari said. By mid-market, the firm means medium-sized customers which may no longer be served by big investment banks. In investment banking, the firm is focused on arranging Islamic bonds, with deal sizes between $75 million to $150 million. Earlier this month, the firm already arranged the first tranche of a $100 million sukuk programme from FWU Group.