IslamicFinance.de

After the first tier commercial banks in Nigeria, Jaiz Bank was the most active stock on the exchange with volumes of 7,179,550 with a total value of N4,682,686.00. The increased activity is indicative of swinging sentiments in favour of the stock. But the stock has underperformed the All Share Index (ASI) in the last six months as it returned a negative 45% while the ASI returned 40%. Jaiz Bank managed to grow its Gross Income in the first half year ending June to N3.25 billion from N2.56 billion. Income from Finance Investment grew 19.82% to N2.95 billion from N2.46 billion while Sukuk leapt 198.3% to N293.35 million from N98.35 million. Abdulfatah Ahmed, the Kwara State governor highlighted there was a lot of scope for growth for the bank and Islamic banking in Nigeria. Hassan Usman, the bank’s managing director, said he was optimistic about the future of the bank and therefore urged everyone irrespective of their religious background to key into the model.

Kuwait Investment Authority has appointed a global consultant to study the merger of two banks, Kuwait Finance House (KFH) and Ahli United Bank (AUB). Moody’s said in a report that the merger of the two banks will have a positive impact on credit rating, especially for KFH. Moody’s noted that if the merger is successful, it will create the sixth largest bank in the GCC with nearly $85 billion in total assets. The merger will make KFH the largest bank in Kuwait, but it will remain the second largest bank in the Gulf after Al-Rajhi Bank Saudi Arabia. The number of domestic branches of KFH reached 65 while AUB has 37 branches. Several reports were published on the possible merger of the two banks. However, officials from both banks denied reports on the merger while others confirmed.

Jaiz Bank CEO Hassan Usman said that #Nigeria would become one of the countries to successfully offer Sovereign Sukuk in local currency. The Federal Government floated around N100bn and according to him, the offer was to last for five days. Hassan said these on the sidelines of Jaiz Bank’s Customers Forum in Ilorin, the Kwara State capital and also revealed that the institution’s capital base had reached N15bn. He said that Islamic finance worldwide was novel, being in existence for about 40 years compared to conventional banking, which had lasted for over 300 years.

In this interview CIMB Islamic Bank CEO Mohamed Rafe Mohamed Haneef talks about the bank's achievements in Malaysia and its growth plans. The most significant segment for CIMB Islamic Bank is retail banking. When Haneef joined the bank, consumer banking’s contribution was between 40 and 45%, while at the end of June it was almost 60%. The bank came up with an embedded model which enables both CIMB Islamic and the conventional side from CIMB Group to tap the same talent. CIMB operates on two separate licences, but out of the same branches, as relationship managers offer both Islamic and conventional banking options. According to Haneef, the bank plans to focus on the Asean region first before eventually building inroads into the Middle East beyond 2018. CIMB Group’s Islamic Asset Management is in close contact with the Securities Commission (SC) and plans to contribute to the development of Sustainable and Responsible Investing (SRI).

In this interview Khairul Kamarudin, CEO of Bank Islam Malaysia, talks about his leadership style and areas of focus. Besides sustainability, the other main area of focus will be digitalisation. In 2016 the bank launched the innovative product called 'e-Donation' Terminal using Visa PayWave, a platform where donations can be made through the contactless electronic method using any debit/credit card. Bank Islam has also taken a step towards accepting fintechs with the recent strategic collaboration with Cognizant. This will allow the bank to embark more on innovative digital Islamic banking. In terms of charity, Bank Islam has its own Waqf project in its office building, which provides prayer facilities to more than 3,000 people per week. Also, the bank supports the affordable development project in Selangor and a school-construction project in the state of Perlis.

Dr. Adnan Chilwan, CEO of Dubai Islamic Bank (DIB), said that Kenya stood out to the Bank as a stepping stone to expanding its operations into Africa. In May 2017 DIB was granted a banking licence by the Central Bank of Kenya to operate a subsidiary, DIB Kenya. According to Chilwan, Dubai always had the ambition to venture into Far East Asia and East Africa. As DIB had already ventured into Far East Asia, East Africa was the next logical point. From the East African countries Kenya stands out in its regulatory framework and the stability in the country. DIB Kenya is already open and the bank has ambitious plans for East Africa. Chilwan added that Kenya was a country that DIB would be surely focussing on in years to come.

In this interview, Dr. Adnan Chilwan, CEO of Dubai Islamic Bank, reflects on the bank’s performance in the last couple of years and prospects for future growth. Dubai Islamic Bank (DIB) has entered the billion dollar profits club and the challenge is to keep up the pace of exponential growth. Chilwan says a billion dollars is just a start and he wants to find the right way of replicating the successful strategy. He hopes the bank will be able to keep up that good work, making sure the customers are happy, the regulator is happy, the ratings agencies, research analysts and shareholders are all happy with what they get from the bank. He is grateful for the board of directors and for the team behind him that made this billion dollar profit possible.

According to Fitch Ratings, a tougher operating environment is continuing to challenge Saudi Islamic banks. Sustained low oil prices have taken their toll on economic growth and government spending and this affects certain sectors. Asset-quality metrics are likely to deteriorate from their current strong position due to slower Islamic financing growth. Islamic banks accounted for about 43% of the sector at end-1H16, up from 36.6% in 1H15. There are 12 licensed commercial banks in Saudi Arabia. Four are fully sharia-compliant, with the rest providing a mix of sharia-compliant and conventional banking products. The performance and credit matrices of Islamic and conventional banks are similar in many ways due to the largely Islamic finance nature of the lending market in Saudi Arabia.

#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.

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.

In this interview Dr. Adnan Chilwan, CEO of Dubai Islamic Bank (DIB), speaks about the Indonesian market and the positioning of Dubai Islamic Bank. In March 2017 Indonesia’s Bank Panin Syariah rebranded to Panin Dubai Syariah Bank (PDSB) and DIB holds a 40% interest. Dr. Chilwan believes Indonesia has great potential and the regulator is quite supportive of Islamic finance. In his view, the success of DIB is the result of its change in positioning. The bank has not compromised Shari’ah, but has a better understanding of customer needs. DIB is competing with the largest players within every region and is aiming at full inclusion to bank everyone.

Barwa Bank has almost finished legal and financial studies regarding its merger with Masraf Al Rayyan and International Bank of Qatar (IBQ). Barwa Bank CEO Khalid al-Subea said that any development in this regard will be announced through a joint statement by the three banks. Barwa Bank's recent Al Majd initiative offers its clients an exceptional banking package within the framework of various ongoing national initiatives. Barwa Bank also announced the launch of its new Shariah-compliant savings account that offers high flexibility and profit rate of an expected 3%, where profits are paid on a quarterly basis. The account allows clients to withdraw once every quarter up to 25% of the current balance.

In August 2017, the Central Bank of Nigeria (CBN) introduced two liquidity management instruments for non-interest financial institutions, a Funding for Liquidity Facility (FfLF) and Intra-day Facility (IDF). In a February 2017 report, the IMF mentioned the lack of such sharp liquidity instruments as a key risk to the financial systems of countries where there are Islamic banks. Therefore, the CBN’s recent move is a welcome development. More Nigerian banks would be wise to have Islamic banking windows, but they must be mindful of some potential pitfalls. Customers might be sceptical about whether the bank is truly able to separate its Islamic banking arm from its interest-earning entities. There is also the possibility of regulatory arbitrage, where the bank potentially transfers risk between the two arms, depending on which is favourable. The CBN seems well-geared to handle such potential abuses.

Al Hilal Bank opened its first client service branch in Almaty, which provides a full range of Shari'ah compliant banking services for corporate and private customers. Bank customers can now use deposit products, debit cards, and cash management services, while the investment deposits are a new and unique product for the market of Kazakhstan. Focusing on the needs of customers, the bank plans on launching a programme to finance individuals in the near future. Speaking at the branch opening, Gordon Haskins, CEO of Al Hilal Bank Kazakhstan, said that Islamic finance had a great potential for development and Al Hilal Bank aimed to bring benefits and establish benchmarking of Islamic financial instruments in the region. Al Hilal was established in 2010 as the first Islamic bank in Kazakhstan and the CIS region. It is a subsidiary bank of Al Hilal Bank PJSC, which is fully owned by the Government of the United Arab Emirates.

The Islamic Corporation for the Development of the Private Sector (ICD) is planning to increase its activities in Africa to widen the appeal of Islamic finance across the region. ICD chief executive Khaled Al-Aboodi said the ICD was helping develop Islamic finance channels, that is Islamic banks, investment and ijara companies, takaful and retakaful firms. Africa represents around 12% of the ICD’s cumulative investment approvals and this figure is expected to rise in coming years. Some of the projects will be led by Senegal-based Tamweel Africa, jointly owned by the ICD and Turkey’s Bank Asya. Tamweel already holds stakes in Islamic banks in Senegal, Niger, Guinea and Mauritania. Further Islamic banks will be established in Benin, Mali and Chad. In Tunisia, the ICD has teamed up with the newly created sovereign wealth fund, Caisse de Dépôts de Tunisie, to set up a $30 million (R315m) fund to support businesses. The ICD also hoped to improve access to sharia-compliant financing for small and medium-sized enterprises (SMEs) across Muslim countries, Al-Aboodi said.

Moody’s Investors Service has upgraded Dubai Islamic Bank’s (DIB) local and foreign currency long-term issuer ratings to A3 from Baa1. The outlook for the bank has been changed from positive to stable. Moody's also upgraded the bank’s baseline credit assessment (BCA), adjusted BCA as well as the long and short-term counterparty risk assessment. The primary driver for the BCA upgrade is the bank’s significant improvement in its asset quality and provisioning coverage. The upgrade also captures DIB’s improving profitability in recent years, with return on assets (ROA) improving to 2.0% for 2016. DIB said that its net income rose 13.8% in the second quarter to Dh1.1 billion compared with Dh929 million in the same period last year. Going forward, the rating agency expects that the bank’s net profitability may face modest pressure, due to increased funding costs, but that it will remain above the domestic average and global median.

Kazakhstan’s previously commercial Zaman-Bank became an official Islamic bank on Aug. 17. The license from the National Bank of Kazakhstan allows the bank to tap into the Islamic banking sector and makes Zaman-Bank the second Islamic bank in the country. Al Hilal Bank, operating since 2010, had been the country’s only Islamic bank so far. Zaman-Bank is planning to focus on retail banking and small and medium enterprises (SMEs). The bank already offers a range of deposit options, including wakala and mudaraba. Head of the Islamic Finance Development Unit, Timur Rustemov, said the bank converted to an Islamic bank, because this sector is still open in Kazakhstan, especially consumer banking. He added that the bank plans to offer Islamic auto finance, Islamic mortgage and a range of products and services for SMEs.

Qatari banks are turning to Asia and Europe for funding after clients from other Arab states pulled billions of dollars from their accounts. Analysts warn that more heavy withdrawals are likely in the coming months. Qatar Islamic Bank has recently raised funds through private placement deals in Japanese yen and Australian dollars. It is now exploring more such deals in Europe and Asia, as well as a certificate of deposit program and a Murabaha facility. Many Qatari banks are facing greater urgency to secure funding since June when the United Arab Emirates, Saudi Arabia, Egypt and Bahrain imposed a boycott on Qatar, accusing it of funding terrorism. Qatar denies the allegations. The crisis has led to an outflow of around $7.5 billion in foreign customers' deposits and a further $15 billion in foreign interbank deposits and borrowings. In response, Qatar's government deposited nearly $18 billion with local banks in June and July.

The corporate sector in #Egypt acquired EGP 11.7bn of the total loans portfolio in Abu Dhabi Islamic Bank-Egypt until the end of June 2017. The bank continued its programme to fund small and medium enterprises (SMEs). The sector continued its growth also in the field of retail banking, reaching EGP 4.3bn, whereas the volume of the portfolio managed by the treasury sector in the bank is estimated at EGP 12.2bn. Abu Dhabi Islamic Bank-Egypt revealed its business results for H1 2017, where total net profits during that period reached EGP 339m with EGP 148m increase by 78% compared to H1 2016. Total revenues reached EGP 1.841bn compared to EGP 1.225bn, with a growth of 50%. The volume of growth in total assets reached 30% by the end of June 2017 compared to June 2016. In its report the bank stressed its commitment to developing the technological infrastructure and investing in human resources.

According to Moody's Investors Service, Islamic Development Bank's (IsDB) credit strengths include a strong capital base, prudent financial and risk management policies. The bank's liquidity level is solid, which supports its Aaa rating and stable outlook. Moody's analyst Mathias Angonin said the weighted average rating of IsDB's shareholders is lower than other Aaa-rated development banks, but its 57 members are strongly committed to the organisation. This support is reflected in continued capital increases. The bank's paid-in capital rose to ID 5.1 billion at end-2016, from ID2.7 billion in 2007, and an additional ID 2.4 billion is expected over the next 10 years. Credit challenges include a risky operating environment as well as lower oil prices and the risks from geopolitical tensions. Nonetheless, its operational assets continue to perform well, with a very low level of impairment.