IslamicFinance.de

From Oman to Algeria, the MENA region is being hammered by low oil prices, which fell below $28 a barrel on January 18, a drop of more than 60% since June 2014. Some countries have been hurt particularly hard. In Libya, for example, the World Bank estimates that the fiscal deficit is more than 55% of GDP and the current account deficit is about 70% of GDP. In Saudi Arabia, central bank reserves have plunged from $732 billion to $623 billion in less than 12 months. Some 75% of the Saudi government’s budget comes from oil. Given the deficit, the International Monetary Fund (IMF) notes that Saudi Arabia needs to sell oil at around $106 a barrel to balance its budget. A regional country that could potentially do better in 2016 is Iran.

Nigeria's debt management office (DMO) and capital market regulator have agreed to collaborate on a debut issuance of sovereign Islamic bonds (sukuk) before the end of the year, the two bodies said. The move could spur wider issuance of sukuk in one of Africa's most liquid debt markets, following similar sovereign deals from Senegal and Ivory Coast. Issuing a sovereign sukuk will attract significant amounts of affordable capital from the Gulf countries and other established Islamic markets around the world into Nigeria, the DMO said in its statement on Wednesday. The statement did not give a potential size for a maiden sukuk deal, although the DMO is a regular issuer of five- and ten-year local-currency bonds.

Islamic International Rating Agency (IIRA) has reaffirmed its Shari’ah Quality Rating of AA (SQR) assigned to Jordan Islamic Bank (JIB). Rating derives strength from JIB’s evident commitment to Shari’ah compliance, which stems at the helm of the institution and is cultivated across management cadres. It is in majority owned by Albaraka Banking Group (ABG). The rating is also supported by Jordan’s effective regulatory Shari’ah governance standards, which with recent revisions are closely aligned with best practice. The bank has been proactive in adopting the revisions in central bank guidelines, and their full implementation is targeted to be achieved within the ongoing year.

Abdolnaser Hemmati, the CEO of the National Bank of Iran (known as Bank Melli Iran or BMI), said that frozen assets of the bank at the Deutsche Bundesbank were freed. Following the move, 17 BMI subsidiaries will be able to work abroad. Deutsche Bundesbank authorized BMI’s branch in Hamburg, and the BMI’s Dubai branch has also been freed of transaction barriers previously in place under sanctions. Measures have been taken to launch the London branch of the BMI. Only a UK permit is left to be issued, he added. Mir Business Bank CJSC, a BMI branch in Moscow, can also resume its full operations, according to Hemmati. In one week, all BMI branches abroad will be operational, he stated.

The conveners of the longest running Insurance platform for the Middle East – the Middle East Insurance Forum (MEIF) – announced that a report on the region’s insurance industry will be launched at MEIF 2016 that will take place on Feb. 2-3, 2016 in Bahrain. The “Finance Forward Insurance Outlook Report 2016” will be launched at the forum. The report aims to help leaders in the insurance industry make key strategic decisions and capitalize on emerging opportunities. The report states that in 2014, growth in commercial lines grew just 6.6% (compared to 19.6% for personal lines) which may account for survey respondents’ more optimistic outlook for medium-term premium growth in personal lines. Many respondents are looking into online channels, particularly for personal lines, and into expanding outreach to underinsured consumers.

The net profit of the shareholders of Damaan Islamic Insurance’s (Beema) touched QR63m for the full-year 2015. Abdullatif Abdulla Zaid Al Mahmoud, the Deputy Chairman of the company, said Beema has achieved a gross contribution of QR314m in the year 2015; a 23 percent increase on year-on-year; and a surplus of QR16.5m from insurance operations, up 114 percent compared to the year 2014. The shareholders profit increased 17 percent to QR46.5m. The investment portfolio achieved an income of QR19.2m during the year 2015. The financial results were announced after the company’s board of directors’ meeting yesterday.

In a statement to Bursa Malaysia on 18 January, Malaysia Building Society Berhad reported that, ‘on behalf of the Board of Directors of MBSB, AmInvestment Bank Berhad wishes to announce that Bank Negara Malaysia (BNM) has vide its letter dated 15 January 2016 (which was received today) stated that it has no objection to MBSB’s application for the extension of time until 2 February 2016 to conclude the negotiations with DRB and Khazanah’ [shareholders in Bank Muamalat Malaysia] for the proposed merger and to submit the formal application to BNM.

The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) said last week that it had taken up the development of a standard for gold, a project which was launched last year by the World Gold Council (WGC), a London-based market development body. The WGC published an exposure draft in November which analysts believe could accelerate the timetable for the creation of a final standard. Such drafts have traditionally taken AAOIFI scholars two years to develop internally. The WGC's draft outlines several uses for gold such as investment accounts, derivative contracts, security collateral, exchange-traded funds and Islamic bonds, said Natalie Dempster, WGC managing director of central banks and public policy.

Premier Insurance appointed Imran Taqi Usmani as Shari’ah Adviser and Ernst and Young Ford Rhodes Sidat Hyder as Shari’ah Auditor. Premier Insurance, which deals in various conventional insurance products, is offering Shariah compliant products, Takaful. The Securities and Exchange Commission of Pakistan (SECP) enable Takaful business in the country and Premier Insurance offers the various services to clients across all economic sectors and products in all classes of general insurance. Imran Taqi Usmani, son of Justice (r) Taqi Usmani, renowned Islamic scholar holds LLB, MPhil and PhD degrees in Islamic Finance. He also holds an Alamiyya and a Takhassus (Specialisation in Islamic Jurisprudence) from Jamia Darul-Uloom, Karachi.

Vice Chairman at Kuwait Finance House (KFH), Abdulaziz Yaqoub Al-Nafisi stressed the importance of international investment and creating further integration in KFH-Group banks in the framework of the coordination that targets boosting development according to a unified vision that prioritizes development and recognizes the value of public-private partnerships and international investment, yet contributes in diversifying non-oil sectors to boost the economy. On the sideline of his participation in the inauguration ceremony of Marassi Al Bahrain project, Al-Nafisi praised the project that was a joint effort between the real estate investment and development company, Eagle Hills, in partnership with Diyar Al Muharraq. He went on to say that the project will provide steady flow of income for investors and will comprise a major destination for tourists in Bahrain.

In a recent EY study, titled ‘World Islamic Banking Competitiveness Report 2016’, the firm explores the Islamic Banking landscape. The report is built up from an analysis of 69 participation banks (Islamic Banks) and 45 conventional banks, covering the markets of Bahrain, Qatar, Indonesia, Saudi Arabia, Malaysia, United Arab Emirates, Turkey, Kuwait and Pakistan. The report finds that the markets covered contain 93% of international participant banking industry assets, valued in excess of $920 billion in 2015. The largest part of that value stood in GCC (Gulf Cooperation Council) countries, at $606 billion, followed by ASEAN countries at around $159 billion. The increase in asset value has been impressive between 2010 and 2014, growing with a CAGR of 16%.

Governments in the wealthy Gulf Arab oil exporting countries look set to borrow from the international bond market at a record pace this year, putting fresh pressure on bond prices, as they cover budget deficits created by low oil prices. For the first 18 months after oil began tumbling in mid-2014, governments largely held off from borrowing abroad, preferring to draw down their fiscal reserves and in some cases borrow domestically. That strategy is reaching its limits as the drawdown begins to alarm financial markets and push up local market interest rates. So governments in the six-nation GCC will turn to the foreign debt market to help cover deficits which are expected this year to near $140 billion, or 11 percent of gross domestic product (GDP).

Standard & Poor’s Ratings Services said that overall sovereign creditworthiness in the Middle East and North African (MENA) region has deteriorated since Standard & Poor’s last published six months ago. The rating agency has published the report Middle East And North Africa Sovereign Rating Trends 2016. The average rating for the hydrocarbon-endowed sovereigns of Abu Dhabi, Bahrain , Iraq, Kuwait, Oman, Qatar, and Saudi Arabia, is currently close to ‘A’, having been at ‘A+’ prior to the downgrade of Saudi Arabia and the inclusion of Iraq in the average. For those with more limited hydrocarbon resources (Egypt, Jordan, Lebanon, Morocco, Ras Al Khaimah, and Sharjah), it is closer to ‘BB+’. The outlooks are negative on Bahrain and Saudi Arabia, reflecting weakening fiscal profiles and uncertain policy responses.

The emirate of Sharjah is targeting a five-year sukuk offering and could launch a transaction as early as this week, a document from lead arrangers showed on Tuesday. The sovereign finished roadshows on Monday in London, following investor meetings in the Middle East and Asia last week, and was now in the process of receiving feedback from the market, the document added. The emirate mandated Bank Of Sharjah, Barclays, Commerzbank, Dubai Islamic Bank, HSBC and Sharjah Islamic Bank to arrange the meetings and the possible transaction. Sharjah was reported to be planning to raise funds through a dollar-denominated sukuk of benchmark size, in what could be the first sovereign Islamic bond issuance from the region this year.

Iran will receive $32 billion of unfrozen assets after sanctions were lifted in a deal with world powers over its nuclear programme, Iranian central bank chief Valiollah Seif said Tuesday. Seif was quoted as saying that $28 billion (25.8 billion euros) would go to the central bank and $4 billion will be transferred to the state treasury as the share of the government. The unfreezing of assets comes after the U.N. atomic watchdog confirmed at the weekend that Iran had complied with measures imposed by the deal with global powers reached in Vienna in July. The central bank plans to keep the funds in centralized and safe accounts abroad, he added.

Emir of Kano, Muhammad Sanusi II, has said Islamic Banking institution can revitalise the troubled Nigerian economy if well adopted. According to him, one of the major benefits of the system is to reduce poverty. He spoke yesterday at the Third Annual Holiday Convention of the Guild of Muslim Professionals (GMP) at the Administrative Staff College of Nigeria (ASCON), Topo, Badagry in Lagos State. The former Central Bank of Nigeria (CBN) Governor, who disclosed that non-Muslim countries including Cote d’Voire, Senegal and Gambia are picking interest in the Sukuk, the Islamic banking system, also called for increased awareness on the Islamic Banking system. He urged scholars to avail themselves of the opportunity of the training sessions organised by the Central Bank of Nigeria.

Emirates Islamic has announced its full-year financial results for 2015, with the bank reporting strong growth for the fourth consecutive year. For the twelve months ending December 31, 2015, the bank reported a net profit of AED 641 million, a 76 per cent year-on-year increase. The bank's total net income (net of customers' share of profit) during the period rose to AED 2.43 billion, up 25 percent compared to AED 1.95 billion in 2014. The bank recently launched the ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™, a consumer focused survey on Islamic Banking in the UAE. In addition, Emirates Islamic introduced EI Trade, a customised Shari'a-compliant online trade and supply chain platform for its business and corporate customers.

Financial inclusion in Uganda is expected to deepen following a move by Parliament to enact a new financial law hence paving way for Islamic banking in the country. The legislators passed the Financial Institutions (amendment) Bill 2015 on Jan.7, a decision that will see individuals who had been locked out of mainstream banking by virtue of their faith or religious affiliation able to access financial services with less hindrance, once signed into law. The law will also allow financial institutions to roll out agency banking as well as offer ‘bancassurance’ products. According to Bank of Uganda data, the country’s bank account holders stand at just four million — mainly from the urban areas — out of the bankable population of about 12 million people.

Arcapita has partnered with Morningstar Senior Living for senior living communities based in Colorado worth $85 million. The current portfolio for Arcapita consists of three projects for assisted living and care communities and provides a total of 196 units and 243 licensed beds in the Denver and Colorado Springs, Colorado. The focus on the state is to attract customers who are in the company’s target age demographic. The target age group for senior living facilities in Colorado is projected to grow by almost twice the national average over the next five years, stated Martin Tan, Arcapita’s chief investment officer.

Bahrain-based Ibdar Bank has announced the successful exit from four Bahrain-based real estate investments for a total value of USD 21.67 million. The first two exits consist of the sale of two 11-story buildings acquired by the Bank for total consideration of USD12.07 million. The first is a 64-apartment fully furnished building located in Manama and the other consists of 38-fully furnished apartments in Busaiteen. The other two exits consist of the sale of the Bank's affiliate company's 11-story and 10-story properties located in the popular Juffair area. The properties consist of 83 fully furnished apartments in total and supporting convenience, leisure and parking facilities, which were sold for a total consideration of USD9.6 million.