IslamicFinance.de

The UAE's Islamic finance sector has continued to outpace the UAE's conventional banking sector's growth in 2015, according to ratings agency Fitch. The agency said in a statement that it expects demand for UAE Islamic banks' lending to continue to grow, supported by wider acceptance and an expanding customer base. Fitch added that Islamic banks have managed to reduce exposure to the real estate sector, which was historically higher than for conventional banks. Moreover, UAE Islamic banks will benefit from the central bank's decision this year to include sharia-compliant securities in the range of instruments it accepts as collateral for accessing liquidity.

According to a recent report by the London-listed asset management group European Islamic Investment Bank, as Dubai pushes ahead with plans to expand its offering in Shariah-compliant financial services, it will be tapping into significant pent-up global demand for Islamic asset management, which could reach as high as $185 billion by 2019. The study, issued in mid October, highlighted additional measures that could be considered in order to raise Dubai's profile as a centre for IFS. Industry growth could be accelerated through wider consultation between fund managers and the authorities, with a focus on identifying ways to spur the creation of multi-asset-class, multi-geography funds.

The Middle East and North Africa region recorded strong growth in the Sukuk market in the first 10 months of 2015, according to Michele Leung, Director, Fixed Income Indices, S&P Dow Jones Indices.
The market value, as tracked by the S&P MENA Sukuk Index, rose 14 % YTD to 37 billion, compared with the mere 1 % growth in the conventional bond market in the region. The Sukuk market has expanded 37 % since the S&P MENA Sukuk Index’s inception in July 2013. United Arab Emirates is the most active issuing country in the region, and it remains dominant in terms of country exposure at 52 %, followed by Saudi Arabia at 17 %.
Overall, governments have continued to diversify their funding platforms, and the global Sukuk market has witnessed solid support from the lack of primary supply. Looking at the indices’ total return performance, there has been a 1.1 - 1.3 % decline in both Sukuk and bond markets month-to-date. As of Nov 18, 2015, the S&P MENA Sukuk Index rose 1.05 % YTD, while the S&P MENA Bond Index outperformed and gained 1.90 % in the same period.

Standard Chartered has appointed Rehan Shaikh as chief executive of its global Islamic banking business, it said in a statement on Wednesday.
Shaikh moves to Standard Chartered Saadiq from Dubai Islamic Bank, where he was senior vice president and business head, private sector and transaction banking. He previously worked for StanChart in Pakistan from 1998 to 2007, the statement said.
He takes over from Sohail Akbar, who was interim chief executive of the Islamic banking operation after the departure of Afaq Khan earlier this year.
StanChart remains committed to the business despite a period of hiatus across other parts of the bank as global chief executive Bill Winters moves to restore profitability. It announced plans this month to reduce costs by $2.9 billion by 2018 and cut 15,000 jobs.
"Islamic finance is an integral part of the business at Standard Chartered and we continue to see growing demand from clients in many of our markets," said Sunil Kaushal, the bank's regional chief executive for Africa and the Middle East.

Banking and financial services sectors in the GCC are actively seeking opportunities beyond their borders triggering a number of cross border mergers and acquisition deals in recent years.
Domestic markets focus of GCC banks has limited the scope for expanding their business. While this has benefited local banks in increasing their banking penetrations in the economies that they are based in significantly, it did take away from the potential to grow outside their boarders and broaden their geographic reach. This is an important point particularly as domestic markets will have limits to their potential. Expanding beyond their borders is one channel for GCC banks to add value to their business models.

Global real estate consultancy firm CBRE says that both Qatar and the United Arab Emirates have pumped $5.24 billion and $4.54bn respectively as foreign direct investment in global real estate.
CBRE’s latest report shows that the global real estate markets attracted investments worth more than $407bn during the first half of 2015, the highest since 2007. This represents an increase of 14 per cent from the same period of the year’s performance in 2014.
Although the pace of growth has accelerated over the past years, the rate of growth slowed in the first half of 2015 and a great variation can be observed in growth at the regional and international levels, reports Qatar-based Al-Sharq.
Despite the fall in oil prices, the buyers from the Middle East have maintained their high investment activity and, overall, pumped $11.5bn into foreign markets during the first half of 2015.
Nick Maclean, managing director, CBRE Middle East says: “Data from H1 2015 shows a continuing acceleration in the flow of capital out of the Middle East region by private offices and high-net-worth-individuals.”

Turkish Islamic bank Kuveyt Turk has mandated six institutions for a sukuk with a value of up to $400 million with a maturity of 10 years, it said in a statement to the Istanbul stock exchange late on Thursday.
Kuveyt Turk Participation Bank, which is 62 percent owned by Kuwait Finance House, said it had mandated KFH Capital, Dubai Islamic Bank, HSBC, Noor Bank, QInvest and Emirates NBD as joint lead managers. Sources familiar with the matter told Reuters in September that seven banks had been picked to arrange a potential deal.

On a trip through a Gulf squeezed by low oil prices, the head of the International Monetary Fund repeatedly called on countries to cut back on subsidies, lower government spending and consider levying taxes. But implementing Christine Lagarde's suggestions is easier said than done in the oil-rich countries, even as crude prices have dropped by over 50 percent since last year. Generations have grown used to cradle-to-grave social programs, comfortable government jobs and tax-free living. While Gulf leaders, including those in Kuwait, have begun warning harder times may be ahead, some citizens remain opposed to any cuts.
"Almost every week we hear about Kuwait giving grants left, right and center to other nations that are in need of money. It's as if the government doesn't realize that we, in Kuwait, are also in need," said Abdulaziz Al-Adwani, a Kuwaiti school teacher. "It's not logical to start imposing a tax on citizens when the government can afford to give grants to this country and that country."

Abu Dhabi Islamic Bank repaid its maturing five-year, $750 million sukuk this week from its own sources without refinancing it, the bank said on Saturday.
Abu Dhabi's largest sharia-compliant bank made a net profit of 503.2 million dirhams ($137 million) in the quarter to Sept. 30, up from 476.8 million a year earlier, it reported previously.
Chief Executive Tirad al-Mahmoud told Reuters last month that the bank had no current plans to raise more capital after a recent rights issue, adding that it would eschew expansion to focus on existing markets.
Bank lending growth in the United Arab Emirates has been slowing as liquidity tightens because of low oil prices. Industry-wide lending growth slowed to an annual 7.0 % in September, the slowest pace since at least February 2014 when the current central bank data series began.

Japan's Bank of Tokyo-Mitsubishi UFJ (BTMU) has launched its Islamic finance business in Dubai, to focus on sharia-compliant loan syndications with later plans to offer project financing. In July, BTMU received approval from the Dubai Financial Services Authority to operate an Islamic window, which it plans to use as a hub for the wider region, said Shichito Tobari, BTMU's regional head for the Middle East. BTMU will initially target commercial loans and trade finance equivalent services, leveraging its existing client base of government-related entities, Tobari said. The next step is to expand the product line to ijara and istisna during the first half of 2016.

Entrepreneurship platform AstroLabs yesterday inaugurated the Middle East and North Africa’s only Google-partnered tech hub, AstroLabs Dubai, enabling top startups from around the world to set up in Dubai’s DMCC Free Zone while taking advantage of Google for Entrepreneurs’ global network and resources. AstroLabs offers scalable tech startups a custom coworking space, mentorship, and business licenses to start operating in the UAE. AstroLabs members join an exclusive Google for Entrepreneurs Passport Program, allowing them to access over twenty Google-partnered hubs across the globe, from Seoul to San Francisco.

Dubai Islamic Bank will require capital in 2016 to boost its capital adequacy ratios, the bank's chief executive said on Wednesday. DIB's total capital adequacy ratio, a combination of Tier 1 and Tier 2 capital -- regarded as one of the key indicators of a bank's health -- stood at 16.5 percent at the end of the third quarter, up from 14.9 percent at the end of 2014, Adnan Chilwan said in an analysts' conference call.

Bahar Alsharif, Deputy Treasurer of International Finance Corporation (IFC), a member of the World Bank Group, today rang the market-opening bell to celebrate the listing of a 100 million US dollar Sukuk on Nasdaq Dubai. More than a third of this total, amounting to 12.75 billion US dollars, has listed on Nasdaq Dubai in 2015. The Sukuk is the second to be listed by IFC on Nasdaq Dubai, following a 100 million US dollar Sukuk that listed in 2009. Through its latest Sukuk, IFC will support developmental financing activities in the Middle East and North Africa and other parts of the world.

Dubai-based retail and leisure developer Majid Al Futtaim has opened books for a benchmark U.S. dollar-denominated sukuk issue, which it expects to price as early as Tuesday. Initial price thoughts for the 10-year sukuk have been set in the area of 270 basis points over midswaps. The firm, which owns and operates the Carrefour franchise in the Middle East, has picked Abu Dhabi Islamic Bank, Dubai Islamic Bank, HSBC, National Bank Of Abu Dhabi and Standard Chartered to arrange the sukuk. The sukuk will use the wakala structure, in which one party acts as an agent managing assets for another.

UAE's Mashreq Al Islami has successfully closed a 5 year USD 500 million senior secured syndicated facility for Ezdan Holding Group Company Q.S.C., the largest private sector real estate developer in Qatar. Mashreq Al Islami UAE acted as Mandated Lead Arranger, Sole Book Runner and Facility Agent for the facility. Other banks that participated in the financing included Abu Dhabi Islamic bank, Ahli United Bank, Emirates NBD, Gulf International Bank, HSBC Bank Middle East as Mandated Lead Arrangers, Sharjah Islamic bank, Warba Bank as Lead Arrangers and QIIB as asset custodian. The Facility proceeds will be utilized to support the Company's expansion and developmental plans in its core market.

Sunrise Properties has secured a 515 million dirham ($140.22 million) Islamic loan for the development of a luxury hotel project, banking group Emirates NBD, the main arranger of the deal, said. Emirates NBD, joined by Doha Bank, are providing the money to finance the Emerald Palace Kempinski Hotel project on Dubai's Palm Jumeirha group of islands. The tenure and margin on the murabaha-structured loan were not disclosed. Bank lending to real estate sector remains buoyant, with credit to the construction and real estate sector totalling 216.2 billion dirhams in the second quarter of this year from 210.6 billion dirhams in the year ago period.

Abu Dhabi Islamic Bank has no current plans to raise more capital after a rights issue last month, its chief executive Tirad al-Mahmoud said, adding that the lender would eschew expansion to focus on existing markets. The largest Islamic lender in the emirate raised Dhs 504m ($137m) in September. Mahmoud said the bank would grow by “mid-single-digits” in 2015 and its capital was sufficient for this level, though he did not say what growth he was referring to. ADIB posted a 10.5 per cent rise in net profit in the second quarter. ADIB had no plans to expand into new markets and would instead focus on where it has existing operations, he added.

Noor Bank is set to support an art and design exhibition at the Global Islamic Economy Summit 2015 (GIES) that will run on October 5th and 6th in Dubai. In partnership with Thomson Reuters, Noor Bank will spotlight new Islamic artwork at the event in its role as the official Arts and Design Sponsor of GIES 2015. Additionally, as part of Noor Bank's participation at the landmark summit, Hussain Al Qemzi, CEO of Noor Bank and Chairman of Awqaf & Minors Affairs Foundation will headline a session on Awqaf as a keynote speaker. GIES 2015 is scheduled to take place at the Madinat Jumeirah.

Standard & Poor's Ratings Services said that it lowered its long-term counterparty credit and insurer financial strength ratings on United Arab Emirates-based Takaful Re Ltd. (TRL) to 'BBB-' from 'BBB'. the ratings agency subsequently withdrew the ratings on TRL at its request. At the time of the withdrawal, the outlook was stable. The downgrade reflects the deterioration of TRL's business risk profile, mostly due to challenges within the Islamic insurance sector that have been exacerbated by the company's lack of scale, S&P said. The stable outlook at the time of withdrawal reflected S&P's view that TRL's risk-based capital would remain at extremely strong levels. This is supported by TRL's excess level of capital relative to its low level of premium income.

UAE's “aafaq Center for Research in Islamic Economy” will launch the first ‘Islamic Finance Encyclopedia’ and ‘Islamic Finance Directory’ in Arabic, at the 2015 Global Islamic Economic Summit taking place from October 5 to 6, 2015 at Madinat Jumeirah, Dubai. It is worth noting that “aafaq Center for Research in Islamic Economy” was recently established to provide thematic, multi-disciplinary research on Islamic finance. The ‘Islamic Finance Encyclopedia’ comprises twelve volumes covering all aspects of Islamic Finance, including, Shari’ah Framework of Islamic Finance; Emergence of Islamic Financial Institutions (IFIs): A Comparative Historical Study with Conventional Financial Institutions; IFIs and Banking Services; Takaful Insurance, among others.