IslamicFinance.de

Bank Negara Malaysia Governor Datuk Muhammad Ibrahim called on the Islamic finance sector to embrace the financial technological revolution. Technologically-driven applications have spread to every segment of the financial sector, with the number of fintech start-ups having doubled in one year. He noted that the potential impact can be significant, with 10 to 40 % banking revenue possibly at risk by 2025 due to fintech innovations outside banking institutions that are able to offer significant pricing advantage. Bank Negara is reviewing the changes needed to its regulatory framework to ensure that it remains appropriate to manage the risk while encouraging productive innovation.

Islamic finance is well suited to bridge financing gaps in long-term infrastructure development projects, especially in less developed markets. Deputy finance minister Datuk Johari Abdul Ghani said Islamic financing had huge potential and could meet long-term funding needs since it suited its asset-based and risk-sharing nature. The global Islamic capital market has expanded in size and depth across areas, with a combined market value of over US$21.5tril spread across 70 jurisdictions.

Hong Leong Islamic Bank's CEO Raja Teh Maimunah says the barrier of digitization is the fear of IT security and nervousness of regulators. But fintechs are here and have a high growth potential. The face to face service is an oldschool approach, what matters today is what banks can provide from a technology perspective.

Mohammad Daud Bakar says gold will be a game changer as a commercial asset, investment asset and hedging asset as well. There is now an attempt to put Sharia standard on gold, this will remove the worries of the scholars and regulators. Mohammad Daud Bakar believes the asset classes have to be expanded and Islamic banking shouldn't rely so much on commodities.

Bahrain-based Al Baraka Banking Group will establish a banking unit in Morocco after receiving approval from local authorities. The bank said entry to the Morocco market would significantly help diversify assets and income sources for the group. In contrast with its peers in the Gulf, Al Baraka has built the bulk of its business outside of the region, including units in Pakistan, Turkey, Egypt, Tunisia and South Africa.

The #Bahrain based Al Baraka Banking Group (ABG) announced that it achieved a substantial increase in total operating income of 16%, and net profits before tax and provisions by 13% during the first quarter of 2016. President & CEO Adnan Ahmed Yousif said the group opened 20 new branches in the first quarter of 2016 to bring total branches to 607 branches with total staff of 11,458. Additionaly, ABG obtainied official approval to establish a banking unit in Morocco, which means a higher diversification in assets and income sources for the Group.

According to Standard & Poor’s the profitability of Islamic banks in the Arabian Gulf is likely to deteriorate this year due to the fallout from the price of oil. The 70 per cent drop in oil over the past two years has put pressure on growth prospects and widened deficits across the region. Yet S&P predicts that Sharia-compliant lenders will weather the storm without too much damage because they have capital buffers that include quality assets. Islamic banking assets are continuing to grow at a rate of 16 per cent per year and by 2020, the global Islamic banking industry profit pool is expected to reach $30.3bn.

The Arab Petroleum Investments Corporation announced the completion of an innovative Sharia-compliant financing facility for Algeria’s Oil Recovery Services. The financing was arranged in conjunction with Paris-based oil and gas private equity firm 4D Global Energy Advisors. The initial $10 million financing will act as a template for the financing of several contracts of the company.

The Arab Petroleum Investments Corporation (APICORP) announced the completion of a Shari’ah-compliant financing facility for Oil Recovery Services SAL (ORSsal) with operation in Algeria. The annual MENA Energy Investment Outlook Report issued by APICORP stated total planned energy investments in the MENA region will reach $900 billion over the next five years. According to the report, Algeria will invest $8 billion on gas as it focuses on developing its midstream sector as part of the country’s plan to expand total pipeline-network capacity by 30 per cent.

On the 10th anniversary of its presence in the Middle East, Lombard Odier demonstrates its long term commitment to the region by expanding its activities and services in the UAE. The team is also celebrating by moving its office location to the Conrad Business Tower. Patrick Odier, Senior Managing Partner of the Lombard Odier Group, said the bank maintains focus on wealth and investment management for private and institutional clients across the region.

According to a report by Ernst & Young (2015), there were more than 300 Islamic financial institutions worldwide in more than 70 countries with Islamic banking assets estimated to reach US$1.6 trillion. The strong position of the Islamic financial institutions is largely attributed to the inherent stability of the Islamic financial system. Despite the achievements, Islamic banks are criticised due to favouring debt-based contracts rather than the equity-based contracts. This results in a lack of financial innovations aiming at financial inclusion, particularly to the poor in rural areas in the form of Islamic micro-financing.

The German car manufacturer Audi has partnered with BankIslami Pakistan to introduce its brand in the Pakistani market. A Memorandum of Understanding (MoU) has been signed with Premier Systems, Audi’s general importer in Pakistan. BankIslami will provide tailor-made financing packages to Audi customers across the country through its flagship product of Islami Auto Ijarah. The MoU was signed by Muhammad Yasin Khan, CFO of Premier Systems and Yasser Abbas, Section Head Auto Ijarah, BankIslami.

Turkiye Finans announced plans for a EURO denominated Sukuk. This represents the first Euro denominated Sukuk in Turkey, though a number of US Dollar Sukuk have been issued previously, most recently by Turkish subsidiary of Kuwait Finance House (Kuveyt Turk) which issued a $350 million Sukuk in February 2016. Kuveyt Turk also recently issued an innovative CPI linked Sukuk, which illustrates a maturing market in Turkey.

After a three-year pause The Islamic Development Bank (IDB) plans to sell ringgit-denominated sukuk in the Malaysian market. The IDB board has approved the issuance of up to 400 mn ringgit ($99.9 mn) in sukuk in 2016. IDB president Ahmad Mohamed Ali said it could be both private and public placement, but the specific size and timing of the deal depend on market conditions.

On 27 April 2016 Ziraat Participation Bank closed its first Syndicated Murabaha Financing Facility. The debut transaction received a strong response from the market. Due to the significant oversubscription, Ziraat Participation Bank increased the facility size to US$155 mn. CEO Osman Arslan said the proceeds from the facility will be used to support the funding requirements of SMEs and the financing of trade related businesses.

La Finance Islamique, c’est plus de $2.000 ms et 35% de taux de croissance. Une manne financière qui doit être saisie par le gouvernement du Sénégal pour le financement du Plan Sénégal émergent (Pse). Oulimata Diop, Directrice de la Monnaie et du Crédit au Ministère de l’Economie des Finances, a dit l'financement du Pse qui doit être pris en charge par le secteur privé à hauteur de 60%, c’est pourquoi le gouvernement compte mettre en place des stratégies pour capter l’investissement Islamique.

The Islamic finance industry has set sight on the gold market as initiatives are underway to establish a new standard to make the metal tradable under Shariah finance rules. World Gold Council (WGC) together with Amanie Advisors and the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain are now developing the standard to increase transparency and harmonisation of the use of gold investments. The Islamic finance entry could shake the gold market as Islamic financial institutions hold around $2tn in assets and are expected to double that asset base up to 2020.

Alif Capital has been approved by the National Bank of Tajikistan to provide banking services in both hard currency and somoni, the currency of Tajikistan. Alif Capital is marketed as the first regulated microfinance institution in Tajikistan that offers Sharia-compliant finance. Its loan terms vary from four to six months, with an average size of $4,000 as of 2015.

In Iraq the private sector is primarily cash-based. Bank financing is unavailable for all but the largest companies and even then is limited mainly to overdraft facilities. Private banks are subject to large and unpredictable demands for cash from depositors, while money transfer companies do not take deposits at all. The majority of households do not have a bank account, those with savings often hold them in the form of US dollar hoards in private safes.

Sheikh Abdullah bin Saud Al Thani, the governor of the Qatar Central Bank (QCB), issued operating instructions and governance principals for insurers operating in Qatar. The instructions relate to licensing, regulations and controls, risk management, accounting and actuaries reports. The new law stipulates that listed insurance companies must have capital greater than QAR100 mn or their risk-based capital requirement, while unlisted insurance companies must have capital higher than the figure set by the QCB.