IslamicFinance.de

Despite the fact that islamic banks have outperformed their conventional peers in most markets, a closer look presents the market dynamics are changing, revealing a new trend.
Two key indicators are cause for reflection: slowing growth rates and eroding profitability, as A T Kearney, a global management consultancy, states.
Cost income ratios are increasing in most markets, putting pressure on profitability. At the same time, declining growth rates are occurring in key geographies including Saudi Arabia, Bahrain and the UAE.

Indonesian two-year sukuk dropped last month, raising up yields by the most since September, as Standard & Poor's.
S&P didn’t associate with Moody’s Investors Service and Fitch Ratings, which have allowed Indonesia investment-grade status in the past five months, declaring the nation at risk from “policy slippages” such as the failure to reduce the fuel subsidies.

The Shariah board of ‘Meethaq’ Islamic banking gave the approval for RO 150 million capital assigned by BankMuscat for its Islamic banking window operations awaiting regulatory approval. The board from Shariah perspective authorized the authenticity of capital allocation from BankMuscat shareholders’ fund for operations of independent Meethaq Islamic banking.
Sheikh Dr Ali Qaradaghi, Chairman of Shariah board, revealed that the capital allocation is in line with injunctions of al-Quran and as-Sunnah and the fact that various contemporary Shariah scholars have supported the usage of shareholders' fund for Sharia compliant transactions.

According to A.T. Kearney, the modifying market dynamics are showing a new trend, with two key indicators giving cause for reflection: slowing growth rates and eroding profitability.
Descending growth rates are coming up in key geographies including KSA, Bahrain and the UAE, where growth rates have dropped to between 3% and 8% from double-digit figures.

Animated by the global economic turmoil, global deleveraging leads to a reduction in global bank credit available for Saudi companies and projects. But funds are neccessary and the government is correctly hesitant to offer it directly.
Richard Banks, Director of Euromoney Saudi Arabia Conference, states that despite the fact that important progress has been made in sukuk issuance, the active names have tended to be large companies.
This year's Euromoney Saudi Arabia Conference will tske place in Riyadh on 22-23 May 2012 in partnership with the Ministry of Finance, key figures from the public and private sector will discuss how this funding gap can be filled.

Family businesses are estimated in the Middle East at around 90% of all companies in the region controlled by families. Furthermore, its importance was underlined with the launch of the Family Business Network GCC, the first of its kind in the area.
The network will be based in Dubai, including members of the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE

Despite the fact that they have been around for many years, they are only now being noticed because of a variety of factors.
The difference between then and now is that there are more Muslims in the financial sector and non-Muslim colleagues know more about Islam because of a combination of internet, 24-7 news, 9/11, documentaries, Dubai's accomplishments, Islamic finance and personalities like His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
After New York Times recently interviewed several American Muslims, two ‘conflicts' were elaborated: Muslims working in conventional finance may encounter ‘interest' against their faith, and challenges of abiding by Islamic ‘traditions' in a secular workplace.

An interesting concept, slowly gaining momentum in the Indian mutual fund industry, is mutual Fund houses launching specific schemes catering to philosophies reproduced by a particular community.
There are currently 3 Shariah compliant funds in the mutual fund space, one being a passively managed fund, while the other two funds are actively managed.
An observation of the AUM of these funds demonstrates that the ETF's corpus has actually witnessed a downward trend. If a closer look is taken at the total AUM of all equity diversified funds, it could be seen that the actively managed Shariah funds constitute only 0.11% of this total AUM. This clearly shows that the investors for whom this product is actually designed are not really aware about this offering.

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will arrange its Annual Shari'a Conference on 7 and 8 May 2012 in Manama, Kingdom of Bahrain. The conference will be held under the patronage of the Central Bank of Bahrain.
The conference represents a part of AAOIFI's consultation with the industry to help its standard-setting efforts.
Some of the topics that will be discussed at the conference include Shari'a compliance and supervision processes, continuing development of Islamic financial and capital markets, legal issues in Islamic finance, potential areas for further growth of Islamic finance, and development of human capital resources in Islamic finance.

The third annual Global Islamic Finance Report (GIFR) 2012 was made in association with the Saudi-based National Commercial Bank and Malaysian-based CIMB Islamic and some other partners in Islamic banking and finance industry. The report is composed of in depth research and analysis on the Islamic financial industry.
After the success of the previous two GIFRs, the GIFR 2012 persists its objective of informing readers about the current state of the international Islamic finance market.
A unique characteristic of the GIFR 2012 is its special focus on social responsibility and philanthropy. The core section of the GIFR 2012 is outlined into three virtual themes revolving around social responsibility and philanthropy.

Tánaiste Eamon Gilmore addressed a seminar on the Government’s purpose to make Ireland a European hub for Islamic finance.
He announced the International Fiscal Association Ireland seminar that Ireland is currently the location for an evaluated 20pc of Sharia compliant funds stationed outside the Middle East. Moreover, he added that Ireland must be tought of as a gateway to the world.

Banque Saudi Fransi arranged a $2 billion Islamic bond program as part of the Riyadh-based lender’s plans to mix up its sources of financing.
Islamic bond sales in Saudi Arabia, the world’s largest oil exporter, progressed to a record $6.55 billion so far this year as the government’s spending plan encourages companies to raise funds to invest.
Lead arrangers of the program were Citigroup Inc. (C), Credit Agricole, Deutsche Bank AG (DBK).

Takaful statistics reveal that the growth of the business is slowing, amplifying pressure on the sector to boost efficiency, roll out new products and try out new markets.
According to Shyam Sankar, regional head of insurance sales through bank channels at Bahrain-based Medgulf Allianz Takaful, the industry's big challenges contain building product awareness and making consumers realise the importance of saving over the long term.

The Supreme Council of the Armed Forces seminar titled ‘January Revolution and Horizons of Economic Growth' has the strong oppinion that Egypt’s economy is at risk.
The statement was based on the unprecedented decline of economic conditions in post-Mubarak Egypt: poverty rates at 70%, economic growth sliding to 1 to 2%, and hard currency reserves that have descended to $28 billion from $36 billion.
Egypt finds itself at social, economic and political crossroads. As the post- Mubarak government is still struggling to fulfill the existing societal challenges and fulfill the people’s revolutionary aspirations, socially responsible behavior (SRB) on the othger side, taken on by both individuals and corporations seems to be a real promise.

Qatar Islamic Bank's first-quarter profits jumped 21% on higher fee and commission revenue, beating analysts estimations.
Qatar’s banks improved lending as the country raised spending on infrastructure including a new airport, seaport, roads and rail systems. Central bank data reveals that the nation’s total credit facilities, including loans, rose an annual 31% in February while deposits were up 5.5%.

Allen & Overy, associated with local law firm Abdulaziz AlGasim Law Firm, advised Saudi Electricity Company (SEC), on the successful closure of its $1.75 billion dual-series Sukuk issue. The transaction represents SEC's first international Sukuk issuance and the largest international debt capital markets issuance to date out of Saudi Arabia.
The transaction was organized as a Sukuk al-ijara, with the two series of trust certificates launched by Saudi Electricity Global SUKUK Company.

An UMNO-linked Muslim scholar and economist has characterized the study loans supplied by the National Higher Education Fund Corporation as un-Islamic.
Dr Asyraf Wajdi Dusuki, head of research at the International Shariah Research Academy for Islamic Finance (ISRA), states that the current practice of dictatting a 'service charge' on borrowers was not excused by Islam and was contrary to Islamic financial laws as agreed by Islamic scholars.
According to him, the service charge must show the actual cost and cannot be based on a percentage of the loan.

The National Commercial Bank has recently cooperated in the Islamic Finance Forum coordinated by Harvard University in the United States of America. The forum is a praised annual event that gathers top scholars, researchers and analysts, with economists and industry leaders in Islamic Finance from around the world.
Being at its tenth session this year, the forum's agenda was centered on discussing the role of Islamic finance in the global economic development, underlining the latest challenges facing the growth of the industry and defining the competitiveness and opportunities inherent in Islamic finance as a potential alternative for the conventional financial system.

Qatar is searching to deepen its debt market. Regarding this aspect, it may list local-currency government bonds and sukuk on the country's bourse this year.
Qatar began to sell treasury bills in May to achieve excess funds in the banking sector and set benchmark rates for companies to issue local-currency debt.
Moreover, the country could spend close to $100 billion (Dh367 billion) in "the medium-term" on projects, involving the completion of a port and airport, a metro system and roads.

According to MCIS Zurich Insurance Bhd and Bangkok Bank Bhd, Johor Corp will apparently pay less than AAA issuers to sell US$976 million of sukuk on local-government guarantees.
They say that Johor Corp could price the 10-year Islamic notes to yield 30 basis points more than non-Islamic sovereign bonds.