IslamicFinance.de

Islamic banks in the UAE have proved that they are better equipped to deal with a difficult operating environment than their conventional peers, with all leading institutions reporting strong growth in assets, profits and asset quality in 2015. Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE by total assets, reported a group net profit of Dh3.83 billion, up 37 per cent compared Dh2.8 billion in 2014. Total income increased to Dh7.54 billion, up 21 per cent compared with Dh6.23 billion for 2014. Net revenue increased to Dh6.48 billion, up 19 per cent compared with Dh5.43 billion for the year 2014. Meanwhile, Abu Dhabi Islamic Bank’s (ADIB) full-year net profit stood at Dh1.93 billion in 2015, growing 10.5 per cent on the previous year.

Islamic banks in the UAE delivered strong shareholder returns last year as they reported strong earnings and better asset quality. Dubai Islamic Bank’s (DIB) earnings per share increased to Dh0.81 in 2015 from Dh0.61 in 2014, return on assets increased by 40 basis points to 2.80 per cent in 2015 from 2.4 per cent in 2014. Return on equity increased by 190 basis points to 19.8 per cent in 2015 from 17.9 per cent in 2014. For the year, the DIB board has recommended distribution of a cash dividend of 45 per cent. Abu Dhabi Islamic Bank’s (ADIB) maintained strong liquidity position while simultaneously continuing to manage its cost of funding.

Guyana, which joined the Organisation of Islamic Cooperation (OIC) in 1998, but not the Islamic Development Bank (IsDB), an organ of that group, will finally join the bank by mid-year according to Finance Minister Winston Jordan. Since Guyana is now a low-middle-income country, it cannot easily access concessionary loans from traditional lenders, and this is one reason why Guyana will join 56 other countries that are members of the IsDB. The IsDB now wants to market its product in the Caribbean and, with Guyana now poised to join, the bank will open an office in a Caribbean Community (CARICOM) country.

Azerbaijan could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance. Azerbaijan, alongside Kazakhstan and Tajikistan, are among several central Asian countries creating a more welcoming framework for sharia-compliant banking with the help of the Jeddah-based Islamic Development Bank. A working group of cabinet minsters and the IDB is making progress on the legislation, which would allow the proposed Islamic bank to launch next year, said Behnam Gurbanzada, chief executive of Islamic finance consultancy BEST Solutions.

Malaysia’s Maybank Islamic Bhd says the investment account (IA) business is set to be a game changer for the group in its effort to boost earnings growth amid the subdued banking landscape. The Islamic lender, which has total assets worth close to RM147bil, will focus on its new mudarabah (profit-sharing) investment fund launched in July last year in view of the Islamic Financial Services Act (IFSA) 2013. Describing the IA business as “the evolution of the next phase of growth”, Maybank Islamic chief executive officer Datuk Muzaffar Hisham said that demand for the IA business has shot up significantly, as the value of its mudarabah fund rose to RM18bil in the last six months of 2015.

A new Bank of England consultation, which closes on 29 April, builds on a feasibility study carried out last year and sets out two possible deposit facilities, and two possible liquidity insurance models. The idea behind the proposals is to help firms that are prevented by Shari’a law from undertaking activities involving interest to manage fluctuating liquidity demands and ride out periods of particular stress. Although the consultation sets out options for both Shari’a compliant deposit facilities and liquidity insurance, the Bank of England said that it was prioritising the former as the area of greatest demand. Following the consultation and further analysis, it will decide whether any of the proposals are feasible, it said.

Azerbaijan could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance, Behnam Gurbanzada, an advisor to the new venture said. Azerbaijan, alongside Kazakhstan and Tajikistan, are among several central Asian countries creating a more welcoming framework for sharia-compliant banking with the help of the Jeddah-based Islamic Development Bank. A working group of cabinet ministers and the IDB is making progress on the legislation, which would allow the proposed Islamic bank to launch next year, said the independent Islamic finance consultant. The proposed Islamic bank would be able to launch operations as soon as the legislation is passed, said Gurbanzada.

The European Court of Justice ruled on Thursday that the assets of Iran's Bank Mellat should not have been frozen from 2010, dismissing an appeal brought by the European Council. The Council, the grouping of the EU's 28 member states, froze the funds of a number of Iranian financial entities from 2010 to combat Iranian activities that could have led to it developing nuclear weapons. In Bank Mellat's case, the Council said that it engaged in conduct which supported and facilitated Iran's nuclear and ballistic missile programmes. The court ruled that the reasoning set out did not enable Bank Mellat to establish which banking services it provided to which entities, particularly as the persons whose accounts it managed were not identified.

The Cameroonian subsidiary of the Pan African banking group Ecobank now offers to its clients the "Mudaraba saving account", which follows the rules of Islamic finance. Ecobank Cameroun thus joins on this segment Afriland First Bank, a credit institution with Cameroonian majority shareholding, which went into Islamic finance some years ago, with the Islamic current account (compte de dépôt islamique - CDI). On 20 February 2015, this Cameroonian bank officially opened a branch focused on Islamic finance, with the support of the International Company for the Development of the Private Sector. During the first year of operation of this specialised branch, Afriland First Bank was planning to collect around FCfa 3 billion, based on the 20% of the Cameroonian population of Muslim faith.

The capital markets arm of Abu Dhabi Financial Group (ADFG) has raised its stake in Dubai-listed GFH Financial Group to 10 percent, ADFG said on Wednesday. Integrated Capital's stake was 7.4 percent previously, data from the Dubai Financial Market shows. Bahrain-based GFH, an Islamic investment bank, is among the most traded stocks on Dubai's bourse. The shares have gained 41 percent since the end of November, while Dubai's index fell 4.4 percent over the same period. ADFG has about $3.2 billion in assets under management, its statement said.

A group of six Malaysian Islamic banks has launched a sharia-compliant investment platform that could shift the role of Islamic lenders to investment intermediaries from credit providers currently. The Investment Account Platform (IAP) will serve as a central marketplace to finance small and medium-sized businesses, with the Malaysian government backing the scheme with an initial RM150 million in funds. Chief executive Mohamed Izam Mohamed Yusof said they were looking at raising between RM200 million and RM300 million (US$47.53 million to US$71.29 million) through the IAP over the next two to three years. Its maiden project could be listed as early as next month, with future plans including listings in other currencies, he added.

There are a growing number of transactions in the Turkish market that are financed by GCC institutions; and the Gulf States are steadily rising investors in Turkey. Among the lastest crop of deals, Qatar’s QInvest has provided a five year $30m murabaha mezzanine finance facility for Turkish private equity firm Crescent Capital to fund its acquisition of a 100% stake in Akocak HPP, an operational 81 MW hydro-electric power plant in Turkey. QInvest has structured and invested in the transaction. The deal also shows that traditional project finance structures are giving way to alternative financing structures, with Islamic finance showing potential for further growth in the funding of capital goods projects.

Faisal Islamic Bank of Egypt's volume of business has increased by 7.4 percent to register EGP 56.141 billion (US$7 billion) at the end of January 2016. The indicators also revealed that the bank's volume of business hit EGP 52.259 billion at the end of January 2016. Furthermore, the total assets of the bank increased by 7.6% from EGP 51.756 billion in January 2015 to EGP 55.701 billion in January 2016. In addition, the bank's current accounts and saving pools rose 7.5% to record 49.494 billion, compared to 46.048 billion in the same period of the previous year. However, the Liquid assets gained 6.6% to LE 3.081 billion, up from LE 2.889 billion in the same period a year earlier. Meanwhile, the bank accounts inched up 3.5% to 1.157 million, up from 1.117 million a year earlier.

Many prospective banking customers cannot easily discriminate between the convential and the Islamic banking system. Despite this lack of clarity, the number of Islamic banks and Islamic banking counters of conventional banks have increased by the day. The question to ask is as to how exactly are they operating here and what models are they adopting in the presence of a well-established interest based banking system. Around 99 per cent Islamic banking in Pakistan revolves around lending and buy-back model and not even one per cent is based on profit and loss sharing. A physical asset is involved in deals. The real challenge for Islamic banks is how to cater to the borrowing needs of the government that are huge.

Bank Nizwa SAOG has signed an agreement to provide a structured financing facility of USD 50 million to Hydrocarbon Finder E&P LLC (HCF), an independent Oil & Gas exploration & production company. The Bank's Shari'a-compliant package is tailored to meet the requirements of HCF, which has been granted concession rights by the Government of Oman for oil & gas exploration, development and production within an onshore geographical area in Oman termed as Block 7. Hydrocarbon Finder E&P LLC is part of the Services & Trade (S&T Group), an Oman based business conglomerate. The Facilities agreement was signed by Dr. Jamil El Jaroudi, CEO of Bank Nizwa and Brig. Gen. (Retd) Sulaiman Al Adawi, Group Chairman of the S&T Group, on February 10th in Muscat.

As high as 38 percent of KSA respondents would recommend their bank as a first choice to friends or colleagues according to the first ever NPS Survey conducted in the Kingdom by Souqalmal.com. Respondents were asked to evaluate various aspects of the overall banking experience. The parameters covered customer service, product offerings and financial education, among others. The results of the survey have been used to conceptualize the inaugural Souqalmal Bank Satisfaction Index. The ripple effect of the findings will be discussed in greater detail at a FINTECH event to be held in Dubai on February 25. Souqalmal.com will also be factoring in data from the NPS Survey to award the Most Recommended Bank in KSA and UAE at the event. The nominees from KSA are National Commercial Bank, the Saudi British Bank and Alinma Bank.

A potential listing of Bank Muamalat Malaysia Bhd could be an option should its major shareholder DRB-Hicom Bhd fail to find a suitable suitor to buy up a stake in the bank. The requirement to pare down DRB-Hicom’s stake in Bank Mualamat is to comply with Bank Negara’s requirements from current 70% to 40%, which has been delayed for a few years. Last week, the proposed merger between Malaysia Building Society Bhd (MBSB) and Bank Muamalat was called off as the parties involved were not been able to reach an agreement on the terms and conditions. Disagreement over valuations and control were believed to be factors that led to the breakdown of negotiations that began last October.

Warba Bank said Tuesday it registered a million Kuwaiti Dinars (KD) (USD 3.3 million), or one fils per share, in profits for the Fiscal Year (FY) ending last December. The bank's 2014 profits were KD 115,000 (USD 383,526). Warba Bank said in a statement on Kuwait Stock Exchange's (KSE) website that its board members did not recommend distribution of profits for shareholders for FY 2015. Total shareholders' equity for last year was around KD 92.2 million against KD 91.8 million the year before. Warba Bank was established in 2010 with a KD 100 million capital, and was listed in KSE in 2013.

Un an après l'adoption de la loi autorisant l'implantation de banques islamiques au Maroc, un troisième acteur va faire son apparition sur la scène de la finance islamique au royaume, en l'occurrence de la Banque participative du Maroc. La nouvelle banque est née du partenariat entre la Banque populaire et le groupe américain Guidance financial Group pour créer une filiale (détenue à 80% par la BP) proposant des produits islamiques. Jusque-là, deux banques islamiques ont été créées au royaume. Il s'agit d'Al Baraka Bank, détenue à parts égales par BMCE Bank of Africa et le groupe bahreïni Baraka Banking Group, et Qatar International Islamic Bank (QIIB).

Freed of international sanctions, Iran has asked India to reactivate its accounts with Indian banks and allow Iranian banks to open offices here. Keen to quickly normalise banking and commercial relations with the world, Tehran also wants UCO BankBSE -3.50 % to open a representative office in Iran. Tehran has already opened an account with IDBI Bank. Central Bank of Iran's vice governor Gholamali Kamyab has conveyed to Indian authorities that Bank Pasargad and Parsian Bank were keen to open representative offices in India while Saman Bank was interested in opening a subsidiary, they said. State Bank of India (SBI) has accounts of 11 Iranian banks including Central Bank of Iran (CBI).