IslamicFinance.de

Fitch Ratings says it expects Turkish Islamic banks' loan growth to remain above the sector average, supported by new entrants to the market and increasing penetration, despite intense competition from conventional banks. Excluding the troubled Bank Asya, Islamic banks (participation banks) expanded their loan books 34% YoY in1H15, compared with sector's average of 25%. For 2016 Fitch forecasts 15%-20% loan growth for the sector. In a report published today, Fitch says return on equity could increase in 2016, underpinned by loan growth, but will be sensitive to non-performing loan (NPL) growth due to the banks' fairly high credit risk profiles and a volatile operating environment.

Customers wanting assurances their investments “will not be channelled into the typical sin industries” is one of the reasons cited for a growth in demand for Islamic finance in South Africa. That’s according to Amman Muhammad‚ the FNB Islamic Banking’s CEO. Over the last few years‚ the bank has seen a consistent rise in the number of South African citizens‚ irrespective of faith‚ who have approached them for various Islamic banking services such as investment accounts‚ vehicle and property finance, he stated. Muhammad said that personal principles are starting to influence the type of banking solutions people choose.

Saudi Arabia's Al Rajhi Bank reported a 28.2 percent rise in its fourth-quarter net profit on Thursday, beating analyst forecasts as operating income was pushed up by higher fee income from banking services and other revenue. The kingdom's second-largest lender by assets made 1.95 billion riyals ($519.6 million) in the three months to Dec. 31, up from 1.52 billion riyals in the same period a year earlier. Samba Financial Group, the kingdom's third-largest bank by assets, reported flat net profit for the fourth quarter. It concludes a mixed earnings season for banks, with as many profit falls as rises at the kingdom's major lenders as the slump in oil prices begins to take some toll. Samba made a profit of 1.23 billion riyals in the three months to Dec. 31, the same figure it reported for the corresponding period a year earlier.

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.

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.

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%.

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.

Abu Dhabi's government-owned Al Hilal Bank has closed a $175 million Islamic loan transaction with three banks, sources aware of the matter said on Thursday. The loan has a life span of two years. The transaction was arranged by Commerzbank, Emirates NBD and National Bank of Abu Dhabi, they added. Al Hilal Bank's spokesman declined to comment. The sharia-compliant lender is one of a number of Gulf-based banks seeking funds to help ease a squeeze on liquidity caused by lower oil prices. The sources on Thursday declined to give the pricing of the loan, although bankers said in November that Al Hilal Bank was marketing the loan with all-in pricing of 150 basis points over the London interbank offered rate (Libor).

Bank Islam Malaysia Bhd (BIMB) expects slower growth in 2016 compared to last year amid the current economic challenges, according to managing director Datuk Seri Zukri Samat. He said he hoped the bank will maintain double-digit growth in terms of financing performance as achieved last year. Asked on plans to open more Bank Islam branches this year, Zukri said the bank was still assessing the current economic situation. He said the bank was eyeing 600,000 payWave debit cards issued in 2016, up from 200,000 cards issued by end-December 2015. Zukri said the bank had invested millions of ringgit in the “E-donation” Terminal Using Visa PayWave programme, and aims to provide these terminals to 10 mosques nationwide, including in Sabah and Sarawak.

Khazanah Nasional Bhd may sell its stake in Bank Muamalat Malaysia Bhd only after the latter merged with Malaysia Building Society Bhd (MBSB) to form the country's largest full-fledged Islamic bank. Reiterating that it is not taking the lead in negotiations, Khazanah managing director Tan Sri Azman Mokhtar said the country's strategic investment fund is not particular about the structure of the merger, provided the valuations are fair. It has been reported that the merger would be effected via a share swap. There have been various scenarios bandied about on Khazanah's preferred outcome for its 30% stake in Bank Muamalat. DRB-Hicom Bhd holds the remaining 70% of Bank Muamalat.

Zain Jordan has signed a MoU with the Islamic International Arab Bank on supporting entrepreneurs and startups. Under the agreement, the Islamic International Arab Bank will provide support for Zain Jordan's Innovation Campus members in various areas of collaboration, in addition to exploring development opportunities in creativity and entrepreneurship. Zain Jordan CEO Ahmad Hanandeh said that Zain supports startups in facing challenges and equips them with the latest technological tools.

Looking to 2016 and beyond, innovation will continue to be critical for the ongoing development of the Islamic finance industry. For instance, efficiency can still be improved as Sharia-compliant institutions still lag behind their conventional counterparts, and are increasingly looking to embrace technological innovation in order to minimise operational costs as well as project a modern face of banking that would appeal to a younger generation of customers, which will be critical for ongoing growth. Another area of development is the Islamic asset management sector, as the range of services available remains quite limited and there is a general lack of quality products in this space.

Al Baraka Banking Group (ABG) has announced that Islamic International Rating Agency (IIRA) has assigned national scale investment grade credit ratings of 'A- (SD)/A-2 (SD)' (A Minus/A Two) to Al Baraka Bank Sudan (ABBS or 'the bank'), its majority owned subsidiary in Sudan operating since 1984. Outlook on the assigned rating is 'Stable'. IIRA observed that ABBS maintains sizable liquid reserves, with solid liquidity and that asset quality indicators have improved and are better than the banking sector average. The bank achieved a general improvement in profitability, driven by consistent increase in gross revenue supported by low cost of deposit funding. The rating has taken into account the various economic and financial challenges faced by banks in Sudan.

Islamic International Rating Agency (IIRA) has assigned national scale credit ratings of 'A- (SD)/A-2 (SD)' (Single A Minus/A Two) to Al Baraka Bank Sudan (ABS). Outlook on the assigned rating is 'Stable'. Ratings derive strength from the bank's franchise and an overall conservative approach to business. Its retail presence in Sudan, is reflected in a cost effective deposit base. Ratings take into account the various economic and financial challenges faced by banks in Sudan. ABS derives strategic guidance from its parent's international experience and established banking processes and systems. The fiduciary score has been assessed in the range of '71-75', whereby rights of various stakeholders are adequately defined.

Islamic International Rating Agency (IIRA) has assigned national scale credit ratings of ‘A- (SD)/A-2 (SD)’ (Single A Minus/A Two) to Al Baraka Bank Sudan (ABS). Outlook on the assigned rating is ‘Stable’. Ratings derive strength from the bank’s franchise and an overall conservative approach to business. While impairment is high in absolute terms, overall asset quality indicators have improved on a timeline basis. The bank features general improvement in profitability, with revenues growing consistently. Capitalization levels remain notably higher than the minimum required and industry average. However, given risks in the general environment, reinforcement of capital as envisaged under the bank’s strategy would strengthen its risk profile and support future balance sheet growth.

Kuwait's Warba Bank has announced the acquisition of equipment leasing portfolio managed by ATEL Capital Group, an independent equipment lessor based in the United States of America. As part of the transaction, the Bank has initially invested US$8.2 million in a diversified portfolio of Operating leases comprising of high-quality low-tech low-obsolescence mission-critical equipment leased to investment grade corporations in United States. Established in San Francisco, California, in 1977, ATEL has originated and managed over $2 billion of equipment leased to primarily investment grade US corporations. Over the last three decades, ATEL has built a reputation as one of the largest independent equipment leasing enterprises in the United States.

Bank Asya, which is known for its links to the Gülen Movement, has been fined TL 15 million ($5.14 million) for unpaid taxes. The Finance Ministry's tax authority imposed the fines after examining the bank's accounts for 2010, 2011 and 2012. In May, the BDDK's audit report on Bank Asya revealed that the bank's privileged shareholders signed blank transfer contracts and a large number of shady transactions were carried out. After 63 percent of stakes belonging to the bank's A group shareholders were transferred to the TMSF in February, the BDDK launched an investigation into the bank, finding a number of dubious transactions in investigations. In addition, the international credit rating agency Fitch said in June that Turkey's banking sector would not be significantly affected by the takeover of Bank Asya.