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Global Islamic banking assets are expected to reach $1 trillion by the end of the year as Sharia-compliant financing increases market share in emerging markets, according to the consultancy firm EY. Sharia-compliant assets of commercial banks in Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey are set to exceed $801 billion in 2015, representing 80 per cent of international banking 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, EY said. Islamic finance is especially picking up in the corporate world, where demand for sukuk has been on the rise in the Middle East in recent years.

Kazakhstan's central bank is considering halving the capital requirement for Islamic banks to 5 billion tenge ($16.3 million) from 10 billion tenge, part of a series of initiatives to attract foreign capital to Central Asia's largest economy. The majority Muslim state is keen to develop Islamic finance, according to a Thomson Reuters study released on Tuesday. A proposed reduction in capital requirements for Islamic banks would apply for both local and foreign investors, deputy governor Nurlan Kussainov was quoted as saying in the study. This could encourage new entrants in a market that now has one full-fledged Islamic bank, Al Hilal Islamic Bank.

Shahjalal Islami Bank has reappointed Farman R Chowdhury as its managing director and chief executive, the bank said yesterday. Chowdhury will serve the bank for the next three years, it said in a statement. He joined Shahjalal Bank in 2013 as its managing director and chief executive. Prior to this assignment, he served ONE Bank as its managing director for six years. Chowdhury started his banking career in 1986 as a management trainee at American Express Bank and served there for 12 years. Later, he joined ONE Bank in 1999 as its first branch manager and served there until 2013.

Standard Chartered Pakistan has established a Shariah board to help guide the bank's transactions in accordance with the principles of Shariah. This board has been formed in compliance with the Shariah Governance Framework and from the directives of State Bank of Pakistan. The members are: Sheikh Nizam Yaquby (Chairman), Mufti Muhammad Abdul Mubeen, Mufti Irshad Ahmad Aijaz and Mufti Muhammad Abdullah. Through liasing with the board of directors and senior management of the bank, the Shariah board shall ensure Shariah compliance as per regulatory requirements. The board would also endeavour to provide guidelines for devising new products and services.

Bahrain-based Ithmaar Bank and Tamkeen have announced the launch of a joint financing solution designed specifically to support private sector enterprises in the Kingdom. The financing scheme offers private sector enterprises amounts of up to BHD 500,000 at a subsidised reduced profit rate, a repayment tenor option of up to 10 years, and grace periods of between one month and two years. Participating SMEs can also benefit from a variety of unique features, as well as exceptional flexibility in repayment methods, including monthly, quarterly, and semi-annual payments. The announcement follows an agreement earlier this year to add BHD 10 million to the joint Ithmaar-Tamkeen enterprise finance scheme portfolio which aims to help private sector enterprises meet their financing needs and achieve their business objectives.

European Islamic Investment Bank PLC on Friday said it has changed its name to Rasmala PLC, effective immediately. The company said it would make a further announcement on the subject before the end of the year.

The world's second-largest asset manager by market value plans to attract some of the US$376 billion (S$528 billion) parked in Malaysian bank deposits by setting up global Islamic stock and bond funds next year.
Franklin Templeton Investments, which has more than US$801 billion in assets, will seek approval from the regulator to start at least two syariah-compliant funds to serve as offshoots from the three it has in Luxembourg, country head Sandeep Singh said in an interview in the Malaysian capital last week.
That would complement similar investment options available from CIMB- Principal Asset Management and RHB Islamic International Asset Management.
The new funds will widen choices for Malaysians looking to diversify after this year's 17 % plunge in the ringgit and a political scandal hurt confidence. A looming US interest rate increase has already prompted global investors to offload twice as many stocks in the South-east Asian nation as they did for all of last year as well as to cut bond holdings.

Product innovation has become imperative for the Islamic finance industry. This is going to be one of the key growth drivers for the industry in the coming years as demand for new products across segments such as Islamic banking, Takaful, sukuk and funds rises thanks to increased understanding and acceptance of Sharia-compliant products.
Islamic banking
Islamic banks are struggling with lower profitability compared to the conventional banks. The estimated 19 % lower profitability of Islamic banks compared to the conventional banks can be primarily attributed to higher expenses and lower average product holding (APH) per customer. Islamic banks have an APH of 2.1 compared to the APH of 4.9 for the conventional banks. Higher profitability can be aimed and achieved by Islamic banks by developing new products, which would provide cross-selling opportunities and higher APH. Islamic banks can also benefit from shedding their existing obsolete systems and embracing technological innovation to bring down costs.
Sukuk

The Bahrain-based International Islamic Financial Market (IIFM) launched a standard contract template for sharia compliant cross currency swaps on Thursday, as the industry body seeks to enhance use of hedging tools in the sector. As Islamic finance grows, institutions are increasingly taking larger positions, often in various currencies, prompting the need for widely-accepted mechanisms to manage such risks.
It is the seventh standard issued by the IIFM, a non-profit industry body which develops specifications for Islamic finance contracts. Applications of the standard are mainly for interbank treasury placements, but it can also be used alongside Islamic bonds (sukuk) as well as trade and corporate finance deals, chief executive Ijlal Ahmed Alvi told Reuters.

The board of directors of Faysal Bank has decided to covert make the bank’s operations Sharia compliant from conventional, but the snail’s pace migration is raising questions about its success in a highly competitive regime and in times when Islamic banking is expanding at a fast pace.

The bank is operating its 277 branches with 63 dedicated Islamic Banking branches having vision to migrate overall operation into full-fledged Islamic banking in next three to four years but its strategy is not being reflected into its plan but seems confusing with its offering to customers and investment in government papers. In a talk show “Aap Aur Karobaar” on Business Plus Tv, Host Khalil Ahmed and Banking Analyst SN Arif discussed business, operations and strategy of bank and its success in its peer in the banking industry.

The Kuala Lumpur-based Islamic Financial Services Board (IFSB) plans to develop guiding principles for capital markets and insurance, seeking to encourage regulatory consistency across new and established markets, its secretary general said.
The new guidelines from the 188-member IFSB, one of the main standard-setting bodies for Islamic finance, will complement existing ones which cover commercial banking.
A wider set of standards could assist the International Monetary Fund which plans to include Islamic finance in its surveillance work, known as the Financial Sector Assessment Program (FSAP).
"Before the FSAP there has to be a set of core principles and that really is the instrument that we feel is going to point the way and facilitate consistency across borders," IFSB secretary-general Jaseem Ahmed told Reuters.
The standards on capital markets and Islamic insurance (takaful) would complement regulatory guidance from the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS).

More than 1200 distinguished guests from more than 45 countries and 300 organizations participating this December, Bahrain

Key players from the global Islamic finance industry will be participating with the 22nd annual World Islamic Banking Conference (WIBC) 2015, taking place on the 1st, 2nd and 3rd of December at the Gulf Hotel, Bahrain. Focusing on 'New Realities, New Opportunities', WIBC will play host to more than 1200 leaders including Central bank governors, regulators, C-suite bankers & asset managers, policy makers, Fintech entrepreneurs and contemporary thought leaders.
WIBC 2015 will host 5 central bank Governors and deputy governors and feature speeches and discussions by the Governor of the Central Bank of Bahrain, H.E. Rasheed Al Maraj, the Executive President of the Central Bank of Oman, H.E. Hamood Sangour Al Zadjali, Deputy Governor of the State Bank of Pakistan, Riaz Riazuddin and the Deputy Governor of the National Bank of Kazakhstan, Nurlan Kussainov.

The Islamic Financial Services Board (IFSB) and International Shari’ah Research Academy for Islamic Finance (ISRA) have successfully organised a Shari’ah Roundtable themed, ‘Financial Safety Nets: Striking a Balance between Shari’ah Requirements and the Soundness of the Islamic Financial System’. The Roundtable was held on 5 November 2015 in Kuala Lumpur, Malaysia.
The Roundtable aimed to provide a platform to Shari’ah scholars, legal practitioners, regulators and market players for having in-depth deliberations on key aspects of financial safety nets such as Lender of the Last Resort (LOLR) and Deposit Insurance Schemes from the Shari’ah perspective.
Over 70 delegates from nine jurisdictions among the IFSB members and non-member organisations – representatives from market players, regulatory bodies, and international agencies – Shari’ah scholars as well as academia attended this Roundtable.

Turkish Islamic bank Albaraka Turk has received initial pricing feedback in the 10 % area for a potential U.S. dollar-denominated sukuk issue which would bolster its supplementary or Tier 2 capital, sources familiar with the matter told Reuters on Thursday.
The lender has received indications of interest totalling over $250 million, including those from joint lead managers, for the ten-year non-call five sukuk, the sources said. A potential deal is expected early next week subject to market conditions, they said.
Albaraka Turk, a unit of Bahrain-based Al Baraka Banking Group, has chosen Barwa Bank, Dubai Islamic Bank, Emirates NBD, Nomura, Noor Bank, Standard Chartered and QInvest to arrange the sukuk issue.

Banks in the United Arab Emirates are working together to try to stem the number of small business owners fleeing the country with unpaid debt, a trend that has already reached around 5 billion dirhams ($1.4 bln) this year, a senior banking official said. Small and medium-sized enterprises have come under pressure in recent months amid a gradual drying up of liquidity in the banking system due to the weak oil price and slowing economic growth. As a result, some business people have chosen to "skip" the country, leaving behind unpaid debt, a situation that bankers say has grown significantly from last year, although they did not provide precise figures. In a country where under existing legislation, a bounced cheque risks landing the issuer in jail, many of those absconding fear the consequences if they stay. "We want to take coordinated action on risk management," UAE Banks Federation chairman Abdul Aziz al-Ghurair told reporters on the sidelines of a banking conference

Prime Minister Najib Razak’s plan to revive Malaysia’s faltering economy is getting no help from the country’s Islamic bond market.
Yields on government 10-year sukuk, used by companies to gauge the cost of Shariah-compliant financing, are at their highest level in 18 months relative to two-year securities, according to data compiled by Bloomberg. And with the slide in Brent crude prices sapping Malaysia’s oil-export revenue against a backdrop of looming U.S. interest-rate increases, investors say longer-term borrowing won’t be getting cheaper anytime soon.
“With the U.S. expected to raise interest rates soon, Malaysia’s yield curve will remain steep next year,” said Elsie Tham, a senior fund manager at Kuala Lumpur-based Manulife Asset Management Services Bhd who oversees more than US$1 billion. “Companies will find it challenging to raise funds because of slower economic growth.”

Rapid growth in Islamic finance in recent years is pushing up demand for more experts in the field, with the Financial Accreditation Agency (FAA) identifying five key areas in which specialists are urgently needed.
However, programmes offered by local universities now are too generic and provide only a broad-based education on Islamic finance, noted FAA chief executive Dr Amat Taap Mashor in an interview with The Edge Financial Daily.
The industry and its future growth, at the very least, require experts that are specialised in compliance, risk management, governance, audit and the syariah principles guiding all these areas of expertise, he said.
“What is needed now are specialised areas of studies. Currently, if someone wants to specialise in risk management for Islamic finance, the [local] universities might offer only one class on risk management. How is the student supposed to develop the depth of knowledge needed [in] Islamic finance?
“Without a depth of knowledge in syariah principles, how can you design a syariah-compliant product?” asked Amat.

The inadequate availability of Sharia'a-compliant financial instruments is a challenge for the GCC Islamic banking industry, leading to excess liquidity and an uneven playing field for Islamic banks that might affect their growth, according to the International Monetary Fund (IMF).
An IMF working paper released on Monday said liquidity management has been a long-standing concern in the Islamic finance industry as there is a general lack of Sharia'a-compliant instruments that can serve as high-quality short-term liquid assets.
'The inadequate availability of Sharia'a-compliant financial instruments seems to have forced Islamic banks to hold a significant amount of cash reserves, limiting the flexibility of the central bank's monetary operations with Islamic financial institutions. Therefore, a key challenge is to broaden the range of Sharia'a-compliant instruments and build liquid markets', the report said.

Albaraka Turk Kat?l?m Bankas? (Albaraka Türk), has mandated seven banks to arrange a Basel III compliant Reg S tier two subordinated sukuk — only the second from Turkey and the first in sukuk format.
The roadshow for the bond starts on Friday, with meetings taking place in Europe, Asia and the Middle East.

Jaiz Bank Plc, Nigeria’s sole Islamic bank has announced the appointment of Mahe Abubakar as the acting Managing Director/CEO of Jaiz Bank Plc.
Until his appointment, Abubakar was an Executive Director in charge of Business Development.
A statement from the Head, Corporate Communications Department of the Bank, Idris Salihu said Abubakar is taking over from Muhammad Nurul Islam, whose two-year contract ends on the 17th of November, 2015.
Salihu said the Board expressed gratitude to Islam for his innumerable contributions towards the growth and success of Jaiz Bank Plc in the last two years.
Nurul Islam joined Jaiz Bank in November 2013 and turned it around from a negative balance-sheet to a positive result in 2014. “He came in on a Technical Agreement Jaiz Bank has with the Islamic Bank of Bangladesh to train and put the staff of Jaiz Bank through Islamic Banking because of their long experience in the subsector” the statement said.
Jaiz Bank is now operating in 21 locations from the 10 locations he met. Under Islam’s leadership, Jaiz also obtained Approval-in-Principle for a license from the Central Bank of Nigeria to operate nationwide.