IslamicFinance.de

Kuwait Finance House (KFH), the country’s biggest Islamic lender, saw an 11 percent drop in loan loss provisions in the first nine months of the year.
On Thursday, KFH posted a 23 percent decline in third-quarter net profit. Net income in the three months to Sept. 30 fell to 26.5 million dinars compared with 34.3 million dinars with the same period a year ago.

The global Islamic bond market could see issues of close to $46bn in 2011 as investor confidence returns and new issuers emerge in the growing Islamic finance industry.
With economies recovering from the financial crisis and the restructuring of state-owned entities like Dubai World gaining momentum, sukuk is once again going to emerge as the preferred way to raise money, Humayon Dar told Reuters on the sidelines of a conference in Dubai.

Through its member organization Islamic Corporation for Development of the Private Sector (ICD), the Islamic Development Bank (IDB) has started replicating the schemes tested in co-operation with Azerbaijan.
The IDB reports that ICD general manager Khaled Al-Aboodi and chairman of the State Bank for Foreign Economic Affairs of Turkmenistan Ragimberdi Jepbarov signed the Memorandum of Understanding (MOU) on development co-operation.
The Memo has a focus on the development of the private sector, especially small- and medium-size enterprises, financial sector, agriculture, logistics, construction of affordable housing, services and manufacturing industries. The IDB will also render technical assistance and consultations within the framework of Islamic financing.

Albaraka Banking Group BSC, the biggest publicly traded Islamic lender in Bahrain, expects to complete an acquisition in Indonesia in the first quarter of 2011 as part of an expansion.
The bank has identified targets for the planned transaction in the Asian country. Albaraka has also identified an acquisition target in Malaysia.
Albaraka this year acquired Pakistan’s Emirates Global Islamic Bank Ltd., which boosted its network in the country to about 90 branches. It also began operations in Syria this year.
The Manama-based bank has received approval to set up a representative office in Libya to benefit from the country’s strong trade ties with other markets where the bank operates, such as Egypt, Turkey, Algeria and Jordan.
The bank expects total loans to increase 20 percent in 2010.

Islamic finance practitioner Michael J.T. McMillen has partnered with the New York Society of Security Analysts (NYSSA) to teach his celebrated course Islamic Finance on November 23, 2010.
In the course, students will compare and contrast the components of an Islamic financial institution’s balance sheet and income statement to those of a non-Islamic financial institution; identify risks particular to Islamic financial institutions and gauge whether foreign demand for Islamic bonds will rise; and leave with the information they need to include Islamic products in their portfolio.
Caroline M. Owen, CFA, attended the course before and was very impressed.
The course will be held on November 23, 2010 from 1:00 p.m.–4:30 p.m. at 1540 Broadway, Suite 1010, New York, NY 10036.

Until recently the issuance of Islamic bonds, or sukuk, was confined to the Muslim world. But now a number of international borrowers are tapping the markets, including Nomura Holdings in Japan and Europe's first corporate borrower, International Innovative Technologies.
The ratings agencies Moody’s and Standard & Poor’s say they expect to see a rise in the number of sukuk issues by new players over the next 12 months, including issues by borrowers in Singapore, Australia, Luxembourg, Thailand, Hong Kong, France and Russia.
While the Islamic Financial Service Board and the accounting and auditing organization have defined standards for sukuk, defaults over the past year have shown that new guidelines must be set as problems arise, particularly as sukuk start to generate global attention.

The State Bank of Pakistan Thursday notified the de-scheduling of Al Baraka Islamic Bank Pakistan operations on account of its merger with and into Emirates Global Islamic Bank Limited with effect from the close of business on October 29, 2010. The State Bank has also notified the change of name of Emirates Global Islamic Bank Ltd to AlBaraka Bank (Pakistan) Ltd on 29.10.2010.

Islamic banks in the country are developing a local currency sukuk index to serve as a benchmark for sharia-compliant fixed income securities.
The index will track highly liquid, high grade bonds, including on-the-run ringgit denominated sukuk, said the Association of Islamic Banking Institutions Malaysia, which includes the local units of Al Rajhi and Kuwait Finance House.
Malaysia has the world’s largest sukuk market

Swiss insurer Zurich Financial Services AG (ZURN.VX) will continue to eye bolt-on acquisitions in emerging markets and sees Islamic insurance, or takaful, as key to growing its Middle Eastern business.
Zurich earlier in October said it bought privately-owned Lebanese insurer Compagnie Libanaise D'Assurances and recently set up a management unit dedicated to the wider Middle East and Africa region.
The insurer is betting on sharia-compliant insurance sector, corporates and large commercial businesses to grow its presence in the wider Middle East.
Analysts expect the sharia-compliant insurance sector to grow nearly 15 percent annually in the next five years and exceed $7 billion in premium income.
With a penetration rate of around 1 percent of gross domestic product (GDP), the overall Middle Eastern insurance sector lags mature markets but its enormous growth potential has already attracted global heavyweights such as AXA (AXAF.PA) and Allianz AVLG.DE.

R Lakshmanan, Chief Executive Officer of Sakana Holistic Housing Solutions, said that Islamic financial institutions (IFIs) providing mortgages for off-plan properties are significantly exposed to risks due to delayed delivery and cancellation of several real estate projects, because the IFI owns the asset.
In addition, the mortgage providers have also been affected to fall in property prices and increased defaults due to job losses. His presentation focused on Ijara Mawsofah fi Dhimah (Forward Lease) structure of financing which is used by the mortgage providers for off-plan properties.
Lakshmanan also said that due care should be taken while preparing legal documentation with particular emphasis on penalties due to delayed delivery as this may have a financial impact on the IFI’s operating results. In addition, the IFI should ensure robust credit risk/control. Lakshmanan concluded that adoption of better risk management practices will enable growth of Islamic finance.

Emirati housewife Sarah Alzarouni brushed past a group of women clad in floor-length black robes, some with only their eyes showing, to enter through the frosted doors of one of Dubai Islamic Bank’s women-only branches.
Clutching a Louis Vuitton bag to match her designer head scarf, Ms. Alzarouni greeted the female tellers and bank manager with three kisses on the cheek and sat down to do business.
Financial institutions in the conservative Gulf Arab region, where many women are reluctant to mix with men outside their families, are tapping into the niche, with women-only bank branches and investment funds mushrooming.
Saudi Arabia, the birthplace of Islam where unrelated men and women are not allowed to mix, is leading the charge.
Industry experts say more women need to participate in the Islamic banking industry at senior levels to help grow products that appeal to a female clientele. But while the finance industry remains a boys club around the world, the glass ceiling is lower in the Middle East.

Elaf Bank, a closely held Islamic investment bank in Bahrain, has applied for a banking license in Malaysia.
The Southeast Asian nation plans to issue two more Islamic bank licenses, including one of a new lender that will be jointly established by institutions from Asia and the Middle East.
Bank Negara Malaysia already issued conventional licenses to five foreign banks in June, including National Bank of Abu Dhabi and Indonesia’s PT Bank Mandiri.
The bank would use Malaysia as regional hub, covering Singapore, Indonesia and Australia.
It would try to use this as an opportunity to converge differing interpretations of Islamic finance between Malaysia and the Middle East by getting Shariah boards to work closely.

The plan to create national Shariah boards to oversee sukuk sales is drawing criticism from bankers and lawyers who say the groups would increase bureaucracy in the $1 trillion Islamic finance industry.
The Accounting & Auditing Organization for Islamic Financial Institutions, a leading global regulator, is in the final stages of a plan recommending governments appoint panels of scholars and experts at the national level to rule whether products comply with the religion’s tenets, Mohamad Nedal Alchaar, secretary-general of the Manama, Bahrain-based body, said in an interview in Kuala Lumpur on Oct. 26. The proposal will be submitted early next year.
The regulator says such a system will help clarify standards and bolster investor confidence in an industry whose assets are forecast by the Kuala Lumpur-based Islamic Financial Services Board to almost triple to $2.8 trillion by 2015. The changes risk adding bureaucratic hurdles and slowing approvals at a time when sales are down 19 percent this year, according to CIMB-Principal Islamic Asset Management Sdn. and Atlanta-based law firm King & Spalding LLP.

GBSA says results underline need for issuers to communicate with bond and Sukuk investors; that a majority of investors have become more demanding over the past two years and an overwhelming majority feels that good IR can lead to more aggressive pricing of new issues. Fewer indicated that they had had contact with IR staff and most consider the information provided by issuers to be insufficient.
The Gulf Bond and Sukuk Association (GBSA) said it has concluded a survey of Gulf-based issuers and investors on bond and Sukuk investor relations (IR).
Among the key findings, it turns out that a majority of investors have become more demanding over the past two years and an overwhelming majority feels that good IR can lead to more aggressive pricing of new issues. Fewer indicated that they had had contact with IR staff and most consider the information provided by issuers to be insufficient. Most had met issuers on roadshows, but a number were not satisfied with the quality and quantity of information provided.

The Board of Directors of Pak-Qatar Family Takaful (PQFTL) has decided to further invest in the company by issuing right shares up to 33 percent of the base capital. This was decided at the Board of Directors meeting of Pak-Qatar Family Takaful held in Doha recently.
The meeting was chaired by Sheikh Ali bin Abdullah Al Thani, Chairman and was attended by all the members.
PQFTL CEO, P Ahmed appraised the board on the company's position and presented the progress report. Sheikh Ali and other members of the board expressed their appreciation for the company's performance despite the difficult socio-economic conditions of the country.

Islamic Development Bank has signed four agreements with the Republic of Gambia to finance new development projects totaling $46 Million.
The two financing project agreements were signed by Dr. Ahmad Mohamed Ali, the IDB President and Abdu Cooley, the IDB Governor for the Republic of Gambia who also signed the two trade financing agreements with Dr. Walid Al-Wehaib, CEO of the Islamic International Islamic Trade Corporation.
the total financing of IDB Group in Gambia reached around $ 310 Million that included financing of projects in the area of agricultural, micro financing, infrastructure, education, and health as well as trade financing operations.

A report prepared KFHR Limited, a subsidiary of Kuwait Finance House (KFH), brought attention to the fact that the financing deals in compliance with the provisions of Islamic Sharia'a contributed to the growth of aviation and shipping sectors in the region.
This growth was achieved through huge financing deals concluded over the past few years and introduced benefits to these sectors.
The report, which addresses in detail the issues relevant to Islamic finance industry, aviation and shipping, explains that the aviation sector which is seeing strong growth in demand since it emerged from the rescission crisis in 2003 to reach a peak demand in 2007, seems to poise for further recovery given several key factors to support this fact. This level is therefore supported by: (i) rapid development of aviation sector in emerging markets; (ii) booming of low-cost carriers; and (iii) replacement of less efficient aircraft. The overall volume of deals compliant with the provisions of Islamic Sharia'a reached during the period from August 2006 to August 2010, $1.882bn through various structures of Islamic financing.

Bank of London and The Middle East plc , London's leading wholesale Sharia'a compliant bank, today announced the launch of BLMEFX, one of the world's first Sharia'a compliant web-based FX trading platform to provide clients with direct access to multiple currencies in order to undertake overseas transactions.
In a Sharia'a compliant environment, currency trading is used to support cross-border transactions rather than to realise a profit. Under Sharia'a all currency transactions must be backed by a commodity, which has historically made currency trading, as well as related transactions, complex and expensive. Through BLMEFX, corporate and private clients have instant access to a large number of currencies as easily as if they were using a conventional system, thereby making the process much simpler and more cost effective.
BLMEFX, which uses the latest secure Java-based technology with full audit-transparency, has been designed with the emphasis on ease of use. Once a client has been permitted access they can trade on the platform using any of the major Internet browsers available today.

HEWLETT-PACKARD (HP), the world's largest technology company, has issued its maiden US$100 million (RM310 million) sukuk to part- finance the development and construction of its multi-million-dollar next generation data centre (NGDC) in Cyberjaya.
The company, via its Malaysian subsidiary HP Multimedia Sdn Bhd, and CIMB Islamic Bank Bhd signed an agreement to formalise the Islamic term financing facility agreement in Kuala Lumpur yesterday.
At the signing, CIMB Islamic was represented by group chief executive officer Datuk Seri Nazir Razak, while HP was represented by HP Enterprise Services senior vice president for Asia Pacific and Japan, Kevin Jones.
The loan will help finance the development of HP's first phase NGDC project, with an option to be extended to subsequent phases in due course.
Upon completion in 2016, the campus will stand as one of HP's four global network centres, alongside India, Mexico and Costa Rica.

SOUTH Korea is keen to foster further cooperation with Malaysia to beef up its Islamic finance and services sector that is at its infancy stage.
Korea Investment and Securities head of Islamic finance Yul-Hee Lee said there has been many enquiries made by Korean companies on how it can raise funds using the sukuk.
Lee noted that the South Korean government is in the midst of fine-tuning laws on Islamic finance and introducing tax incentives but development is still at its early stage and will take time to be ready.
The South Korean government announced an Islamic financing tax regime for sukuk as early as August 2009.
South Korean firms have been using Islamic finance products for a couple of decades, but only in relation to their business activities in the Middle East.
Post-global economic crisis, Lee said the country is considering other options and diversifying its investments. Part of its plan is to tap into the Islamic finance market.