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Fitch Ratings says that 2009 proved to be, as anticipated by Fitch, a challenging year for banks in Saudi Arabia as the full impact of the global economic crisis caught up with the region, reflected in rising loan impairments and a rapid slowdown in lending. The preliminary 2009 results released by the 10 main Saudi commercial banks rated by Fitch showed different trends in net income in 2009, with Q409 being the worst quarter of the year.

Fitch notes that five of the 10 largest commercial banks operating in Saudi Arabia showed improvements in their net income y-o-y, but overall growth in total net income for all 10 banks stagnated in 2009 y-o-y (2008: -14.2%). Areas of concern included lower domestic economic growth, mainly reflecting lower oil revenues and exports, and the negative impact on asset quality of recent rapid credit growth as well as problematic exposures to some large Saudi trading groups (primarily Algosaibi and Saad). The agency has yet to see the full audited financial statements of the Saudi banks but will review them fully in the near future. At this stage, Fitch does not expect to see further downgrades of Individual Ratings in 2010.

Nobel Laureate Professor Muhammad Yunus and the Chairman of the Board of Trustees of the Royal Charities Organization, Prince Shaikh Nasser bin Hamad Al Khalifa inaugurated the Family Bank, a microfinance bank licensed by the Central Bank of Bahrain, at a ceremony held at the Gulf Hotel Convention Hall in Bahrain recently.

The government is likely to approve an Islamic banking licence for the National Bank of Abu Dhabi. The move comes before the administration unveils its new economic model in which the services sector, and in particular Islamic finance, is given more emphasis.

Legal & General Gulf Takaful B.S.C (c), a wholly owned subsidiary of Legal & General Gulf B.S.C (c), a joint venture between UK-based Legal & General Group Plc and Ahli United Bank Group (AUB), announced the launch of its retail business in Bahrain.

Thomson Reuters announced the launch of a risk management system specifically tailored for Islamic banking.

Kondor+ Suite for Islamic Banking is a real time trade and risk management solution, which will provide full front-to-back and cross-asset coverage for Islamic banks as well as Islamic windows in conventional banks.

Bank Negara Malaysia (BNM), the central bank, is pressing ahead with developing a series of Shariah parameters that would provide a standard guidance on applying the respective Shariah contracts in Islamic finance.

In fact, BNM in December 2009 published its latest draft concept paper -- a Shariah Parameter Reference 3 (SPRC 3) -- on the Mudarabah contract. The paper has been sent to various market players in the Islamic finance industry for feedback. This follows the publishing in October 2009 of "Concept Paper -- Guidelines on Takaful Operational Framework" which outlines the parameters governing the operational processes of the Takaful business.

Sharjah Islamic Bank (SIB) has signed an agreement with Noor Takaful according to which the Bank will offer Noor Takaful Motor Takaful Insurance to all SIB customers through its network of 23 branches. This strategic partnership will enable SIB customers to access Noor Takaful's motor insurance plans for their currently owned or newly purchased sedans and 4x4s at preferential rates and with minimum documentation.

"Takafulhous" subsidiary of Mawarid Finance, the leading Islamic insurance company in Dubai, announced appointment of the new CEO Mr. Ayman Yousif Al Ajmi.

Dubai Electricity and Water Authority (Dewa) will issue $1.5 billion (Dh5.5bn) worth of bonds in April to fund its ongoing expansion plans. When sold, Dewa would have raised nearly Dh10bn from international markets over the period of 12 months. Dewa is also looking at nearly doubling the size of its Export Credit Agency facility in the next few months

Qatar International Islamic (QIIB) Bank has made a donation to support the programmes of the Centre for Educational Perspectives, Qatar.

The microfinance sector in Afghanistan is going through a period of reform which is largely due to the consequence of an early emphasis on rapidly achieving operational sustainability.

AREU researched on the impact of microcredit on informal credit systems and rural livelihoods illustrated by the viability of challenges faced by MFIs. These challenges were linked to having invested little effort in determining the viability of clients by understanding the social and economic contexts in which they were to invest their loans or in offering loan products meeting client needs.

MISFA's reforms have initially targeted MFIs' internal structures, capacity, and control systems. However, they also recognise the need to consider greater diversity of loan products and methodologies to meet client needs. To support diversification in the future, after internal reforms are in place, MISFA has committed to an action research agenda to investigate demand for savings products, agriculture and livestock loans, and Islamic finance products.

Full report at: http://www.reliefweb.int/rw/rwb.nsf/retrieveattachments?openagent&shorti...)

The report on Social Responsibility Trends at Islamic Financial Institutions presents the results of an extensive survey on Social Responsibility at Islamic Financial Institutions (IFIs) carried out during summer and fall of 2009 by DinarStandard and Dar Al Istithmar with the support of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

Some key findings of the survey were:

Clients: 100% of respondents answered yes to having a policy to screen prospective clients which is actively implemented. Similarly 97% have an organizational policy that deals with client responsibly.

Employees: 83% of respondents’ state having policies that provide equal opportunity to all their employees, 93% have policies that ensures merit-based salary and promotion, and 86% having policies that specifically prohibits any kind of discrimination. However, when it comes to having policy to monitor employees from different backgrounds and gender, the response was mix with only 52% admitting to having such a monitoring policy and 48% not having any such policy.

DEBT WATCHER Standard & Poor’s said Islamic finance growth will stay strong this year, as demand for financial products that comply with Islamic or Sharia law continues to increase with Southeast Asia driving expansion.

The Al-Amanah Islamic Investment Bank wants to educate the public of the difference between Islamic Banking and Conventional Banking while creating the regulatory framework for Islamic Finance and ironing out the taxation issues relating to islamic finance.

State insurance company PT Jamsostek plans to acquire stakes in two local sharia banks this year through a joint agreement with the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD).

The new investment arm of the company, the Jamsostek Investment Company (JIC), expected to be established in the first semester of this year, will purchase the stake of the country's biggest sharia lender BNI Syariah and Bank Syariah Bukopin by the end of this year, Jamsostek president director Hotbonar Siaga said on Friday.

The Centre has offered a helping hand to Kerala in revoking a stay order by the state high court against setting up of an Islamic bank.

Noting that the court order could hamper investment opportunities in the country, Union minority affairs minister Salman Khurshid said the Centre would coordinate with the state government in dealing with the issue legally.

The Kerala government cleared the project after a feasibility study found that Islamic bank was a viable proposition in Kerala. A company was also registered to take the process forward. The share capital of the proposed bank had been fixed at Rs 1,000 crore.

According to the Islamic banking concept, the bank will not pay any interest to customers. A Sharia board can decide what sort of investments the bank can make. The bank will also have Sharia-compliant banking products.

Profits made out of the investments will be distributed to shareholders.

The people of West Java also showed their support by injecting Rp 106 billion into the bank. Although its business was not too bright in its early days, the bank recorded a profit of Rp 372.5 billion in the second quarter of 2009. The achievement of Bank Muamalat is proof of the great potential of sharia banking in Indonesia. Sharia banking is based on Islamic law.

Bank Indonesia data reveals there are currently five sharia banks operating in the country, namely Bank Syariah Mandiri, Bank Muamalat Indonesia, Bank Syariah Mega, Bank Syariah Bukopin and Bank Syariah BRI. Twenty-six other banks have sharia banking units, such as Bank Permata, Bank BNI, Bank CIMB-Niaga, Bank Danamon and BPD DKI.

The Acting Governor of Bank Indonesia said that banks based on Islamic law are predicted to enjoy further growth in 2010. Darmin added that sharia banks would continue to flourish due to the organic growth within existing banks and the establishment of new sharia banks and unit.

A muscular banking sector will make or break whether Iraq is to rebuild and prosper.

Iraq's financial architecture to support a growing, privatised economy is a bottom-up operation. The country remains a cash economy with a thriving black market. Private banks are thin on the ground, lending is sparse and there is no ingrained credit culture.

Local focus

In terms of commercial banking in the country, the landscape is principally local Iraqi banks and joint-venture banks. Products offered are in four main areas: remittances/cash transfers and some foreign exchange; trade finance; commercial lending; and securities and stockmarket trading. Activity in all of these areas is fairly limited.

Lending potential

Palisades Park Capital started a multi-strategy hedge fund in November. Justin Doff and Omar Haroon manage the fund. The fund is a computer-based long-short equity strategy.

Update 12.2.2010: Palisades Park Capital informed IslamicFinance.de that the vehicle has been closed and new subscriptions can no longer be done.

The International Islamic Relief Organisation-Saudi Arabia (IIROSA) is to launch six endowment (waqf) projects in Makkah at a cost of over SR470 million, with annual returns of about SR45 million that will be used to finance the organisation’s relief and development projects.

Mark Mobius, who oversees $33 billion in emerging-market securities as chairman of Templeton Asset Management Ltd., said he’s looking into setting up a Malaysia-based stock fund that’s compliant with Islamic law.