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In February, Kuwait’s Warba Bank announced the purchase of Ahli United Bank (AUB) and its subsidiary to acquire their collective 75.7% stake in Kuwait & Middle East Financial Investment Company (KMEFIC).
Warba Bank said that the Central Bank of Kuwait (CBK) has rejected its proposed acquisition of a controlling stake in KMEFIC. According to CBK, Warba Bank's acquisition of AUB’s stake in KMEFIC will not have a significant effect on the financial position of the lender. The purchase agreement came at a time when mergers and acquisitions in the Gulf’s financial sector are rising as lenders attempt to improve their financial standing through consolidation.

According to S&P Global Ratings, Islamic banks of the Gulf Cooperation Council (GCC) are expected to show resilience over the next two years after weathering tough market conditions in 2018. Last year they expanded slower than conventional peers for the first time in five years. The growth forecast for Islamic banks for 2019-2020 is the same as what the rating agency is estimating for conventional lenders in the region. S&P Head of Islamic Finance Mohamed Damak forecasts a muted GCC economic growth over this period, despite some benefit from government spending and strategic initiatives such as national transformation plans and Dubai Expo 2020. However, with the transition to IFRS9/FAS 30, Islamic and conventional banks will even more closely align. Another trend is the significant increase in Islamic banks’ coverage ratios at end-2018, coupled with a stable cost of risk that is lower than conventional banks.

Between 2014 and 2017, Jordan has made significant progress in terms of financial inclusion. According to the latest World Bank report, 42.5% of adults in Jordan now have a bank account, a remarkable increase from the 24.6% seen in 2014. Raising this percentage even further is one of the key pillars of Jordan Islamic Bank’s (JIB) future growth plan. According to Musa Shihadeh, CEO and General Manager of JIB, the bank is specifically targeting young people, women and SMEs to improve financial inclusion. Between its financial inclusion efforts and sustainability initiatives, the organisation is keen to become a leader in social responsibility. JIB developed a relationship with Jordan’s major trade unions, which represent engineers, doctors, nurses, pharmacists and agricultural engineers, to help spread information about the bank’s financial products.

The Abu Dhabi Commercial Bank (ADCB) has completed its merger with Union National Bank (UNB) and the combined company has acquired Al Hilal Bank to create the third largest financial institution in the UAE. Following the merger with ADCB, UNB has been dissolved as a legal entity while its shares have been delisted.
The enlarged ADCB Group will provide services to more than a million customers. It will hold AED423bn ($115.16bn) in assets with a market share of 21% of retail loans as of 31 December 2018. The Government of Abu Dhabi owns 60.2% stake in the enlarged banking group. The integration of the three banks’ operations and customer experience will be fast tracked in a phased manner from the second half of 2019.

Bloomberg provides an overview of which lenders are in merger talks and where those conversations are at. Talks are underway in Abu Dhabi for a possible tie-up between Abu Dhabi Islamic Bank with First Abu Dhabi Bank, a merger that would create one of the Middle East’s largest lenders. Saudi Arabia’s biggest lender National Commercial Bank said at the end of 2018 that it’s starting initial talks with Riyad Bank. This deal would form the Gulf’s third-biggest lender. Dubai’s largest bank Emirates NBD is buying Turkey’s Denizbank for $2.8 billion. The three-way merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal creates the fifth-biggest lender in the Gulf.

Senior executives at Abu Dhabi Commercial Bank (ADCB) were appointed to top leadership positions at Al Hilal Bank, as it prepares to be acquired by ADCB. Alaa Eraiqat was announced on Sunday as the new chairman of Al Hilal Bank, while Amr Al Menhali was announced as the private bank’s new chief executive officer. The appointments come just 10 days before the three-way bank transaction, which will see ADCB merge with Union National Bank and then acquire Al Hilal. The three banks are set to merge on May 1. The new merged entity, which will retain the name ADCB, is expected to own Dh420 billion in assets, and have around one million customers.

Bank Islam Malaysia expects its home financing business model will continue to help the bank to grow and boost its assets. Malaysia’s oldest Islamic lender has been growing organically over the years, despite the crowded market. Bank Islam CEO Mohd Muazzam Mohamed said the bank is already adopting the right model to support this affordable segment. He added that the Islamic bank will continue with its current business model which is in line with the governments’ directive. Bank Islam has already allocated RM300 million to be utilised until 2021 as part of its digitalisation directive. Mohd Muazzam said the bank aims to increase its financing for small and medium enterprises (SMEs) by RM200 million in 2019. The bank also plans to increase its investment fund to RM800 million under its Al-Awfar product, which has been refreshed since its establishment in 2009.

Emirates Islamic reported a net profit of Dh411 million for the first quarter of 2019, an increase of 97% year-on-year and 54% quarter-on-quarter. Emirates Islamic CEO Salah Mohammed Amin said the bank recorded its highest ever quarterly net profit since its inception in 2004. The strong set of results was supported by balance sheet growth, higher funded income, growth in fee income and lower cost of risk. The bank’s total income for the first quarter increased by 12% to Dh663 million. The total assets at Dh60.6 billion, increased by 4% from end 2018. Impaired financing ratio is at 8.6% with a strong coverage ratio of 111%.

Dubai Islamic Bank is looking at acquisitions among other options as part of its expansion strategy. A potential acquisition of Noor Bank by DIB would create a lender with AED 275 billion in assets if completed. The Investment Corporation of Dubai (ICD) is the biggest shareholder in DIB with a 28.4% stake, and it also owns 22.9% of Noor Bank. The Middle East’s financial industry is witnessing a wave of consolidation as banks seek ways to improve competitiveness and boost capital. Abu Dhabi is in the process of merging Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Al Hilal Bank after the consolidation of First Gulf Bank and National Bank of Abu Dhabi to create First Abu Dhabi Bank (FAB) in 2017.

According to Egyptian investment bank EFG-Hermes, the potential acquisition of Noor Bank by Dubai Islamic Bank would be a positive move for the buyer. Also, there is room for more consolidation among local lenders as the UAE is overbanked, with 22 local and 38 foreign banks, most of which have "sub-optimal" market shares. EFG-Hermes expects a potential transaction to be made through a share-swap. It estimates a share-swap of 1 DIB share for 7.8 Noor Bank shares that would lead to a 1% earnings per share dilution for DIB. The merged entity would have an assets market share of 10%, as Noor Bank's assets amount to Dh51 billion or 2% market share and DIB’s assets amount to Dh224bn or 8% as of 2018.

Bahrain’s largest lender Ahli United Bank (AUB) has announced that two investment banks are evaluating a potential merger with Kuwait Finance House (KFH). HSBC and Credit Suisse are currently undertaking necessary valuations studies to assist AUB and to arrive at a fair share exchange ratio. If a merger proceeds, the total assets of the two banks would be $90.57 billion, making it the sixth largest bank in the Gulf. The major shareholders in the two lenders are Kuwait state-owned entities. The Public Institution for Social Security owns 18.59% of AUB, while KFH's largest shareholder is the Kuwaiti sovereign wealth fund, the Kuwait Investment Authority (KIA).

Assets and revenues at Qatar's Islamic banks have grown over the past year, but an increase in problem loans and a drop in foreign currency lending underscore the impact of a diplomatic rift in the region. Qatar Islamic Bank, Masraf Al Rayan, Qatar International Islamic Bank and Barwa Bank held a combined 358.6 billion riyals (US$96 billion) in assets in the first quarter of this year, an 8.8% increase from a year earlier. Most of that increase was due to their holdings of Islamic bonds, which stood at 65.1 billion riyals in the first quarter, a 37.7% rise from a year ago. Capital adequacy and profitability measures were mostly unchanged, but foreign exchange financing decreased by 7%.

Gulf African Bank's net profit increased to Sh212.42 million from Sh191.60 million in the first half of 2018. It is a 10.86% growth after fees on financing deals quadrupled. Fees and commissions on financing arrangements surged 309.72% to Sh122.89 million from Sh29.99 million. Net profit income rose 7.46% to Sh1.01 billion after the value of the arrangements to customers jumped by a third year-on-year to Sh21.42 billion in June and 7.42% from last December.

BIMB Holdings, the parent company of Bank Islam Malaysia, has allocated RM300 million for investment under its three-year (2018-2020) digital roadmap. Bank Islam CEO Mohd Muazzam Mohamed said digital investment was the group's future focus and it already had a few products in the pipeline. He added that the bank's digital journey includes improving customer service touch points and business efficiency through upgrading back-end processes. Mohamed also said the bank currently had 500,000 Internet banking users, which had been doubling annually, supported by the bank's mobile application. BIMB Holdings was incorporated in Malaysia on March 20, 1997 and was listed on the Bursa Malaysia Securities Main Market on Sept 16 in the same year.

Barwa Bank and International Bank of Qatar (IBQ) may announce plans to merge as early as this week. Combining Barwa and IBQ would partially salvage a proposed three-way merger with Masraf Al Rayan that was abandoned in June after 18 months of talks. That consolidation would have created the country’s largest Shariah-compliant bank and the Middle East’s third-biggest Islamic lender with more than 178 billion riyals ($49 billion) of assets. The smaller merger will create a lender with about 82 billion riyals in assets, the sixth-largest in the country. Each bank was valued around $1.8 billion in two separate share sales in 2014.

Shareholders of Abu Dhabi Islamic Bank (ADIB) have approved proposal for a rights issue of AED1 billion ($270 million) by offering 464 million new shares. Shareholders also approved the issuance of a $750 million sukuk and the repayment of its $1 billion sukuk issued in 2012. Khamis Buharoon, ADIB vice chairman and acting CEO, said the bank will continue to focus on expanding its retail business, providing market-leading digital banking services, while capturing opportunities across corporate, transaction and correspondent banking. ADIB reported a 3% increase in net profit for the first half of 2018, which reached AED 1.16 billion.

Faisal Islamic Bank of Egypt (FIBE) will start appointing women to all of its branches for the first time since the bank was established in 1979. Egyptian member of parliament Inas Abdel Halim had submitted May 31 a briefing paper to then-Prime Minister Sherif Ismail about reports whereby the FIBE does not employ women. Abdel Halim stressed that the bank is violating Article 9 of the Egyptian Constitution, which stipulates that the state shall ensure equal opportunity for all citizens. She called on both the prime minister and the governor of the Central Bank to investigate the incident. According to Sahar el-Damaty, the first female vice president of Banque Misr, FIBE and its relationship with its founders in Saudi Arabia is the main reason behind the strict rules relating to the appointment of women. It seems the FIBE decision falls within a series of societal changes both in Egypt and Saudi Arabia aimed at granting women their full rights.

Abu Dhabi Investment Council has increased the share capital Al Hilal Bank by AED 400 million. Al Hilal Bank's CEO Alex Coelho said this move will allow the lender to meet the growing demand for Islamic finance by investing in areas with the greatest prospects. The Central Bank of the UAE (CBUAE) raised this year’s economic growth forecast to 2.7% from its previous projection of 2.5% while non-oil GDP growth is forecast to increase to 3.9% this year from 3.4% in 2017.

Indonesia’s Bank Mandiri plans to list its Islamic finance unit Mandiri Syariah in 2020. According to Mandiri’s president Kartika Wirjoatmodjo, the Islamic bank is seeing 16% to 17% growth in savings, triple the pace of conventional banks. Indonesian authorities are nudging commercial banks to widen the pool of Shariah-compliant products for the nation’s more than 260mn people and the government is aiding the efforts by selling sovereign sukuk. With assets of about 93tn rupiah ($6.4bn), Mandiri Syariah is Indonesia’s largest Islamic finance company. Wirjoatmodjo expects the pool to top 100tn rupiah by the end of this year. Total assets at Indonesian Shariah banks were 426tn rupiah at the end of May, compared with 7,673tn rupiah for conventional banks.

Shareholders of Abu Dhabi Islamic Bank (ADIB) have approved proposal for a rights issue of AED 1 billion to raise the Paid and Issued Share Capital through a tradeable rights issue of 464 million new shares. Shareholders also approved the issuance of USD 750 million (AED 2.75 billion) perpetual Tier 1 sukuk, and the repayment of its USD 1 billion (AED 3.67 billion) sukuk issued in 2012. The capital plan has been developed to support the bank’s continued growth and its objectives in achieving its strategy while meeting regulatory requirements.