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Al Rajhi Bankk is losing ground to peers in Saudi Arabia, its home market, as slowing credit growth and intensifying competition for retail customers weigh on earnings. The world’s biggest Islamic bank said this week that first-quarter profit fell 17% from a year earlier, its third quarter of declining earnings. Lending growth in the three months slowed to 7% from 19% in the same period of 2013. That compares with 30% for Bank Albilad and 11% for Samba Financial Group. Profit at the Riyadh-based bank is slowing even as the Saudi economy is poised to grow 4.2% this year, because rival banks are increasingly turning their attention to retail customers as new labour laws stifle construction projects. Construction lending accounted for 7.7% of total bank loans in 2013.

The loan book of Saudi banks is expected to grow at pace of 12% in 2014. The increased proportion of younger population in Saudi Arabia can result in demand for personal financing to grow robustly. The UAE’s banking sector indicates strong loan growth led by retail and consumer banking and improved profitability. In Oman, lending slowed in 2013, but is expected to improve in 2014 and can even reach 10%. Kuwait bank lending is expected to pick up in 2014 after investment firms cut debt and government implements projects. In Bahrain further consolidation is expected this year after a spree of tie-ups in 2013. Qatar’s banking system remains profitable. The Qatar Central Bank has also come out with guidelines for implementing capital adequacy and liquidity under Basel III in 2014 and Qatari banks will adhere to it.

Dubai’s government will consider establishing the world’s first fully Shariah-compliant export-import bank to promote the emirate’s foreign trade. The bank would provide financing to companies involved in trade while helping them to reduce their risks and gain market access, the Department of Economic Development said in a statement without giving details of the proposed institution’s structure or financing. Noor Investment Group will advise on the project, the department added, but did not give a time frame. Last month the Export-Import Bank of Malaysia said it had issued the world’s first US dollar-denominated Islamic bond issue from an export-import bank; the $300mn, five-year sukuk attracted $3.2bn of investor orders.

Like all financial services, Islamic finance needs an appropriate supervisory framework and legislation is often the first step towards opening a new market. Financial institutions also need to ensure they have sufficient shariah expertise and advice to develop appropriate products. Three factors are driving the market’s growth. First, it is becoming part of normal retail and corporate banking in core Islamic countries, such as Saudi Arabia. Second, its growth appeals to other markets, particularly in the Muslim world. The third driver is innovation. In the end, greater availability of sukuk offers more choice to companies and investors and allows issuers to offer products tailored to specific needs.

After gaining the leadership position in Shariah-based retail banking, International Islamic has its eyes firmly set on improving its presence in corporate financing, said CEO Abdulbasit A al-Shaibei. Corporate financing is expected to have an exponential growth in Qatar, particularly in the next two to three years. In line with this, the Doha-headquartered lender has activated its trade finance department. Besides, the bank is an active partner with Qatar Development Bank in its initiative to help SMEs flourish. Registering growth across various portfolios of its core business, International Islamic posted a full-year net profit of QR750mn in 2013, up 10.5% on 2012. The bank earned a total revenue of QR1.5bn in 2013. Assets totalled QR34.4bn last year, indicating a 20.5% growth compared to 2012.

The Inauguration of the Islamic Banking and Finance Society (IBFS) at the Oxford Union Debating Chamber on February 12 featured presentations by leading figures from the Islamic finance world. Keynote speakers included Salah Jaidah, vice chairman of Mena at Deutsche Bank and chief country officer for Deutsche Bank Qatar; Baroness Warsi, Senior Minister of State and Minister for Faith and Communities, and the Ministerial lead on Islamic Finance; Nigel Denison, executive director of Bank of London and the Middle East (BLME), and Azeemeh Zaheer, vice president of Gatehouse Bank and former vice consul, US oil & gas sector head for the British Consulate General. The IBFS hopes to act as a platform for leading professionals in Islamic banking to create relationships with students at Oxford interested in pursuing a career in finance.

The UAE is in the final stages of creating debt issuance and listing regulations that will help develop a domestic credit market and encourage the sale of Islamic bonds. The Securities and Commodities Authority, or SCA, has circulated draft rules that for the first time to treat sukuk and non-Shariah compliant debt separately. The regulator is seeking feedback from market participants by the end of the year and “hopes” to enact the regulations early in 2014. The UAE must develop local debt markets to help state-run and private companies find alternatives to bank loans because it is the only one in the six-nation Gulf Co-operation Council that doesn’t have a domestic, local-currency debt market.

The Kuala Lumpur-based Islamic Financial Services Board (IFSB) has published guidelines on capital adequacy for Islamic banks and risk management of takaful as the industry body expands its activity and membership base. Revised guidelines detail criteria for using sukuk as Tier 1 and Tier 2 regulatory capital, those for takaful firms outline issues faced by Islamic insurers, including the risk that their products become non-compliant with Shariah principles, and describe best practices to supervise their funds and disclose information. Work now shifts to the IFSB’s 16th guideline covering the supervision of Islamic finance institutions, helping tighten regulatory oversight of industry practices. The IFSB council will be chaired in 2014 by the managing director of Brunei’s monetary authority, taking over duties from the Qatar’s central bank governor.

The Law Harmonisation Committee is working to encourage use of Malaysian rules for cross-border Islamic deals instead of English law. Regulations are being amended to remove loopholes that discourage Shariah deals to make the nation the preferred place to settle disputes. Malaysia still has a single set of laws that govern both Shariah-compliant and non-Islamic commercial contracts, and they can sometimes render Islamic deals less competitive. However, Malaysian law is unlikely to displace English legislation in other deals, although it may find some acceptance among offshore investors who have businesses or investments in the country.

Growth of Shariah-compliant banks in Qatar is poised to outpace that of the UAE lenders as borrowing rises amid $200bn in government spending for the 2022 soccer World Cup. Qatar's four Islamic lenders will almost double their asset base to $100bn by 2017, Standard & Poor's has said in a report. Last year, the assets of the largest Shariah-compliant bank in the country, Qatar Islamic Bank, grew five times faster than those of the biggest one in the UAE, Dubai Islamic Bank. Spending for the world's most-watched sporting event will spur lending for roads, stadiums and hotels.

Qatar Islamic Insurance Company has reported a 3% rise in first-half net profit to QR35.84mn despite expenses growing faster than income mainly due to a 13% rise in general and administrative costs. Income from investments in associates almost quadrupled to QR3.97mn, rental income grew 16% to QR4.53mn, wakala fee by 8% to QR23.98mn and other income by 28% to QR1.06mn. However, income from shareholders’ investments shrank 30% to QR6.73mn and shareholders’ share in policyholders’ investment income by 5% to QR7.74mn. Nevertheless, total income grew 5% to QR48mn. Total assets were valued at QR662.22mn comprising policyholders’ assets of QR365.41mn and shareholders’ assets of QR296.81mn. Total shareholders’ equity stood at QR263.39mn on a capital base of QR150mn and earnings-per-share was QR2.39 at the end of June 30, 2013.

Cheraman Financial Services Ltd, jointly promoted by the Kerala government and non-resident Keralites, is to fund hundreds of cash-strapped student startups coming up in Kerala state, India. The Islamic financial institution has set aside Rs150mn for companies in the Startup Village, Kerala’s answer to Silicon Valley, from its Rs2.5bn Alternative Investment Fund that primarily targets the Shariah-compliant service and manufacturing sectors. There are more than 900 firms with innovative products started by students waiting to set up their units. At least one company of students with innovative ideas is being set up each day at the Startup Village. The Village aims to host 3,000 startups by 2020. Coming up on the same campus in this port city is the Kerala Technology Innovation Centre, another zone exclusively for bio-technology.

Qatar-based Barwa Bank has reported half-year profits of QR303.6mn, up 85% from the QR162.9mn recorded in the same period last year. Return on equity increased from 6.6% to 11%, with earnings per share rising from QR0.55 to QR1.01 on the back of a 10% increase in total assets to QR27.8bn. The highlight of the first half has been the high level of activity in corporate banking as major infrastructure projects have started to bear fruit. Also, contributing ware the strong performances in the bank’s treasury and trading businesses. Barwa Bank has also seen selective expansion in its retail footprint with two new high-profile branches nearing commissioning and good response to its special outlets located in the Ministry of Interior and the Navy.

Maran Nakilat Company, a joint venture between Nakilat and Maran Ventures, has secured $662.4mn Islamic refinancing. At a ceremony held in Doha, Maran Nakilat signed the Murabaha refinancing agreement with Qatar Islamic Bank (QIB) and Barwa Bank. With the refinancing, Maran Nakilat will be able to expand its fleet of LNG carriers from four vessels to six, with the delivery of two new carriers scheduled for early 2014. At the same time, Nakilat has also increased its ownership of Maran Nakilat Company. Latham & Watkins advised Maran Nakilat on commercial and legal matters related to the refinancing, while Allen & Overy advised QIB and Barwa Bank.

Barwa Bank’s investment banking division, The First Investor (TFI) and Investra Investments have announced the first two property acquisitions of their UK joint venture fund. The fund invests in income-generating property in the distribution, logistics and light-industrial sector of the UK, targeting net quarterly dividends of 7%-9% per annum and capital appreciation over three years. Both TFI and Investra have seeded the fund with approximately QR56mn capital from their respective balance sheets. TFI and Investra have put together an institutional grade investment programme in collaboration with Pelham Associates as well as internationally renowned lawyers, tax advisors and administrators to deliver best in class governance, investment management and risk management. TFI and Investra will be continuing their investment programme in the UK distribution, logistics and light-industrial sector until Q1, 2014.

Ten executives from six banking organisations in Korea recently participated in a training course on Islamic finance in collaboration with Qatar Central Bank (QCB). It was intended to enhance the understanding of Islamic finance so that it could be applied in Korea. The trainees had a deeper look at the financial industry in the Middle East, including Qatar, licensing systems, main principles of Islamic finance, basic contracts and case studies on Islamic financial products. They visited Qatar Islamic Bank, Qatar Financial Centre, Qatar Islamic Insurance Company, Barwa Bank, Masraf Al Rayan and others. The training was part of an agreement signed by the Middle East-Korea Financial Co-operation delegation and QCB last January.

Qatari entrepreneur and philanthropist, Sheikh Ali bin Abdullah al-Thani and International Islamic CEO, Abdulbasit A. al-Shaibei participated in the celebrations held as part of the Charity Art and Photography Auction at the College of North Atlantic in Qatar on May 22. More than 100 selections of art and photography were up for bids. The majority of these pieces have been donated by members of CNA-Q’s art and photography clubs. The proceeds from the auction will go to Qatar Red Crescent. Institutions such as Qatar Red Crescent are committed to serving the local community and others in need. Through various projects they undertake such initiatives.

Qatar resident Ziyad Rahim, head of market risk at Barwa Bank, recently broke a Guinness World Record by completing the Marathon Grand Slam in just 41 days. In the process, he set the fastest time to complete a marathon on each continent and the North Pole and smashed the previous record of 324 days, which had stood for over six years. He is also the first person in the world to complete two extreme marathons - at Antarctica (-20 degrees Celsius) and the Sahara Desert (50 degrees Celsius) - within a month. Ziyad is an ambassador for CARE, a charity educating underprivileged children in Pakistan. He says he runs to promote health and fitness and raise awareness for the less fortunate.

The Malaysia-based International Islamic Liquidity Management Corp (IILM), backed by nine central banks and monetary agencies as well as the Jeddah-based Islamic Development Bank, has said it plans to issue up to $500mn of dollar-denominated sukuk in the second quarter of this year, and eventually expand the programme to as much as $3bn. However, the company faces a delicate task as it designs its maiden sukuk: it must make the issue attractive enough for investors to buy, but not so attractive that most of them buy to hold. The IILM’s mission is to create a highly liquid tool which Islamic banks will trade to manage their short-term funds. Whether it gets the balance right will affect the development of Islamic money market trading in the Gulf and Southeast Asia over the coming year.

Qatar-based bank Masraf Al Rayan is in the final stages of due diligence to acquire a stake in a Libyan lender. According to the group chief executive Adel Mustafawi, after preparing the required studies, a memorandum of understanding will be signed before proceeding to secure the required approvals from the authorities in both Qatar and Libya. Shareholders of Rayan had approved in February its plan to buy a stake in a Libyan lender, while also voting to give the board of directors control over a QR1bn ($275mn) war chest to make acquisitions over the next two years. Moreover, the bank has also made significant progress in fulfilling the requirements of acquiring a stake in Islamic Bank of Britain.