IslamicFinance.de

The Islamic banks in Qatar outpaced conventional banks in the country in terms of growth in net profit during the second quarter of 2014 (Q2,14). Qatar Islamic Bank (QIB) reported a 15.0 percent YoY bottom-line growth in Q2 14, mainly due to improvement in top-line as well as fee income. Masraf Al Rayan reported 12.1 percent YoY growth in its bottom-line due to strong growth in net financing income, Global Investment House (GIH) noted in its Q2, 14 “GCC Banking Sector” analysis. The GIH analysts who covered five major Qatar-based banks said the loan books of banks in Qatar grew the most in the region, by registering 15.4 percent growth on year-on-year basis, followed by the banks in Saudi Arabia (9 percent), UAE (4.8 percent) and Kuwait (4.6 percent).

International credit rating agency Moody's has downgraded the long-term deposit rating of Turkey’s Bank Asya to Caa1 from B2, placing the note on review against any further deposit volatility at the bank. Bank Asya's financial strength was also adjusted downward. According to Moody's statement, the downgrade reflects increasing external pressures that may exacerbate the bank's deposit volatility, which has already shown evidence of significant outflows this year. Depending on the existent deterioration of the bank's financial fundamentals, the bank would need to receive external support, and it would face higher potential losses in case of a deterioration in the quality of the bank's assets and its ability to pay its depositors, Moody's also said.

BIMB Holdings Bhd’s net profit for the second quarter ended June 30 increased 86.4% to RM129.67mil from RM69.58mil a year ago. The banking group's revenue for the period rose 3.8% to RM734.59mil while earnings per share (EPS) for the period stood at 8.68 sen. For the second-half period, the group said as a result of the acquisition of the 49% interest in Bank Islam Malaysia Bhd, the net profit attributable to the shareholders increased by RM109.4mil or 76.1%. Consequently, the EPS for the period under review also increased by 25.8%. To attract deposits, BIMB said greater focus would be placed on individual and retail deposits with new product features.

Bank of London and The Middle East (BLME), Britain’s largest stand-alone Islamic bank, aims to pay its first dividend in early 2016 as the lender diversifies its revenue and funding streams. Founded in 2006 by Kuwait’s Boubyan Bank, BLME has not paid a dividend, but its net distributable reserves are expected to reach a sufficient level in 2015, chief executive Humphrey Percy said. BLME, which provides corporate banking and wealth management services, posted a net profit of £4m ($6.6m) in the first half of 2014, up from £1m during the same period last year. This was aided by diversification of revenue streams, with the corporate banking division seeing its total operating income grow 32.5 percent from a year earlier.

Moody's lowered the long-term deposit rating of Bank Asya, which is known for its close ties to the controversial Gülen Movement, from "Ba2" to "B2". The financial strength rating of the Gülenist bank has been downgraded from "D-" to "E+". According to the rating agency's statement, the bank's standalone financial strength rating was lowered due to a fall back in negative asset-quality trends, funding volatility, and post-provision profitability. Moody's also stated that the bank has been placed on review due to uncertainty in deposit ratings and that the financial strength note is also under review in case of a possible reduction.

Bank Asya, which is known for its close ties with the Gülen Movement, is now in an even more critical condition after the Central Bank of the Republic of Turkey (CBRT) reportedly issued a "warning letter" to the Banking Regulation and Supervision Agency (BDDK). The "confidential" note delivered to the BDDK states that the bank might not be able to provide the required reserves for its deposits in the central bank. The bank faced a TL 6 billion deposit outflow and a TL 7.6 billion decrease in assets as well as an 81 percent drop in its profits in recent months. Furthermore, the default loan amount of the bank and the rate of loans being followed up have reached critical levels. The BDDK started to investigate transactions of Bank Asya in order to determine whether the bank will be able to fulfill its obligation.

Currently, Pakistan ranks ninth globally terms of development of the Islamic financial services industry but some recent purposeful steps would prove to be a game changer, said Mian Shahid, Chairman United International Group (UIG). Now, the conventional insurance companies in Pakistan are set to make major inroads into the Islamic insurance business with the active support of regulators, he added. The potential of Takaful in the Muslim world is still largely unexploited, he said, adding that its premiums are expected to reach $20 billion by 2017. Saudi Arabia, UAE and Malaysia enjoy the lion’s share on account of their advanced Islamic finance sector while Pakistan would need more simplified regulatory frameworks to propel the industry’s expansion, the insurance veteran observed.

Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim today said there was nothing dubious about the out-of-court settlement with regard to the loan of more than RM60 million he took from Bank Islam. He said he had taken court action against the irresponsible people who had slandered him. Khalid made the statement when speaking at the monthly gathering of Selangor government departments. The Port Klang state representative reminded those who were not satisfied with him to lodge reports with Bank Negara for an audit to be carried out and not to act as they pleased. He said he had decided to remain silent as he had to protect the bank’s secrecy practice.

The laws regulating Islamic financing in Kenya need fine tuning to fully support sharia compliant banking, First Community Bank general manager Omar Sheikh has said. At the moment there is no double taxation for the murabaha contracts but the law ought to be clear on this matter for future operations. Sheikh also cited the loss sharing principle as a matter that creates confusion in terms of declaration and their accounting statements whereby while sharia law requires that profit and loss be shared among the bank and clients, the local industry's guidelines require that they record it as loss provision in their books. Sheikh urged non Muslims to also seek services at the bank adding that wrong perception that the lender is restricted to Muslim clients has been the biggest challenge to its growth.

Hasan Say?n, a major shareholder of Bank Asya, is accused of insider trading for capitalizing on his knowledge to trade away his shares of the Gülenist bank and illegally earning millions of dollars. It was determined that Hasan Say?n traded millions of dollars on the stock exchange right before it was announced that Bank Asya was negotiating with Qatar Islamic Bank (QIB). The Capital Market Board (SPK), which is investigating the insider trading claims, is now getting ready to file a criminal complaint. Bank Asya had reportedly invited the holders of 290 privileged shares of the bank to discuss partnership options with the QIB, including Hasan Say?n and ?brahim Say?n. It was determined that both of them then traded millions of Bank Asya shares.

The International Bank of Azerbaijan (IBAR), the biggest bank in Azerbaijan managing more than 35% of total banking assets in the country, has announced the signing of a Shari'a Supervisory agreement with Shariyah Review Bureau (SRB). IBAR hopes that SRB and its experience will help the bank to build the Shari'a Complaint business and lift its Islamic financial sector to a successful future. Shariyah Review Bureau is today recognized globally for its iconic Shari'a Compliance services. With more than 37 Shari'a scholars, the company's growth includes recently doubling Shari'a review and Certification capacity in the GCC. As the pace of change in the Islamic financial industry accelerates at an international level, institutionalized services of Shari'a Advisory firms like SRB has become increasingly evident.

A consortium comprising a reputable bank, royal families, and a group of leading businessmen in the GCC, has announced that an agreement to set up the first Islamic bank in the eurozone has now been concluded.
Eurisbank will have a start-up capital totalling Euro 60m, branches in Paris, Brussels, The Netherlands and Frankfurt are planned. Set to be headquartered in Luxembourg, the founders, promoters and Deloitte have concluded a meeting with the CSSF (Luxembourg's Supervisory Authority), which has welcomed the idea. Deloitte has completed a feasibility study for the bank, which is said to demonstrate high return on investment, taking advantage of being the first of its kind to operate from the eurozone countries.

Turkish Islamic lender Bank Asya said in a note to Borsa ?stanbul that the company continued its banking operations smoothly, defying any kind of uncertainty regarding the bank’s shareholders and board. The bank’s statements follow on the heels of an announcement from state bank Ziraat Bankas? a few hours earlier. Ziraat said it had ended unofficial talks to acquire Bank Asya, saying such a purchase was not in line with its priorities. Observers said the statement from Bank Asya would help ease earlier concerns that the bank would be seized by the state amid an intense pressure from President-elect Recep Tayyip Erdo?an’s ruling party.

The Turkish regulator Capital Markets Board (SPK) said it won’t consider Bank Asya’s (ASYAB) application to sell 140 million liras ($65 million) in debt, dealing another blow to the suspended Istanbul-based lender. It cited ambiguity over ownership. The shares have been on hold since Aug. 7, after large swings on contradictory government statements about a possible state purchase. Bank Asya was subsequently suspended from trading on the Istanbul exchange and removed from the main indexes. Regulators have also revoked the bank’s right to collect tax on behalf of the government. The bank said it applied to sell the debt in March. Bank Asya shares declined 14 percent this year before being suspended. That compares with a 20 percent gain on the Turkish banking index this year.

London-based Gatehouse Bank has purchased the leasehold interest in the Marriott Residence Inn ("Residence Inn"), Manhattan, New York for an undisclosed amount. The Bank, assisted by Arch Street Capital Advisors, LLC, has acquired the property in partnership with a US-based hotel operator. The Residence Inn is a 17-storey, recently redeveloped building located on 48th Street in Midtown East, Manhattan. The property features 211 guestrooms of multiple room configurations including studios, suites and a penthouse. All rooms include a fully equipped kitchen. The Residence Inn is an extended stay, select service brand of Marriott International that is among the strongest performing brands under the Marriott umbrella.

Social Islami Bank Limited (SIBL) arranged a Strategic Business Planning Session to evaluate business position and formulate future business strategy of some chosen branches of the bank at its corporate head office in the city recently. Chairman of the Bank Major (Retd.), Dr. Md. Rezaul Haque, was present in the session as the chief guest while Managing Director of the bank, Md. Shafiqur Rahman, presided over the programme.

International Bank of Azerbaijan (IBA), 50.2% owned by Ministry of Finance, is preparing to launch a separate sharia-compliant banking unit as the former Soviet state prepares an Islamic banking law slated for next spring. A stand-alone unit would allow IBA to more than quadruple its Islamic financing business in the country. IBA has thus far extended $180 million of Islamic financing in the country; after legislation is passed, this could increase to as much as $750 million within a year. IBA also wants to create a strong domestic Islamic banking platform for use with its subsidiaries in Russia, Georgia and Qatar. IBA has hired Bahrain-based consultancy Shariyah Review Bureau to help in the design of several projects.

Six years after the economic crisis there is still much cynicism and anger directed at the conventional banks. People across the globe have a hunger for a more ethical, transparent and robust financial system. This has opened a window of opportunity for Islamic banks to emerge as a values-driven alternative to conventional banks. However, Islamic Bank deposits are minuscule compared to those held by conventional banks. Few can dispute that the lack of standardisation has held back Islamic finance. But there is a far more fundamental issue that today’s Islamic banks need to address: Catching up with new trends. Unless Islamic banks clearly define their differences from conventional banks, in moral and value terms, and are easily understood by Muslims and non-Muslims, the promise that Islamic banking can offer the world a better way of banking will have no more substance than a mirage in the desert.

Islamic lender Bank Asya has received another blow, as the Customs and Trade Ministry has joined with two other state institutions in cancelling their contract with the bank. The ministry has decided to terminate customs tax collection protocols with Bank Asya as a result of assessments made, the ministry said in a press statement released on Aug. 13. The ministry informed the lender regarding the annulment on Aug. 12 and the cancellation will take effect on Sept. 12, the statement also noted. Last week, the Revenue Administration and Social Security Institution had separately announced annulling their contracts with the lender.

The Borsa Istanbul issued a statement providing the reason for suspending the trading of shares of Bank Asya under the name ASYAB between August 7 and 12. The statement noted that the reason for the suspension was the contradictory news announced by various media institutions about the partnership structure of the bank and news which has caused fluctuation in the prices of share certificates. Therefore, it was noted that ASYAB share certificates are being temporarily suspended from trade. It further explained that the temporary suspension of trade continued since the statement Bank Asya gave to the Public Disclosure Platform on Aug. 8, 2014 did not completely remove the current uncertainty. In this respect, in order to not damage trust, clarity and the stability of the market, the temporary suspension of trading ASYAB stocks continued until Aug. 12, 2014, the BIST remarked.