IslamicFinance.de

Islamic lender Bank Asya posted a net profit of 10.6 million Turkish Lira ($4.9 million) in the second quarter, a slide of 81 percent from a year earlier. The bank’s total profit decline for the first half of the year was 48.8 percent, making its non-consolidated profit 51.5 million liras for the six-month period. The lender has been going through a whirlwind year of deposit withdrawals, acquisition talks and state contract annulments, due to the ongoing power struggle between the Justice and Development Party (AKP) government and Gülen’s supporters. The bank’s future looked dim after the authorities cancelled its tax collection and social security payment deals on Aug. 7 - a sign according to observers that the government may be a step closer to winding down the lender.

After a decision by the Saudi Arabian Monetary Agency (SAMA) prohibiting banks from compounding interest, Saudi commercial banks were expected to improve their services. However, the services remained substandard. In their terms and conditions for extending loans, the banks determine the profit rates depending on the size of the loan and the financial position of the customer. You will often see customers waiting in long queues to be served because the banks do not appoint sufficient number of employees to serve customers. The complaints against Saudi commercial banks have become a normal phenomenon. The banks would have improved their services if they had heeded SAMA's instructions.

Reactions are snowballing against the government's operation to force the closure of the participation bank Bank Asya as part of its fight against the Hizmet movement, with the matter brought to Parliament's agenda in the form of a parliamentary question from the Republican People's Party (CHP). CHP ?stanbul deputy Umut Oran directed a question at Deputy Prime Minister Ali Babacan to ask for the rationale behind the government's attempts to sink a private bank and risking a domino effect which could damage the entire economy. Two weeks ago, Prime Minister Recep Tayyip Erdo?an said that Bank Asya's financial situation was worsening. His remarks were criticized strongly as a premeditated act intended to damage the bank, which is a crime punishable with a jail sentence of between one and three years. After the prime minister's words, the bank's shares in Borsa ?stanbul (B?ST) plummeted.

London-based Gatehouse Bank is developing new business lines and widening its investor base as the Islamic wholesale lender looks to build a more stable revenue stream. The bank remains focused on real estate in Europe and the United States but wants to expand its investor base beyond Kuwait, its traditional source of funds, while generating more deals outside the British property market. New chief executive Henry Thompson, who joined in April this year, says he wants to reduce the bank's dependence on transaction fees. This comes after fee and commission income dropped more than two-thirds during last year, partly because of lower deal activity in Britain. The bank also plans to launch an online retail deposit product in December and is considering structuring private investment funds.

The National Bank of Pakistan (NBP) has sought regulator’s approval to conduct due diligence of Burj Bank, as the bank wants to continue its footprints in the Islamic banking industry. The NBP had already initiated the process of converting its existing branches into Islamic ones, which will increase to 175 by the end of this year. The acquisition of Burj Bank provides NBP with the opportunity to become a key player in the Islamic banking industry of Pakistan. Burj Bank is the smallest of five full-fledged Islamic banks in Pakistan with a network of 75 branches. The State Bank of Pakistan is stepping up its push to develop Islamic banking, encouraging lenders to expand their operations in the world’s second most populous Muslim nation.

Trading in the shares of Turkey's third-largest Islamic lender, Asya Katilim Bankasi AS, was temporarily suspended Thursday after its share price whipsawed in the last 24 hours amid conflicting government statements about a takeover of the bank. Bourse Istanbul made the announcement just as the afternoon session commenced. Shares of the lender known as Bank Asya plummeted by as much as 9% on Thursday after Prime Minister Recep Tayyip Erdogan’s chief adviser, Yigit Bulut, decried talks of an acquisition by the state as a farce, reversing a 7% rally from Wednesday. The stock was down 5.3% at 1.24 liras ($0.57) at midday before trading in the shares was halted. Bank Asya was also hit Thursday by the Presidency of Revenue Administration and the Social Security Institution, which canceled agreements.

Noor Bank announced the appointment of Damian White as Treasurer in a statement on Sunday. The role entails managing the bank’s trading activities, investment portfolio and the sale of market based treasury products to customers. As Chairman of the Asset and Liability Committee, he is also in charge of asset and liability management of the balance sheet. Previously, White served as Group Treasurer of Al Rajhi Bank, based in Riyadh. Before moving to the Middle East he was associated with the National Australia Bank, Melbourne, as Head of Group Funding, and also operated as the Head of the Funding Desk at Lehman Brothers Treasury, London.

India is preparing legislation to promote Islamic banking as a way to make its financial markets more inclusive and provide new capital-raising opportunities to companies. India’s Ministry of Finance has formed an internal committee to study the prospects for Islamic banking. Sources said the ministry is talking to the Reserve Bank of India and the Securities and Exchange Board of India about introducing rules to streamline sukuk issuance by Indian entities, among other regulatory amendments. Although Islamic banking is not new to India, its services have not prospered. Existing regulation is prohibitive and there is a general lack of awareness about the benefits of Sharia-compliant finance. Sukuk could help close the US$300bn funding gap for the infrastructure sector.

Al Baraka Banking Group (ABG) on Sunday announced its collaboration with the World Bank (WB) to begin a research partnership that would be beneficial to the global Islamic banking industry. The partnership's first initiative, part of a planned series of research projects, will be a study examining the risk-management challenges facing Islamic banks, with a particular focus on Musharaka and Mudaraba under the profit-and-loss-sharing system. The project will not only collect data from a number of countries where Musharaka and Mudaraba are being used in banking transactions, but the project will also examine what enabling legal and regulatory environment would be needed to support the adequate risk management of Musharaka and Mudaraba. The research's preliminary findings are expected to be available in the first quarter of 2015.

Islamic banks that previously did not allow their cards to be used to make purchases at tobacco-selling stores have now changed their policy, except for one of the capital’s major banks. However, all Islamic banking institutions still do not allow their debit and credit cards to make payments at liquor stores and bars. The capital’s national Islamic bank, Abu Dhabi Islamic Bank (ADIB), has implemented this only this year and is still strictly prohibiting their clients from using their cards at alcohol-serving locations. Meanwhile, other institutions such as Sharjah Islamic Bank (SIB) and Al Hilal Bank have more rigorous policies pertaining to the use of their cards at bars, tobacco-selling facilities and casinos. However, there is a loophole since customers can use the cards in places that serve alcohol but are not registered as bars or liquor stores.

Bahrain-based Al Baraka Banking Group B.S.C (ABG) announced a net profit of $143m for the first half of 2014. While balance sheet items increased moderately: total assets increased by 5%, total financing and investments by 5%, customer accounts by 5% and total equity by 3% at the end of June 2014 compared to the end of December 2013. With regard to the results of the second quarter of the year 2014 compared with the results of the first quarter of the same year, total operating income increased by 9% to reach $232m, while net operating income increased by a large percentage of 31% to reach $110m, and net income increased by 15% to $76m.

The Gulf banks are fast replacing European lenders in expansion within the Middle East region and into some of the fast growing emerging markets in Asian and Africa in the context of improving health of their balance sheets and strong support from shareholders. Banks from GCC, particularly those from the UAE and Qatar are in the forefront of overseas expansion.First Gulf Bank (FGB), for example, announced last month that it has a new representative office in South Korea as part of plans to expand its presence in Asia Pacific. Qatari banks have been seeking overseas expansion to cut dependence on local markets and access trade flows across the Middle East, Africa and Asia. Doha Bank is expanding its presence in Hong Kong, India and Saudi Arabia.

An increasing number of Kuwaiti lenders are moving away from traditional banking in a bid to tap into a booming market for Sharia-compliant financial products in the region - a move that could soon see Islamic financing overtake conventional banking in the Gulf state. Commercial Bank of Kuwait (CBK) is the latest to unveil plans to turn into a fully-fledged Islamic institution. There are already five other Kuwaiti Islamic banks; Kuwait Finance House (KFH), Boubyan Bank, Al Ahli United Bank, Kuwait International Bank, and Warba Bank, which was established in 2010. This compares with four conventional banks. Kuwait’s Islamic banking assets grew by 8.7% during the first nine months of 2013, reaching KD22.5bn ($79.7bn), while Islamic financing grew by 11.2% to hit KD13.5bn ($47.8bn) during the same period.

The pressure on Islamic lender Bank Asya is growing as it has pit two senior government figures against each other amid a whirlwind day that saw the annulment of deals with two state institutions and suspension of its shares’ trading at the stock exchange. The lender has been under scrutiny after contradicting statements from Deputy Prime Minister Ali Babacan and Prime Minister Erdo?an’s economic adviser Yi?it Bulut regarding the possibility of its acquisition by state-owned lender Ziraat. Amid the political figures’ ongoing row, the lender received another blow when the Revenue Administration and state social security institution announced ending service deals with the lender. Bank Asya downplayed the impact of the annulment, but vowed to use its legal rights against the decision.

Turkish Islamic lender Bank Asya said an exclusive deal with Qatar Islamic Bank (QIB) to acquire a stake in the Turkish lender was annulled, opening the way for alternative suitors. QIB and Bank Asya have reportedly ended the talks after a disagreement over price. Deputy Prime Minister Ali Babacan said on Wednesday that state-run Ziraat Bank, which is looking to launch its own Islamic banking unit, could buy Bank Asya. The bank's future looked dim after the authorities cancelled its tax collection and social security payment deals on Thursday - a sign according to observers that the government may be a step closer to winding down the lender.

Deputy Prime Minister Ali Babacan has said the public Ziraat bank is considering purchasing Turkey's Bank Asya, a move that many have interpreted as the authorities' latest effort to crush the lender as a form of vengeance against the Hizmet movement, with which Bank Asya is affiliated. However, Bank Asya said no such talks have taken place. Pressure on the bank intensified on Thursday as an agreement between the Finance Ministry and Bank Asya allowing the bank to collect taxes was canceled. The bank said it will take legal action against these decisions. A source involved in the financial market who asked to remain anonymous said the government has apparently launched a new campaign, this time trying to purchase the bank after numerous failed attempts to sink the bank earlier this year.

There are several issues which appear to indicate that Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim's integrity has been compromised. Shah Alam MP Khalid Samad said he hoped Abdul Khalid will clear the air over several issues, including his out-of-court settlement with Bank Islam over his RM66.67 million debt. Another issue Abdul Khalid is expected to clarify is his claim that he will be suing Permodalan Nasional Berhad (PNB) and will win RM300 million. Khalid also expressed doubts over the awarding of a RM591 million contract to Eco World to build 2,400 affordable houses in Sungai Sering, Ukay Perdana. PKR has been pressuring Abdul Khalid to step down from his position with party president Datuk Seri Dr Wan Azizah Wan Ismail chosen to replace him.

Dubai Islamic Bank Pakistan (DIBPL) has appointed Mufti Muhammad Hassaan Kaleem as the Bank’s new country Head of Shari’a. Mufti Hassaan has also been appointed a member of the Bank’s Shari’a Board by the Board of Directors of DIBPL, subject to approval of State Bank of Pakistan. Mufti Hassaan has vast experience in matters of Shari’a teachings and advisory and has been teaching various courses in Islamic Studies and Arabic at Darl-ul-Uloom Karachi for the last 17 years. He is a member of several institutions and boards, including Dar-ul-Ifta, JamiaDarul-ul-Uloom Karachi, Chairman Shari’a Board of Securities & Exchange Commission of Pakistan (SECP) and others.

State Bank of Pakistan’s (SBP) five-year strategic plan will drive strong asset growth in the Islamic finance sector, given the high domestic demand for Islamic banking. SBP’s plan targets a 15 per cent share of banking system assets for the sector by 2018, up from around 10 per cent as of December 2013. The National Bank of Pakistan will convert around 6 per cent of conventional branches into Islamic-banking branches over the next two years. Although the sector is expanding rapidly, the Islamic operations of the top five banks — National Bank of Pakistan, Habib Bank, MCB Bank, Allied Bank, and United Bank are small and currently account for less than 2 per cent of their assets on average. Moreover, rapid growth in the sector is likely to weaken asset quality.

Al Rajhi Bank posted a fourth successive quarterly profit decline as its second-quarter earnings fell 8.2 per cent year-on-year, with Saudi Arabia’s largest listed lender hit again by higher provisioning. The bank said it made 1.95 billion Saudi riyals in the three months ending June 30, compared with 2.12bn riyals in the same period a year earlier, citing an increase in total operating expenses for the drop without elaborating. Despite the decline, Al Rajhi’s net profit figure was in line with analyst forecasts, with a poll conducted by Reuters expecting an average profit of 1.97bn riyals for the quarter. Al Rajhi’s quarterly profit decline stands against the positive earnings performance reported by most other Saudi lenders.