IslamicFinance.de

DIFC published a report about the Wealth and Asset Management industry.

From the abstract:

"Continued growth in Islamic asset management

Islamic asset management [IF: Islamic mutual fund business only] continues to grow, at a moderate CAGR of 2.44% since 2012 to reach US$58.89 billion in AuM by the end of 2016, despite the economic challenges in the GCC caused by falling oil prices. The industry is still highly concentrated in Saudi Arabia and Malaysia, however.

Shariah-compliant investments have strong demographic demand but remain under-utilised. Targeting different
market sectors and regions has been largely ineffective, due mainly to poor marketing strategies. Inadequate government support and recent market conditions have also impaired market performance.

Despite developments in Islamic finance and growth in Islamic assets, Islamic wealth management remains a niche market, and with local services still largely underdeveloped, most Middle East investors continue to invest overseas. Islamic pension funds’ potential scarcely tapped Pension funds in particular present one way to add scale

Uncertainty over the UK’s future status as a financial hub after leaving the European Union (EU) is already casting a shadow over London’s Islamic finance sector. It is estimated that London would lose at least 10,000 banking jobs and 20,000 roles in financial services as clients move €1.8tn of assets out of the UK. The banking exodus would also hit the Islamic finance sector in London, which is the largest globally in a non-Muslim jurisdiction. London currently hosts more than 15 large banks that operate Islamic finance windows and dozens of related service providers. A banking lobbying group has already urged the UK government to introduce post-Brexit laws that make sure that demand for Islamic finance services does not diminish. As long as the UK gives no clear direction whether and how it would excel as a financial hub, competitors will continue positioning themselves as alternative locations. Within the EU, Luxembourg and Dublin, and partly Frankfurt, have good chances to take on roles as Islamic finance hubs for Islamic finance institutions with business in the EU.

After the first tier commercial banks in Nigeria, Jaiz Bank was the most active stock on the exchange with volumes of 7,179,550 with a total value of N4,682,686.00. The increased activity is indicative of swinging sentiments in favour of the stock. But the stock has underperformed the All Share Index (ASI) in the last six months as it returned a negative 45% while the ASI returned 40%. Jaiz Bank managed to grow its Gross Income in the first half year ending June to N3.25 billion from N2.56 billion. Income from Finance Investment grew 19.82% to N2.95 billion from N2.46 billion while Sukuk leapt 198.3% to N293.35 million from N98.35 million. Abdulfatah Ahmed, the Kwara State governor highlighted there was a lot of scope for growth for the bank and Islamic banking in Nigeria. Hassan Usman, the bank’s managing director, said he was optimistic about the future of the bank and therefore urged everyone irrespective of their religious background to key into the model.

Islamic finance is exploring green bonds in order to develop Sharia-compliant financial products to invest in climate change solutions. Green Sukuk are Sharia-compliant investments in renewable energy and other environmental assets. Over $30bn worth of green bonds were issued in the second quarter of 2017. Issuance from emerging markets has jumped from $2.3bn to $9.2bn year-on-year versus 16% a year ago. Malaysia has the opportunity and ambition to be a leader in this space on the premise that Malaysia is already a leader in Islamic finance. Another active player on this front is the United Arab Emirates (UAE), which launched the Green Finance and Investment Support Scheme to promote green projects. Green Sukuk is a good model to finance sustainable infrastructure as well as help bridge the gap between conventional and Islamic finance. The most important challenge for Sukuk is gaining acceptance by international investors due to lack of standardisation and legal enforceability risk. Other challenges of green Sukuk include investor’s awareness, demand for energy supply, government support and demand for energy financing.

Kuwait Investment Authority has appointed a global consultant to study the merger of two banks, Kuwait Finance House (KFH) and Ahli United Bank (AUB). Moody’s said in a report that the merger of the two banks will have a positive impact on credit rating, especially for KFH. Moody’s noted that if the merger is successful, it will create the sixth largest bank in the GCC with nearly $85 billion in total assets. The merger will make KFH the largest bank in Kuwait, but it will remain the second largest bank in the Gulf after Al-Rajhi Bank Saudi Arabia. The number of domestic branches of KFH reached 65 while AUB has 37 branches. Several reports were published on the possible merger of the two banks. However, officials from both banks denied reports on the merger while others confirmed.

Jaiz Bank CEO Hassan Usman said that #Nigeria would become one of the countries to successfully offer Sovereign Sukuk in local currency. The Federal Government floated around N100bn and according to him, the offer was to last for five days. Hassan said these on the sidelines of Jaiz Bank’s Customers Forum in Ilorin, the Kwara State capital and also revealed that the institution’s capital base had reached N15bn. He said that Islamic finance worldwide was novel, being in existence for about 40 years compared to conventional banking, which had lasted for over 300 years.

In this interview CIMB Islamic Bank CEO Mohamed Rafe Mohamed Haneef talks about the bank's achievements in Malaysia and its growth plans. The most significant segment for CIMB Islamic Bank is retail banking. When Haneef joined the bank, consumer banking’s contribution was between 40 and 45%, while at the end of June it was almost 60%. The bank came up with an embedded model which enables both CIMB Islamic and the conventional side from CIMB Group to tap the same talent. CIMB operates on two separate licences, but out of the same branches, as relationship managers offer both Islamic and conventional banking options. According to Haneef, the bank plans to focus on the Asean region first before eventually building inroads into the Middle East beyond 2018. CIMB Group’s Islamic Asset Management is in close contact with the Securities Commission (SC) and plans to contribute to the development of Sustainable and Responsible Investing (SRI).

In this interview Khairul Kamarudin, CEO of Bank Islam Malaysia, talks about his leadership style and areas of focus. Besides sustainability, the other main area of focus will be digitalisation. In 2016 the bank launched the innovative product called 'e-Donation' Terminal using Visa PayWave, a platform where donations can be made through the contactless electronic method using any debit/credit card. Bank Islam has also taken a step towards accepting fintechs with the recent strategic collaboration with Cognizant. This will allow the bank to embark more on innovative digital Islamic banking. In terms of charity, Bank Islam has its own Waqf project in its office building, which provides prayer facilities to more than 3,000 people per week. Also, the bank supports the affordable development project in Selangor and a school-construction project in the state of Perlis.

Muscat Securities Market (MSM) adopted a list of Sharia compliant companies for the second quarter of 2017. The list of companies includes 35 public shareholding companies: Al Saffa Food, Al Anwar Ceramic Tiles, Al Izz Islamic Bank, Al Jazeera Services, Al Kamil Power, Al Madina Takaful, Al Maha Ceramics, Bank Nizwa, Computer Stationery Industry, Dhofar Beverages and Food Stuff, Gulf International Chemicals, Gulf Mushrooms Products, Gulf Quarries, Majan Glass, Muscat Gases, Muscat Thread Mills, National Biscuit Industries, National Real Estate Development, Oman Cables Industry, Oman Cement, Oman Fisheries, Oman Flour Mills, Oman International Marketing, Oman Packaging, Oman Refreshments, Omani Telecommunications, Ooredoo, Port Services Corporation, Raysut Cement, Salalah Port Services, Shell Oman Marketing, Takaful Oman Insurance, United Power, and Voltamp Energy. The list is reviewed every three months by adding standards-compliant companies and eliminating those that lost their eligibility.

#Qatar's QInvest has invested in OneOcean Port Vell in Barcelona, Spain. Originally built for the 1992 Olympic Games, the marina recently completed its transformation to a luxury facility, creating the ultimate destination for yachts up to 190m. QInvest will work with the city and port authorities in Barcelona to increase the profile of the marina by investing additional resources in the port infrastructure. OneOcean Port Vell is QInvest's second investment in Spain this year, having earlier invested into a Spanish real estate strategy focused on land developments in Madrid, Barcelona, Valencia and Marbella. The objective is to acquire well-located land parcels across Spain and develop residential apartments for first home owners. QInvest’s revenues from all business lines were QR209mn, resulting in an operating profit of QR113mn and net profit of QR34.6mn in the first half of this year. The bank’s global assets stood at QR4.7bn at the end of June 30, 2017.

Global debt may be under-reported by around $13 trillion because traditional accounting practices exclude foreign exchange derivatives. Bank for International Settlements (BIS) researchers said it was hard to assess the risk this missing debt poses, but that the main worry was a liquidity crunch like the one that seized FX swap and forwards markets during the financial crisis. The $13 trillion exposure exceeds the on-balance-sheet debt of $10.7 trillion that was owed by firms and governments outside the United States at end-March. The fact these FX derivatives do not appear on balance sheets means little is known about where the debt lies. According to Claudio Borio, head of the BIS's monetary and economic department, the debt remains obscured from view.

Cagamas announced its 14th issuance for the year, a three-year, RM1 billion sukuk, which represents Malaysia's first ever dual tranche sukuk reopening. Proceeds from the issuance will be used to fund the purchase of Islamic house financing from the financial system. CEO Datuk Chung Chee Leong noted that the final yield was priced competitively at a spread of 50 basis points over the three-year Government Investment Issue. He said as at September 8, 2017, Cagamas' secondary trading volume stood at over RM5 billion. He added that subscription from foreign-based investors indicates continued confidence in the company. The new issuance will bring the company’s aggregate issuance for the year to RM8.5 billion.

The Islamic Development Bank (IDB) is investing more than US$2 billion into innovative projects in Kazakhstan. The three major initiatives are the establishment of an organization on food security of Muslim countries, a project of integration of Islamic infrastructure and the establishment of the Astana International Financial Center. IDB CEO Bandar Bin Mohammed Hajjar said the investment would strengthen the bilateral relationship between the IDB and government of Kazakhstan. The IDB has recently established the Foundation for Development of Science, Technology and Innovation. In addition, the bank undertakes the creation of the cooperation ecosystem, which should unite efforts of governments, businessmen and scholars of Islamic countries, and allow to realize the most advanced ideas into ready-made, commercial products.

Values and norms can be positively utilized in achieving development goals where commercial interests are not good stimulators. Redistribution of resources is vital to enhance income as well as the capacity to earn sustainable incomes. This requires income support programs, basic health and education as well as microfinance to build small enterprises. In economics education, results suggest that expenditure can be on self-consumption as well as on consumption of others including dependents, family, neighbours, etc. If an individual prioritizes certain ethical goals over self-aggrandizement, then theorizing should not assume it away. Philanthropy should not be envisioned in the framework of reciprocity alone. People may have a strong desire and willingness to help others even when not reciprocated. There is plenty of evidence that people help strangers, pay anonymously in charities, and sacrifice their wealth and even their lives in the pursuit of being a good person.

According to the Malaysian International Islamic Financial Centre (MIFC), the global sukuk market is set to continue its upward trajectory in 2017 as the fundamentals supporting their issuance remain intact. MIFC said global sukuk issuances stood at US$59.1 billion as of the first half of 2017 (1H17), an increase of 45.6% compared with 1H16. Malaysia continues to be the main driver in the Islamic capital markets, with the country commanding a 46.4% market share in sukuk issuance. As for outstanding sukuk, Malaysia's share stands at 52.6%. MIFC observed that Malaysia is the pioneer in the world's first green sukuk, as evident by the RM250 million of Islamic bond issued by Tadau Energy. Also, the regulator Securities Commission Malaysia is offering several incentives to attract green issuers including tax deduction on issuance costs, which is valid until the year of assessment 2020.

The Dubai Center for Islamic Banking and Finance in Hamdan Bin Mohammed Smart University (HBMSU) concluded the 2nd China-UAE Conference on Islamic Banking and Finance. The two-day event focused on the objectives of the One Belt, One Road (OBOR) initiative, which aims to revitalize the Silk Road connecting Asia and Europe. The event was organized in cooperation with China Islamic Finance Club, ZhiShang Intercultural Communication, and Knowledge Partner Thomson Reuters. Talks focused on challenges and prospects for Islamic finance in achieving the goals of the ambitious Chinese initiative. The agenda comprised a series of panel discussions moderated by key international figures such as Prof. Baydoun; Mr. Gao Lin, Vice Director, Shenzhen Municipal Commission of Economy, Trade and Information Technology, and Dr. Adnan Chilwan, CEO of Dubai Islamic Bank.

Dr. Adnan Chilwan, CEO of Dubai Islamic Bank (DIB), said that Kenya stood out to the Bank as a stepping stone to expanding its operations into Africa. In May 2017 DIB was granted a banking licence by the Central Bank of Kenya to operate a subsidiary, DIB Kenya. According to Chilwan, Dubai always had the ambition to venture into Far East Asia and East Africa. As DIB had already ventured into Far East Asia, East Africa was the next logical point. From the East African countries Kenya stands out in its regulatory framework and the stability in the country. DIB Kenya is already open and the bank has ambitious plans for East Africa. Chilwan added that Kenya was a country that DIB would be surely focussing on in years to come.

In this interview, Dr. Adnan Chilwan, CEO of Dubai Islamic Bank, reflects on the bank’s performance in the last couple of years and prospects for future growth. Dubai Islamic Bank (DIB) has entered the billion dollar profits club and the challenge is to keep up the pace of exponential growth. Chilwan says a billion dollars is just a start and he wants to find the right way of replicating the successful strategy. He hopes the bank will be able to keep up that good work, making sure the customers are happy, the regulator is happy, the ratings agencies, research analysts and shareholders are all happy with what they get from the bank. He is grateful for the board of directors and for the team behind him that made this billion dollar profit possible.

Algeria’s new government will introduce Islamic finance and develop its stock market to draw more investment into the economy. The country currently struggles to cope with a sharp fall in energy earnings. Prime Minister Ahmed Ouyahia plans wider reforms and the start of fracking for shale hydrocarbons to boost oil and gas revenue. Algeria's finances have been hit by a more than 50% drop in crude oil prices since mid-2014, the government said 2017 would end with real difficulties, while 2018 looked to be even more complex. Algeria has failed in the past to modernise its stock market and has a very low level of liquidity. Its firms currently rely on state finances, which in turn depend on the oil and gas sector. The government plans to continue spending cuts, including subsidies, but analysts say spending cuts alone may not be enough to tackle the crisis. Foreign exchange reserves fell to $105 billion in July this year from $193 billion in May 2014.

American International Group (AIG) has placed the first Shariah-compliant mergers and acquisitions (M&A) insurance policy in the Middle East and North Africa region (MENA). AIG’s Warranty and Indemnity insurance product helps protect buyers and sellers from financial losses if misrepresentations occur. Buyers can distinguish bids, sellers can reduce indemnity obligations. AIG was advised by global law firm Norton Rose Fulbright, led by corporate/M&A partner Adjou Ait Ben Idir. Associates were Agnieszka Braciszewska (lead associate), senior associate Rachel Moylan (IT/IP aspects) and of counsel Louisa Lynch (real estate aspects). Partner Dominic Stuttaford advised on tax aspects. Mark Storrie, M&A Manager at AIG said M&A insurance provided a unique solution for MENA clients investing both in the region and globally. He was very pleased to have placed the first M&A policy in the region.