IslamicFinance.de

Islamic microfinance start-up Blossom Finance has started accepting zakat payments in cryptocurrencies for zakat-eligible cryptocurrency assets in response to user demand. Blossom Finance has designated a wallet for zakat payments at a cryptocurrency exchange in Indonesia. Blossom will channel the zakat to the Indonesian financial cooperative Baitul Maal Wat Tamwil (BMT) that will distribute the funds to any of the 87 microfinance institutions that the start-up has agreed to partner with. The crypto zakat payment on crypto assets is completed once deposited in the Blossom-designated wallet. CEO Matthew Joseph Martin said Blossom Finance would not take a fee for providing the zakat payment facility. The company’s aim is to provide a working model for zakat collection and management organizations.

Pakistani banker Ali Allawala has been appointed as the chief executive officer of the Islamic Unit of Standard Chartered Bank Malaysia. Ali Allawala possesses over 22 years of experience in retail banking, both within conventional and Islamic banking. He joined Standard Chartered Bank Pakistan in 2012 and had previously worked for Citibank and Samba Financial Group. He was named "Best Islamic Consumer Banker in Pakistan 2015" by the Islamic Finance Awards. Mr. Allawala has extensive multi-product experience in business development, product management, distribution, digital banking and marketing.

US-based Blossom Finance recently launched a fund that will lend local-currency on the Indonesian island of Java via Permodalan BMT (PBMT) Ventura. Baitul Maal wat Tamwil (BMTs) are financial institutions that follow Shariah law. They provide savings and loan services primarily to people who do not use traditional banks. The new fund is Blossom’s first microfinance fund that is open to investment from the public. The minimum investment is USD 1,000, although US-based investors must be accredited before participation. Blossom is accepting investments into the fund in US dollars as well as the cryptocurrencies Bitcoin, Bitcoin Cash and Ethereum. In testing its platform since 2015, Blossom has generally returned investors annualized profits around 7% with terms of 6 to 12 months.

Malaysian property developer Matrix Concepts is teaming up with an Indonesian consortium to jointly develop an Islamic financial district in Jakarta. Matrix entered into a memorandum of understanding (MoU) with Bangun Kosambi Sukses (BKS) and Nikko Sekuritas Indonesia (NSI) for the joint development dubbed PIK 2 Sedayu Indo City. Matrix said the proposed development was initiated by the Indonesian government in its quest to position itself as an Islamic financial hub. PIK 2 Sedayu Indo City will encompass 1,000ha of land complete with residential houses, apartments, shopping centres, a light rail transit system, and a stadium.

According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, the world will need up to US$90 trillion (RM360 trillion) worth of investments for infrastructure by 2030. This presents a significant opportunity for green finance and green sukuk to be part of the mainstream investment for the financing solutions. In July 2017, SC, Bank Negara Malaysia and the World Bank Group established the country’s first green sukuk. Green sukuk has become the trend that has received support from investors and regulators on a global scale. NewParadigm Capital Markets Managing Director Charanjeev Singh says more green sukuk issuances are expected to take up the Islamic finance space as Malaysia continues to be the catalyst for Islamic bonds. So far, the focus has been big government-owned companies. The next level of development would be to facilitate the middle- market or the mid-sized companies, and not necessarily the government- owned or government-linked, but the A or AA ratings.

The Malaysia International Islamic Finance Center (MIFC) published in cooperation with the Islamic Corporation for the Development of the Private Sector (ICD) the latest report entitled “Islamic finance in Asia: Reaching new heights”. According to the report, Asia’s Islamic finance assets registered an annual growth of 8.4% between 2011 and 2016 and stood at $528.7bn, or 26% of the world’s Shariah-compliant financial assets, at the end of 2017. Furthermore, Asia has grown to the largest market for sukuk. $52.3bn or 52.5% of all newly issued sukuk came from Asia in 2017, with most notable contributors being Hong Kong, Indonesia and Pakistan. The region also has a global market share of 60.7% of sukuk outstanding and is market leader in Islamic funds. The report states that Malaysia, Bangladesh, Brunei and Indonesia are currently among the most developed Islamic banking jurisdictions in Asia.

Indonesia has seen a rapid growth of sharia fintech. In fact, the country’s Sharia Fintech Association already has 28 members, although it was established only in February. The interest is understandable given the size of the market for Islamic fintech. According to a 2017 Sharia Fintech Business Study published by Telkom Indonesia, the market size for sharia lending is worth up to Rp 7.3 trillion ($525 million). However, venture capital firms still seem hesitant about pouring capital into the sector. Mandiri Capital Indonesia investment head Aldi Adrian Hartanto believes that sharia fintech startups would need a more convincing business model and market approach in order to attract investment. Focusing on sharia market alone is not seen as a strong differentiator amid tight competition in the country. Malaysia, however, seems to see it differently. The country has made various efforts to provide funding for Muslim-focused tech. Thus, Malaysia was ranked first for Islamic fintech by Bloomberg Intelligence, followed by the UK and UAE.

According to Rehan M Shaikh, CEO of Standard Chartered Saadiq, Standard Chartered Bank (SCB) wants to bring more Islamic liquidity into the market as the demand is increasing in Bangladesh as well as in the global markets. Islamic banking has expanded three times from 2007 to 2017 in Bangladesh, with a Compound Annual Growth Rate (CAGR) of 11.6%. The Takaful sector has grown five times with a CAGR of 19.34% during this period. SCB has arranged a $32 million Diminishing Musharakah Facility for Noman Terry Towel Mills and Ismail Spinning Mills. This is the first Islamic syndication arranged by SCB Bangladesh. The facility will finance the company’s capital expenditures and support its export growth.

The Hong Kong Financial Services and Treasury (FSTB) released a report on the status of money laundering and terrorism financing. The report concluded that virtual currencies, like Bitcoin, are not particularly involved in either type of financial crime. Hong Kong's financial regulators and law enforcement agencies are working together to look into risks associated with Initial Coin Offerings (ICO) and cryptocurrencies. In March this year, Hong Kong’s Securities and Futures Commission (SFC) halted an ICO in Hong Kong and made the company return the money raised. More recently, in mid-April, the SFC said that the type of fundraising done through ICOs is better suited to venture capital funds.

Ibn Sina Trust is set to sell off its entire 2.24% stake in Islami Bank Bangladesh (IBBL) within the next 30 days. Ibn Sina's exit from the country's biggest private lender comes a few days after the resignation of Chairman Arastoo Khan. The former secretary stepped down on April 17 and was replaced by Md Nazmul Hasan, a professor of the University of Dhaka. Ibn Sina left the bank's board on January 5 this year after a huge reshuffle. Last year, the Islamic Development Bank, one of the foreign investors of IBBL, sold two-thirds of its shares, bringing its stake in the bank down to 2% from 7.5%. In 2014, foreign sponsor-shareholder Bahrain Islamic Bank sold off all of its shares and Dubai Islamic Bank followed suit in 2015.

Ten days after losing its chairman, Islami Bank Bangladesh is preparing to lose one of its biggest sponsor shareholders. Ibn Sina Trust announced its intention to withdraw by the end of next month. The Ibn Sina Trust is the largest local corporate shareholder in Islami Bank. Its 36,077,391 shares are worth around Tk94.16 crore. A year ago, the Islamic Development Bank (IDB) sold off two-thirds of its shares, shrinking its stake in the bank to 2.1% from 7.5%. Two other foreign banks have sold out from Islami Bank in recent years. In 2014, foreign sponsor shareholder Bahrain Islamic Bank sold off all its shares, followed by Dubai Islamic Bank, which sold all its shares in 2015. Islami Bank has always had the reputation of being influenced by Jamaat-e-Islami, the Islamist political organization noted for its connection with the local collaborators of Pakistan occupation forces during the Liberation War in 1971.

Malaysia is one of the largest markets for Islamic finance. According to Mohieddine Kronfol, chief investment officer at Franklin Templeton Investments, Malaysia's sukuk market could attract Chinese companies if there were more foreign currency-denominated issues. He said Malaysia has attracted foreign companies to issue sukuk, but they were predominantly in ringgit and largely domestically bought.Mohieddine said there should be more transactions in international currencies like the U.S. dollar, and a currency regime or some central bank support that facilitates that. Franklin Templeton Investments projects global sukuk growth at 15-20% this year on the back of stable oil prices, better growth outlook in markets that issue sukuks and sustained demand for Islamic finance.

Blossom Finance announced the open enrollment for an Islamic microfinance fund that will accept multiple cryptocurrencies. Investors will focus on socially responsible opportunities and receive profit sharing from Blossom’s network of microfinance partners in the province of Central Java, Indonesia. Blossom has partnered with PBMT Ventura, an Indonesian Islamic microfinance firm. The funds raised will be utilized to bolster micro-businesses and traditional market sellers to meet the increased demand during the upcoming Ramadan holiday. In order to participate, investors will have the option to invest with Bitcoin Core (BTC), Bitcoin Cash (BCH), Ethereum (ETH) or USD.

According to the Sultan of Perak, Sultan Nazrin Shah, the Islamic equity asset class needs to explore solutions and achieve critical mass volume in order to remain competitive. He delivered his keynote speech at the Franklin Templeton Investments 2018 Islamic Forum in Kuala Lumpur. He believes that Islamic finance must embrace the era of disruptive innovation, with a continued strong focus on product innovation. The global asset management landscape had been pushed to embrace new online investment platforms and failure to keep up with these changing structural dynamics could put the industry at an even greater disadvantage than at present. He said that Islamic investors could also capitalise on the emerging "green" or environmentally-friendly finance.

Sharia-compliant investments have flourished in recent years, which could help strengthen the domestic market’s resistance to global influences. Data from the Indonesia Stock Exchange (IDX) shows that the number of sharia-compliant investors in March grew 18%, or by 4,245 investors year-to-date (ytd), with transactions totaling Rp 476 billion.

Malayan Banking (Maybank) is preparing to spin off and list its Etiqa insurance arm on the local stock exchange. Etiqa operates in Malaysia, Singapore, the Philippines and Indonesia and is estimated to be worth at least $1 billion. As part of the transaction, Maybank’s investors are expected to receive shares in the insurance company in proportion to their existing holding in the bank. Etiqa provides life and general insurance as well as family and general takaful. In 2017 Eitqa reported a record revenue of 6.2 billion ringgit ($1.6 billion). Profit before tax rose 18.5% to 1 billion ringgit last year. In March, Etiqa said it maintained its top position in Malaysia’s general insurance and general takaful segment with an 11.8% market share. It was ranked fourth in the life and family segment, with an 8.9% market share.

MBSB Bank, the result of a merger between Malaysia Building Society and Asian Finance Bank, starts afresh as a full-fledged Islamic bank. According to group CEO Datuk Seri Ahmad Zaini Othman, the bank intends to differentiate itself in the area of transactional banking, as well as in digital capabilities. One of the key targets in MBSB Bank’s three-year business plan is to have fee-based income account for at least 25% of its total income by the end of 2020. The bank hopes that its approach towards customers will also set it apart from other lenders. MBSB Bank is starting out with total assets of RM43.7 billion, making it the second largest standalone Islamic bank after Bank Islam Malaysia (RM57.7 billion). Personal financing constitutes the biggest portion of the bank's gross financing and is extended mainly to civil servants. MBSB plans to make a stronger push in the industrial hire purchase segment, which involves SME financing. Zaini plans to offer a lot more products and services for SMEs, especially in the area of current accounts.

Despite a failed merger with HSBC Amanah Takaful a year ago, Allianz Malaysia is still keen to acquire a takaful business. According to Allianz CEO Zakri Khir, there is bright takaful business growth potential because the penetration rate in Malaysia is just 15%. Allianz Malaysia has recently sealed a partnership with insuretech start-up PolicyStreet to offer potential clients to purchase insurance policies online. Four Allianz digital products will be offered on PolicyStreet’s digital platform namely Enhanced Road Warrior, Smart Home Cover, Allianz Travel Care and Allianz Flight Care. In 2017, Allianz Malaysia's profits fell 7.7% to RM287.96 million from RM312.13 million on the back of 2.6% rise in revenue from RM4.68 billion to RM4.8 billion. Zakri said Allianz Malaysia was impacted by Bank Negara's detariffication of motor and fire insurances from July 1 2017.

The central bank of Bangladesh has suggested encouraging Islamic Shariah compliant investment certificate Sukuk in the capital market. Capital market regulator BSEC pointed out that other Muslim majority countries such as Malaysia, Indonesia, KSA, UAE as well as non-Muslim majority countries like the UK and Singapore have Sukuk in their capital market. It also pointed out that Bangladesh needs to undertake measures to expand capital market for financing productive investments and infrastructural projects. Finance Minister Ama Muhith has recently expressed his plan to pave the way for the long-term financing of the capital market.

Malaysian Islamic banks are boosting their trade financing market share with various measures. Maybank Islamic CEO Mohamed Rafique Merican said the bank intended to grow its trade facilities in line with growing demand for Islamic finance in Malaysia. Mohamed Rafique was speaking to reporters after a forum on "Islamic Trade Finance: Revitalising Trade and Unlocking New Potential". He said a lot more could be done to boost Islamic trade facilities, which stood at 1.5% out of US$50 billion. RHB Islamic Bank CEO Datuk Adissadikin Ali said Islamic banks would need to collaborate with the financial technology players to provide e-commerce trade financing. He added that RHB Islamic Bank was developing an e-commerce trade financing platform to enable companies to boost their working capital and the platform was likely to be implemented next year.