IslamicFinance.de

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.

Deadlines for Qatar-based Islamic bank Masraf to announce a firm intention to make an offer for Islamic Bank of Britian have been extended to the end of August. The latest deadline again lapsed as talks that have been ongoing since late 2012 continue. The bank has struggled to make a profit in recent years and at the end of 2012 bosses revealed the lender would look at ways to offer more products. In 2009 the bank attempted to boost business by targeting mortgage advisers, launching a website providing resources enabling them to re-sell the Islamic Bank of Britain’s range of Sharia-compliant home purchase plans and commercial property finance products. Yet in 2011 the bank reported a loss of £8.9m despite income from home purchase plans increasing 17.9 per cent to £2.3m.

Iranian Bank Mellat appealed against a decision upholding measures taken by the Treasury to restrict its access to the UK financial market. The Treasury had directed that all persons operating in the UK financial sector were prohibited from having any commercial dealings with the Appellant or its UK subsidiaries. The Appellant argued the Treasury had failed to give adequate reasons for its decision. The High Court and Court of Appeal both dismissed the appeal, however the Supreme Court allowed it. One of the central issues raised was that the lower courts found that the justification for the order was not a problem specific to the Appellant, but a problem with Iranian banks in general. However, the order made no attempt to impose restrictions on other Iranian banks. In that regard, the measure was arbitrary, irrational and disproportionate. The order was also found to be invalid on various procedural grounds.

According to Adil Dahlawi, CEO and Managing Director of Itqan Capital, the Islamic banking sector will witness an increasing demand as Islamic financing jumped 27 percent in one year to $1.1 trillion from $800 billion. He noted that one of the most prominent topics discussed at Al Baraka's 34th symposium for Islamic Economic was zakat on debt, especially with the widespread presence of financial institutions specialized in financing from private companies and Banks. Besides, the increase in demand for private and public financing, whose notable effects are apparent on the financial statements of various companies and institutions were important issues. Standard & Poor's earlier forecast that sukuk sales are to double and reach $3 trillion by 2015 in light of companies which are working to capitalize on this growing and promising market.

Mohammed Obaidullah of the Islamic Development Bank highlighted the role of customers in strengthening Islamic banks and financial institutions by asking right questions and monitoring the bank’s activities and dealings. The customer is the driving force who can make Islamic banking move, he said while giving a lecture on the relevance of Islamic banking and finance in the modern world at the Islamic Education Foundation. Obaidullah called for the establishment of independent Shariah bodies to monitor and approve the activities of Islamic Banks. Moreover, Islamic banking and finance have become a strong industry that will not be shaken by defaulting of some institutions or individuals, he added emphasizing the importance of taking protective regulatory measures. Obaidullah hoped that India would soon get on the bandwagon of Islamic banking since the country could get the much-needed funds available in GCC countries for its infrastructure projects.

Three million muslims live in Britain, and more and more of them are demanding financial products compatible with their faith. British business leaders are eager to cash in on this expanding revenue stream.David Slater and his colleagues of London and Partners, backed by the British government, are now pushing for London to become the global hub for Islamic finance and they’ll be pressing their case at the 9th World Islamic Economic Fórum which will be hosted by London in October. The U.K. already has the largest Islamic banking sector outside the Middle East and Asia. Britain has also changed its commercial and taxation laws to accommodate sharia-compliant finance. More sukuk have been issued on the London Stock Exchange than any other bourse, worth more than $34 billion.

Indonesian Bank Muamalat has implemented Oracle FLEXCUBE Universal Banking to streamline its core business processes and to enhance productivity. Oracle FLEXCUBE is now live across all of Bank Muamalat's branches and e-channel network (ATM, EDC, etc) including mobile branches. It covers its retail and corporate banking business, including treasury and trade, all in compliance with Shariah Laws. The implementation was completed well within time and within Budget. By implementing Oracle FLEXCUBE Universal Banking, the institution has been able to improve business processes and significantly reduce processing times required for financial and administrative transactions. FLEXCUBE has helped to support 24-hour banking operations as well as enable enhanced customer insight and simulations to deliver excellent customer service.

Mr. Abdul Razak Abdulla Al-Qassim - Chairman of the Board of Directors announced that the Board has approved the Financial Statements for the period ended on 30th June 2013. The Bank registered BD2.4m as net profit for the first half of the year after deducting BD5.7m as provisions compared to a net loss of BD15.8m for the same period last year. The Board has taken provisions of BD5.7m as a precautionary step against any unforeseeable deterioration in asset values compared to BD15.9m for the same period last year. Net operating profit for the three months of the second quarter registered BD3mn compared with BD1.4m for the same period in 2012. These results are considered good considering the prevailing economic circumstances.

Nigerian Jaiz Bank has increased its branch network to ten, with the commissioning of its Katsina branch. The bank commenced operations with three branches in Abuja, Kaduna and Kano states on January 6, 2012, after it received licence from the Central Bank of Nigeria on November 11, 2011, to operate as a non-interest bank. The bank now has branches in Gombe, Maiduguri, Katsina, and two branches in Kano. The bank has also added two branches in Abuja, the Federal Capital Territory. The branches are located at the National Assembly and Wuse District. According to the chairman, board of directors of Jaiz Bank, Alhaji Umaru Mutallab, there are plans to open additional branches in Bauchi, Zamfara, Sokoto, Kebbi and Jigawa states and at the Bayero University Kano, Federal Secretariat Abuja and Zaria, before the end of year 2013.

Bank Islam Malaysia is exploring opportunities to expand its business in South-East Asia, especially in Indonesia. However, the bank has not identified suitable joint-venture partners to penetrate foreign market, according to its managing director, Datuk Zukri Samat. Bank Islam was earlier reported to have held talks with an Islamic bank in Indonesia to acquire up to 40% stake in the latter. Meanwhile, Zukri said, the bank aimed to expand its operations by opening five branches nationwide by year-end. Bank Islam recently closed a deal regarding a business zakat of RM320,000 to Majlis Agama Islam Johor. Zukri said the zakat payment represented part of the total RM9.2mil for financial year 2012, based on its profit of RM600mil the previous year.

Abu Dhabi Islamic Bank (ADIB) has closed a AED 1.32 billion (US$360 million) Syndicated Islamic Facility for Abu Dhabi-based Gulf Marine Services (GMS). ADIB acted as the Mandated Lead Arranger, Sole Underwriter, Sole Bookrunner, Investment and Security Agent for the facility. The deal was tailored by ADIB to meet GMS’ specific financing needs, including re-financing existing facilities and providing finance for the acquisition of 2 additional vessels. The financing will also help GMS achieve its plan to further improve and expand its fleet. The facility was very well received, as evidenced by the strong demand from local and regional banks which resulted in it being 2 times oversubscribed by 10 local and regional banks. White & Case acted as the legal counsel to the financiers, while Gibson Dunn acted on behalf of GMS.

Saudi-based Al Rajhi Bank posted a slight rise in its second-quarter net profit. The bank made 2.12 billion riyals ($565.3 million) in the three months to June 30, compared with 2.09 billion riyals in the same period a year earlier. Profit for the opening six months of the year was 4.17 billion riyals, up from 4.10 billion riyals in the corresponding period of 2012. The results are in line with analysts' forecasts that expected the bank, on average, to post a net profit of 2.13 billion riyals for the second quarter.

An Ordinary Shareholder Assembly of Bahrain Islamic Bank (BisB) was held on Sunday 7th July 2013 with the objective of electing a new Board. The result was the election of four new members to the Board in addition to the five members who are appointed. The following four members are the ones who were successful in the elections: Talal Ali Abdulla Al-Zain, Khalil Ebrahim Nooruddin Nooruddin, Ebrahim Hussein Ebrahim Abdul-Rahman, Othman I. N. Al-Askar. Accordingly, the Board of Directors constitution now is complete with a total number of nine as follows: Mr. Abdul Razak Abdulla Hassan Al Qassim (Chairman), Brig. Khalid Mohammed Al Mannai (Vice Chairman), Mr. Talal Ali Abdulla Al Zain, Mr. Khalil Ebrahim Nooruddin, Mr. Mohammed Al Zarrouq Rajab, Mr. Mohammed Ahmed Abdulla Ali, Mrs. Fatima Abdulla Budhaish, Mr. Ebrahim Hussain Ebrahim Abdul Rahman, Mr. Osman Ebrahim Naser Al Askar.

Gulf African Bank has tied its public listing plans to the exit of International Finance Corporation (IFC) from its shareholders’ roll. IFC bought a 15 per cent stake in the bank for $5 million (Sh430 million) last year, which valued it at about $33.33 million (Sh2.86 billion) at the time. Chief executive of Gulf Bank Abdalla Abdulkhalik said IFC plans to exit through a public share sale. The IPO is also expected to raise additional capital for the lender. However, no timeframe has been set. Going by the IFC’s investment horizon the public could get a chance to buy into the lender by 2017. IFC’s policy is to invest in firms for between five and seven years. Gulf Bank's total assets stood at Sh13.56 billion as at the end of 2012, up from Sh5 billion as at the end of 2008.

European Central Bank, Occasional Paper No 146, June 2013

ABSTRACT

Islamic finance is based on ethical principles in line with Islamic religious law. Despite its low
share of the global financial market, Islamic fi nance has been one of this sector’s fastest growing
components over the last decades and has gained further momentum in the wake of the financial
crisis.

The paper examines the development of and possible prospects for Islamic finance, with a special
focus on Europe. It compares Islamic and conventional finance, particularly as concerns risks
associated with the operations of respective institutions, as well as corporate governance. The paper
also analyses empirical evidence comparing Islamic and conventional financial institutions with
regard to their: (i) efficiency and profitability; and (ii) stability and resilience. Finally, the paper
considers the conduct of monetary policy in an Islamic banking context. This is not uncomplicated
given the fact that interest rates – normally a cornerstone of monetary policy – are prohibited under
Islamic finance. Liquidity management issues are thus discussed here, with particular reference to
the euro area.

Pakistan-headquartered Bank of Khyber (BoK) plans to open branches in the Middle East, as part of an expansion drive to capture the fast growing investment opportunities and facilitate the expatriate Pakistanis belonging to Khyber Pakhtunkhwa and Federally Administered Tribal Areas (FATA). The lender would offer both Islamic and conventional banking services in the lucrative market of Middle East, according to the bank's acting managing director, Javed Hashmat. No further details were provided.

Emaan Islamic Banking, a division of Silkbank Limited, has been launched and is now available in 10 branches in 8 cities including Karachi, Lahore, Faisalabad and Islamabad. M. A. Mannan, Executive Director at Silkbank, said that currently, the Islamic Banking Division offers a complete suite of liability based products and services including Current Account, Savings Account, Term Deposit (01 Month to 05 Years), Online Banking, 24/7 Phone Banking, Internet Banking, Visa Debit Card, Utility Bills Payment Service and Corporate Banking solutions including Musharka, Murabaha, Diminishing Musharka and Import Murabaha. Silkbank plans to open more Emaan Islamic Banking branches throughout the country and offer more products, both in Retail and Consumer Banking in Pakistan.

The International Finance Corporation (IFC) – the investment arm of the World Bank – has acquired 15 percent shareholding in Gulf African Bank, Kenya's Islamic bank, for $5 million (Sh425 million). In addition, a further $3 million (Sh255 million) trade guarantee has been opened for Gulf African Bank under IFC’s global trade finance programme. Gulf African Bank said it would use IFC’s financing to boost finance for retail and corporate customers and develop programmes for women entrepreneurs while also extending services to SMEs. In addition to the IFC partnership, the bank is undertaking a rights issue to increase its capital base by an additional Sh850 million.

The three Bahraini Islamic investment Banks Capivest, Elaf Bank and Capital Management House have agreed to merge in order to better compete in a fragmented market. The combination will create a bank with assets of $400 million which should be able to win larger projects while benefiting from a more diverse balance sheet. Kuwait Finance House advised the lenders on the merger. The deal must still be approved by Bahrain's central bank and the Ministry of Industry and Commerce.

Al Rajhi Bank will reportedly distribute dividends worth SR2.25bn ($599.9m) for the first six months of 2013. This is equivalent to 1.5 riyals per share. The amount is slightly higher than the 1.25 riyals per share which the bank paid last year. Separately, Banque Saudi Fransi said it would distribute dividends worth SR361.6m ($96.4m) for the first six months of the year. This equates to 0.4 riyals per share. In 2012, Banque Saudi Fransi paid a full-year dividend of 0.8 riyals per share, indicating that this year's payment is in line with that made last year. Al Rajhi is expected to release its second-quarter earnings around July 16.