IslamicFinance.de

Moody's Investors Service (Moody's) has completed a periodic review of the ratings of Dubai Islamic Bank (DIB).
Dubai Islamic Bank's A3 long-term Issuer ratings are derived from the bank's ba2 standalone baseline credit assessment and a five notch systemic support uplift based on Moody's view of a very high likelihood of government support from United Arab Emirates (rated Aa2), in case of need. DIB's ba2 BCA reflects the bank's solid profitability, deposit-funded balance sheet, and healthy liquidity reserves. These strengths are moderated by Moody's expectation of downside pressure on the bank's solvency in the 12-18 months on the back of lower oil prices, reduced investor confidence and the coronavirus-induced disruption.

The College of Islamic Studies (CIS) at Hamad Bin Khalifa University (HBKU) has signed a Memorandum of Understanding (MoU) with Qatar FinTech Hub (QFTH). Through the agreement, CIS and QFTH will engage and contribute actively to the development of the financial technology (FinTech) industry in Qatar. QFTH represents a range of stakeholders in the industry from early-stage firms to large financial services companies and relevant service providers, who stand to benefit from CIS' insights and research. The Fintech Hackathon, which was launched in June 2020, is one of the pioneering areas of collaboration between CIS and QFTH.

The desire for wealth transition means that many family businesses may have to change their approach and look outside the family to increase that longevity rather than simply relying on the next generation inheriting the family business. It may be that the skill set or appetite of the next generation to take on the family business is simply not there. Furthermore, the inheritance laws governing the transfer of assets locally may vary from those applicable to assets located abroad. Wealth planning company Julius Baer expects to see an increase in the number of Dubai International Financial Centre (DIFC)/Abu Dhabi Global Market (ADGM) Foundations to support wealth and succession planning for clients in the UAE.

Moody’s expects sukuk issuance to modestly decline by 5% this year to about $170 billion because of the coronavirus crisis. Despite the decline, 2020 will still see the second highest sukuk issuance total ever, following a 36% increase in 2019. Total issuance in the first six months of 2020 dropped to $77 billion, down 12% from the same period last year, as activity in Malaysia and Indonesia flagged. Issuance in southeast Asia dropped by 25%, while volumes in the Middle East rose 7%. Volumes are likely to rebound in the second half of 2020, as governments raise money to finance their responses to the coronavirus crisis.

The Dubai Islamic Bank (DIB) reported a net profit of Dh2.11 billion for the first half of 2020. Due a difficult quarter, DIB continues to demonstrate healthy profitability whilst ensuring prudence in growing the balance sheet.

Banks who are in the Gulf Cooperation Council (GCC) states, will have weaker earnings and profitability this year, due deterioration in nearly all their sources of income said Junaid Ansari, head of Research and Strategy at Kamco Invest, Kuwait. Conventional banks and the Islamic financial institutions will record weaker performance he said, but Islamic banks, due to their structure and focus, may cope better.

Emirates Islamic announced its financial results for the half year ending 30 June, 2020. The Bank reported a net profit of AED 12 million for the first half of 2020. The total income is of AED 1.1 billion, lower by 15% year-on-year. Funded Income margins are lower by 25 bps year-over-year due to lower profit rate environment. Total assets stand at AED 64.2 billion, decreased by 1% from end 2019. Customer accounts stand at AED 45 billion, broadly flat from end 2019, while current and savings accounts balance up 10% from end 2019.

According to Boston Consulting Group (BCG), personal wealth held by UAE residents surged to $400 billion between 2014 and 2019, with 48.5% of it held by millionaires in 2019. The consultancy reckons the ranks of UAE’s millionaires are expected to grow by 4.2% annually over the coming four years. The UAE represented 7.1% of the share of personal wealth pool in 2019 in the Middle East and Africa, having grown by 3.8% annually to $400 billion between 2014-19. The consultancy says the wealth management industry's value proposition will change over the next two decades, new forms of interaction will evolve, as well as new business models.

Launched in 2017 with the aim to diversify funding, the Saudi finance ministry had planned to raise US$31.5 billion of Sukuk in 2019. A new ‘primary dealer’ scheme for local-currency government sukuk was launched in 2018, under which five local banks buy the sukuk directly from the government and then make a market by quoting two-way prices to other investors. Additionally, Saudi regulators introduced a number of incentives in 2019 for corporate sukuk issuers and investors to encourage further issuances. Lower regulator fees and zero tax/zakat on investments in domestic sovereign sukuk also promise a more active and liquid secondary market.

Private investment firm, Siraj Holding, has officially acquired Al Hilal Takaful, the Islamic insurance business and operations of Al Hilal Bank. The transaction, which was initially expected to be complete in the first quarter of 2020, was given the green light by shareholders, the Securities and Commodities Authority (SCA) and the Insurance Authority. The firm plans to rebrand and align with the new leadership and group operating model following the completion of regulatory formalities. A new group of board members was appointed as part of the acquisition, while the operations of the company will be led by Thomas Joe as chief executive officer.

Al Baraka Islamic Bank has launched a promotional campaign to provide property financing to the beneficiaries of the Housing Ministry’s Mazaya programme. Under the campaign, profit rates will be calculated at competitive rates, there will be no down payments, and zero banking fees. The bank will also cover the fees of life insurance for the beneficiaries and will provide fire insurance for the property. Also, there will be instant prizes for the executed deals. The financing is up to BD120,000 with maximum duration of 25 years.

The Islamic Development Bank Group in partnership with the UAE Ministry of Economy conducted a live webinar entitled "IsDB Group Private Sector Action Response to COVID-19". The webinar discussed the future outlook to overcome the COVID-19 pandemic. In addition, the webinar highlighted the IsDB Group’s US$2.3 billion Strategic Preparedness and Response Programme. During the webinar, 3 online initiatives were launched: Digital Country Presentations, Startups Virtual Pitch Competition and the MADE IN…..SERIES, which is a digital platform for SMEs who want to showcase and present their local products, project and services to an international audience.

ADIB has launched a series of special offers exclusively to healthcare professionals as a tribute for their efforts during the COVID-19 pandemic. These offers include reductions and discounts on ADIB products: special reduction on the profit rate of personal and auto finance; AED500 reduction in fees for ADIB covered cards or a voucher from Amazon or Noon when applying for cards; fixed profit rates on home finance starting from 2.99% per annum on home finance; 20% fee reduction on all wealth management products; Smartaccount welcome pack and no minimum balance requirement for Smartbanking; an iPad with every Life and Savings Takaful plan, if an AED 1,000 monthly contribution is made. ADIB was among the first UAE financial institutions to launch relief measures for customers during COVID-19, including the postponement of monthly installment payments and the reduction of certain fees.

Saudi Arabia’s mortgage lender Amlak International for Real Estate Finance starts trading shares on the Tadawul stock exchange. The company is floating 27.18 million shares, or 30 per cent of its total, with an indicative price range set at 15-17 Saudi riyals (Dh14.7-Dh16.6) per share. Proceeds of the offer are being used to repay selling shareholders. Amlak International was set up in 2007 and is a non-bank lender, mainly of property loans. Shares in Amlak International's IPO will be allocated on a pro-rata basis to individuals who subscribed to the offer, depending on the size of their request.

FinTech has spurred the evolution of the Islamic finance industry over the last year. It helps to address the need for simplification and innovation in the sector. It also provides a great opportunity for the sector to streamline services and attract new segments, with the key being digital-savvy millennials. Dubai and Dubai International Financial Centre (DIFC) are key players in the Islamic finance sector. DIFC and Dubai Financial Market have launched the first Dubai Sustainable Finance Working Group to create a sustainable financial hub in the region in line with the UAE Sustainable Development Goals 2030. They are encouraging the use of green financial instruments and responsible investing.

Value added tax ("VAT") was pioneered by the European Union, but is gradually spreading worldwide. Saudi Arabia recently tripled its rate of VAT. While VAT in Saudi Arabia is only a couple of years old, the Saudi VAT law follows widespread international precedent by also exempting financial services. Accordingly, all financial institutions will suffer a hit to their profit and loss account. All purchases of goods and services which are subject to VAT increase in cost by 9.5%. This may lead to an increase in bad debts in the Saudi banking sector. Islamic financial services are not expected to suffer more (or less) than conventional financial services.

According to Fitch Ratings, Islamic financing and deposits accounted for 27% of total sector financing and deposits at end-2019. Growth in Islamic financing slowed significantly in 2019. Asset-quality metrics deteriorated in 2019, particularly due to pressures in the real estate and contracting sectors, but also in entertainment, hospitality, and retail and wholesale trade. The operating profit/risk-weighted assets ratio also deteriorated due to increased financing impairment charges. Capital ratios have increased over the past four years, while core capital ratios remain below those of conventional banks but the difference has narrowed.

Barwa Bank held yesterday its Ordinary General Assembly and approved all the agenda of the meeting. The annual general meeting was presided over by the Bank's Chairman and Managing Director Sheikh Mohammed bin Hamad bin Jassim Al Thani. It was held via video conferencing. The focus of the meeting was on completing the full merger process with International Bank of Qatar, in addition to statistics and financial results for the year 2019 as well as the Bank's future plans. The merger took place in a record time that did not exceed 11 months. Barwa Bank recorded remarkable growth, as its total revenue increased by 43% to reach QR3.3bn, while total assets reached QR77bn, supported by financing assets that exceeded QR51bn.

The cancellation of the Hajj pilgrimage sent shock waves of sadness and disappointment across the Muslim world. Performing the pilgrimage at least once for those who are physically and financially able is one of the five pillars of Islam. Making the trip is a sacred milestone for the world’s 1.8 billion Muslims. The Saudi government announced on Monday that no pilgrims from outside the kingdom could perform the hajj this year. On Tuesday, Saudi officials narrowed the order, saying that only about 1,000 pilgrims would be permitted this year, a tiny fraction of the 2.5 million who came last year. The cancellation weighs particularly heavily on older Muslims who have been waiting for years to go in hopes that they can fulfill their religious obligation before death.

The National Bank of Bahrain (NBB) announced its subscription to Bahrain Bourse’s (BHB) newly introduced Murabaha service, which will be used by the Bank when transacting in Islamic Commodity Murabaha financing. NBB is one of the first banks in the Kingdom to execute a transaction using the new fully Shari’ah compliant service. The service employs Government of Bahrain Islamic Ijara Sukuk, whereby the lender in the financing transaction buys the Sukuk from the CBB and after the transfer of the ownership, sells them to the borrower, with a deferred sell as the underlying commodity.