Social Reporting Practices of Islamic Banks in Saudi-Arabia

Abstract Islamic banks are said to possess ethical identity (Haniffa and Hudaib, 2007) because their social goals are just as important if not more important than financial goals because of the fact that they are based on religious foundations, i.e. the Islamic Shari?ah which has as its ultimate goal, the betterment of society. Islamic banks are thus expected to portray a high level of corporate social responsibility which would be evident in their social reporting practices as evidenced in their annual reports. However, two prominent studies of the social reporting practices of Islamic banks have shown otherwise (Maali, 2003; Haniffa and Hudaib, 2007). This study replicated the Haniffa and Hudaib study by examining the social reporting practices of Islamic Banks in Saudi Arabia. This examination involved a comparison of the social disclosures of 4 Islamic banks made through their annual reports against an ideal level of social disclosures that Islamic banks ought to make, over the years 2008-2009. This comparison was accomplished using the Ethical Identity Index (EII) developed by Haniffa and Hudaib (2007).

Islamic Finance Talent Development Program (IFTDP)

The Islamic Finance Talent Development Program (IFTDP) is a talent development program with the sole objective of building a pool of highly talented young Islamic Finance executives who are capable of leading the Islamic Finance Industry in the future.

The program is for 2 years and it provides the participants with on-the-job experience and exposure to the different aspects of Islamic Finance, upon which they are to build a career in Islamic finance.

Alinma Bank offers gifts for financing clients

Alinma Bank has launched a new financing services, through whichclients are given free promotional gifts with the first personal financing (real estate, car or share financing) deal they complete with the bank.

Fahad Al-Semari, Alinma’s GM for retail banking, said the bank would offer a wide range of valuable gifts including BMW cars, electrical appliances (televisions, refrigerators, air conditioners, etc.) as well as the Mobily Limited service.

NCB Capital sponsors financial literacy program

NCB Capital, a GCC wealth manager and Saudi Arabia's largest investment bank, has signed an exclusive agreement with INJAZ-Saudi Arabia to sponsor a three-year financial literacy-training program for male and female Saudi university students.

CEO NCB awarded

The National Commercial Bank Chief Executive Officer Abdulkareem Abu Alnasr has been named Islamic Banker of the Year 2010 at the World Islamic Banking Conference (WIBC).
Alnasr received the award from the governor of the Central Bank of Bahrain in recognition of NCB's strong leadership and commitment to Islamic Banking.

BLME returns to healthy profits

First it was the shareholders of Islamic Bank of Britain (IBB) at their general meeting in August 2010 approving a 20 million pounds capital injection from founding shareholder Qatar International Islamic Bank (QIIB). This was an effective bailout of IBB which gives the UK's only dedicated Islamic commercial bank some much-needed breathing space.
BLME, the wholesale Islamic bank which claims to be the largest Islamic bank in Europe, was the first of the five Islamic banks in the UK to report "a healthy return to profitability" for the first half of 2010.
One area in which BLME is setting the pace is Islamic trade finance and structured trade finance. According to Massoud Janekeh, director of Islamic Capital Markets at BLME trade finance should be a natural home for Islamic finance funded either through a Murabaha sale or a Tawarruq structure.

Saudi Arabia, Malaysia discuss Islamic finance

A Malaysia International Finance Centre (MIFC) delegation, headed by Raja Nazrin Shah, crown prince of Perak, visited Saudi Arabia recently to promote Islamic finance relations. The 33-member delegation included representatives of 17 Islamic banks and 12 Islamic fund management companies and some asset management firms, aside from Takaful operators, and legal and other professional services firms.
With the sukuk market acquiring going global dimensions market education and knowledge, especially of Islamic Capital Markets (ICM), becomes a necessity. This is met by the Islamic Markets Programme (IMP), which is held annually by the Securities Industry Development Corporation (SIDC), the training and development arm of the Securities Commission Malaysia (SC).

Worldbank: Arab donors among the most generous in the world - twice the recommended amount

Arab donors—predominantly the Kingdom of Saudi Arabia (KSA), Kuwait and United Arab Emirates (UAE)—have been among the most generous in the world, with official development assistance (ODA) averaging 1.5 percent of their combined gross national income (GNI) during the period 1973–2008, more than twice the United Nations target of 0.7 percent and five times the average of the OECD-DAC countries. Arab ODA accounts for 13 percent of total DAC ODA on average and nearly three-quarters of non-DAC ODA.

The share of Arab ODA in Arab GNI was exceptionally high in the 1970s and early 1980s, peaking at over 12 percent for the UAE and at about 8.5 percent for Kuwait and KSA in 1973. Nearly one-third of all ODA during the 1970s was from Arab donors. Although the ratio has fallen over time, it still exceeds the average among OECD-DAC member countries.

Moreover, Arab aid is generally untied, and is offered without conditions or restrictions.

Saudi mortgage law sparks 'differences of opinion'

The Shoura Council has completed 12 sittings regarding the draft of the mortgage law and to solve the differences of opinion. However, a timescale for when the draft law would be approved has not been given. The implementation of the Saudi mortgage law is expected to increase demand for housing by around 50 percent.

Saudi mortgage law delay 'will hit lenders' - BMI

Saudi Arabia's parliament delays the decision concerning the mortgage law until the members return from summer recess. Saudi Arabia, the Middle East's biggest economy, needs 1.2 million new homes by 2015, says the Deutsche Bank research.

Saudi's SABIC gets $1bn credit from Alinma Bank

Saudi based Alinma Bank said that it would grant a $1bn credit facility to SABIC, plugging a financial gap at the petrochemical group. SABIC Chief Executive Mohamed al Mady declined to comment while Chief Financial Officer Mutlaq al Morished could not immediately be reached for comment. Alinma said Morished signed the agreement on behalf of SABIC. Ratings agency Moody's assigned the planned bond an A+ rating and said it understood it would be used to refinance or repay debt at SABIC Innovative Plastics Holding, the renamed GE Plastics.

Saudi Arabia-Based Al Rajhi Bank Upgraded To 'A+' On Strengthened Financial Profile

Press Release

Saudi Arabia-Based Al Rajhi Bank Upgraded To 'A+' On Strengthened Financial Profile;
Outlook Stable

*We consider that Al Rajhi Bank's strong market position in the Saudi retail market,
superior profitability, growth strategy with solid capital ratios, and improved risk
management have strengthened the bank's financial profile. *We are raising our
long-term rating on Al Rajhi Bank to 'A+' from 'A' and affirming our 'A-1'
short-term rating. *The stable outlook reflects our view that Al Rajhi Bank should
continue to benefit from its comparative advantage as a leading and well-entrenched
Islamic bank in Saudi Arabia and maintain superior financial performance and capital

PARIS (Standard & Poor's) May 31, 2010--Standard & Poor's Ratings Services said
today that it has raised to 'A+' from 'A' its long-term counterparty credit rating
on Saudi Arabia-based Al Rajhi Bank (ARB) and affirmed its 'A-1' short-term
counterparty credit rating. The outlook is stable.

"The rating action reflects our view that ARB's stand-alone credit profile has
strengthened in the recent past, thanks to its unique market position in the Saudi


IdealRatings service empower and enable Khalijia Invest’s portfolio Managers

Press Release

San Francisco, USA-Riyadh, Saudi Arabia, Feb., 15th, 2010 – Khalijia Invest, a leading global Shari’ah compliant investment firm chaired by HH Prince Sultan Bin Mohammad bin Saud Al Kabeer and regulated by the Capital Markets Authority (CMA) today announced that it has selected IdealRatings Inc., a global Shari’ah compliant fund management service provider to take full advantage of IdealRatings’ universe screening and Shari’ah compliant fund management service.

Khalijia Invest needed a robust, fully integrated Shari’ah compliant fund management service to streamline it Shari’ah funds investment process and analysis, and turned to IdealRatings for its integrated Shari’ah funds service capabilities.

IdealRatings enable portfolio managers to maximize Alpha through a detailed Shari’ah compliant universe research for more than 40,000+ equities in 100+ countries, which results in more than 12,000 + compliant equities. Dhafer Salih Alqahtani, EVP & Deputy CEO of Khalijia Invest asserted that “IdealRatings increase our efficiency and empower our portfolio managers to concentrate on generating more Alpha for our Investors”

IDB co-operates with UN for food aid

A UN Food Agency is co-operating with Islamic Development Bank (IDB) to help advance agriculture in poor countries.

OIC secretary general calls for concerted multilateral actions for knowledged based economies in Muslim countries

The Secretary-General of OIC, Professor Ekmeleddin Ihsanoglu has underscored the need for both inter-OIC cooperation and international partnership to enhance the popularization of knowledge-based economies in OIC countries.

Khalijia Invest announces the launch of its operations and commencement of activities as a Shari’ah compliant investment company

Khalijia Invest as one of the recently established investment companies in the region, specializing in Corporate Finance and Asset Management, operating in compliance with Shari’ah guidelines announces the commencement of its operations, under its five licenses awarded by the Saudi Capital Market Authority.

Islamic Development Bank plans $850m sukuk issue

Saudi-based Islamic Development Bank (IDB) plans to issue Islamic bonds, or sukuk, in the first half of next year worth around $850 million.

Exposure Of Rated Gulf Banks To The Saad And Algosaibi Groups Is Significant But Manageable, S&P Survey Shows

Press Release

DUBAI, July 22, 2009--Standard & Poor's Ratings Services found the exposure to the Saad and Algosaibi groups of 30 commercial banks it rates in Gulf Cooperation Council (GCC) countries to be significant but manageable, according to its report "Special Standard & Poor's Survey Shows That Rated Gulf Banks Are Significantly Exposed To The Saad And Algosaibi Groups."

The two prominent Saudi Arabian groups recently ran into severe and unexpected difficulties and have entered debt restructuring discussions with their respective creditors.

"Total exposure net of tangible collateral to the two groups is significant but manageable for sampled rated GCC banks," said Standard & Poor's credit analyst Goeksenin Karagoez.

Information related to each individual Gulf bank's exposure is confidential--and as such can not be disclosed by Standard & Poor's--but our survey enabled us to arrive at various opinions:

Exposure to the groups varies significantly among the sampled GCC rated banks, from no exposure to net exposure of more than 20% of a few banks' adjusted total equity.

Strong demand expected for SEC Sukuk

Saudi Electricity Co, the state- controlled power producer, may raise as much as USD 1.87 bn, SAR 7 bn, in the largest sale of Sukuk.

The 5-year Sukuk, which is expected to be rated AA- by Fitch rating service, may pay between 90 basis points to 100 basis points over Saudi interbank rates a market expert is quoted.

The spread above the London interbank offered, or Libor, on corporate and government sukuk has narrowed to 7.6 percentage points from an all-time high of 12.3 percentage points in February, according to HSBC-Nasdaq Dubai indexes.

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