Islamic Bank

Dubai Islamic Bank Get Three Awards On Islamic Finance Deal Of The Year

Mar 5, 2015 by admin Leave a Comment

Dubai Islamic Bank receives award for great significance in Mudarabah, Pakistan and Ijarah transactions Dubai – Dubai Islamic Bank (DIB), Islamic Bank in the UAE has claimed that it has won three awards at the prestigious Islamic Finance News (IFN) Awards 2015. The DIB bank has been awarded for “Pakistan Deal of the Year” for the second year; and the “Mudarabah Deal of the Year” and “Ijarah Deal of the Year” for the first time. Dr. Adnan Chilwan, CEO Of DIB, collected the awards in the presence of senior bank executives at an exclusive gala.

Established in 2006, the IFN Deal of the Year Awards recognize the major Islamic financial institutions that have participated in the industry’s most innovative and important transactions. Following a severe judging process, a panel of experts from industry selects the most innovative deals based on a set of vigorous criteria. For the second year, DIB has been selected for the “Pakistan Deal of the Year” for its $ 1 billion Sukuk Ijarah for the Islamic Republic of Pakistan.

It also received the award for “Mudarabah Deal of the Year” emphasizing the bank’s role in arranging the US$ 127.8 million Mudarabah facility for Empower, the world’s largest cooling services provider for districts, for the company’s major project in Dubai’s Business Bay. In addition, DIB was also part of the joint lead arrangers on the US$ 700 million Musharaka Fixed Rate Trust Certificates for DIFC Investments, for which the bank won the award for “Ijarah Deal of the Year”.
Commenting on the awards, Dr. Chilwan, CEO of Dubai Islamic Bank said: “A key component of the bank’s outstanding performance in 2014 has been great innovation. As an institution that is growing nationwide, varying and expanding globally, our products and offerings require continuous advancement. Given the relatively emerging nature of Islamic finance and the fact that DIB is known for adhering to its basic ideology, this is a hard work. Therefore, our running success at the IFN Awards reflects our unmatched position in this space with the bank having firmly established a peerless reputation across the globe for arranging complex financing facilities for governments and diverse corporations alike.”
Indicative of the bank’s commitment to this purposeful activity, in addition to arranging a variety of transactions for clients over the past year, the bank successfully priced and closed a $1 billion Tier 1 Sukuk in January, which opened 2015 debt capital markets in MENA and was the first perpetual issuance of the year. These deals highlight the ongoing potential of the global Sukuk market, which grew from $111.3 billion in 2013 to $116.4 billion last year, according to S&P. Despite variation in the market due to fluctuations in oil prices, the market is anticipated to exceed $100 billion in 2015 as well.
Naveed Ali, Chief of Corporate Banking of DIB added: “Winning these awards highlights the success we had in arranging an impressive array of landmark Sukuk transactions last year for some of the biggest sovereign and non-sovereign entities. Our ability to carry out these deals across geographies, and sectors as diverse as financial services, utilities and real estate, displays the unrivaled capabilities of our team and our expertise in this space. We look forward to continue leveraging our balance sheet and our institutional relationships this year to help organisations throughout the UAE, and globally, access the financing they need to grow and prosper.”
These awards build on the recognition DIB has received over the years, including winning “UAE Deal of the Year”, “Kuwait Deal of the Year” and “Pakistan Deal of the Year” at the IFN Awards 2014. The bank also recently won the award for “Best Regional Commercial Bank – Middle East” at the Islamic Business & Finance Awards 2014.

Alizz Islamic Bank Opens New Branch In Sohar, Oman

Jan 2, 2015 by admin Leave a Comment

Muscat – alizz islamic bank, Oman’s full-fledged Sharia-compliant bank has opened a new branch in Sohar to reach out to more clients.

The 551 square metres` property was inaugurated on December 25 at a prominent location at the heart of Sohar, facing the main road. The bank also plans to open a new location in Salalah soon.

The official opening of the new branch took place under the auspices of Sheikh Muhana bin Saif Al Lamki, governor of Al Batinah North, in the presence of Kadhim Abdullah Al Ajmi, member of Majlis Al Shura, and Salaam Al Shaksy, chief executive officer of alizz islamic bank, and a number of other officials.

“We’re excited to grow our presence in the Batinah region. This city has experienced a solid population increase and businesses are also continuing to open their doors and flourish,” Moosa Al Jadidi, head of retail banking commented.

Originally published on www.zawya.com

Islamic Banks To Dominate Financial Sector In Brunei Darrussalam

Jan 2, 2015 by admin Leave a Comment

Brunei’s financial system is transitioning to one in which Islamic banking and takaful will be the dominant forms of banking and insurance, said the Oxford Business Group (OBG), a global consultancy and research company. According to the latest publication of OBG The Report: Brunei Darussalam 2014, the country’s two Islamic banks, Perbadanan Tabung Amanah Islam Brunei (TAIB) and Bank Islam Brunei Darussalam (BIBD) had combined assets of $7.9 billion at the end of 2013, representing 41 per cent of total bank assets.

“That was up from 37 per cent in 2010 and demonstrates that Islamic banking is making a steady progress towards it’s declared goal of a majority market share,” OBG said.

OBG said consolidated Islamic banking assets, including those of BIBD’s finance company subsidiary BIBD At-Tamvil, hit $8.3 billion. This is according to OBG calculations based on data from financial regulators and BIBD’s annual report. “That too is equal to 41 per cent of consolidated banking sector assets, including conventional finance companies,” OBG said.

Takaful or Islamic insurance is already dominant in the general insurance sector, OBG said, noting that takaful had a 68 per cent share of the general insurance and takaful assets in March 2014. This is up from 62 per cent in March 2011. The report said family takaful is small but catching up, with 18 per cent of total life insurance and family takaful assets in March 2014, up from 12 per cent in March 2011.

Total takaful assets came to some $444 million or 33 per cent of total insurance and takaful assets at the end of March 2014, said the report, citing figures from financial regulators. Two takaful companies compete in the insurance market, Insurance Islam TAIB, a subsidiary of TAIB and Takaful Brunei.

Both have separate subsidiaries that compete in the general takaful market (Insurance Islam TAIB General and Takaful Brunei AM) and the takaful family market (Insurance Taib family takaful and Takaful Brunei Keluarga). OBG said that Islamic banks are more aggressive than most of Brunei’s conventional banks in putting their funds to work in the domestic economy.

While Islamic banks have not yet reached a majority of banking assets, they may already make up more than half of domestic loans said the report, though added that there was still limited data. The strong focus on domestic lending is because the Islamic banks in Brunei are government linked institutions with mandate to support domestic business. The report said that most conventional banks in the Sultanate are foreign owned and take a more cautious approach to lending. Another reason is that the largest Islamic bank, BIBD, handles most public employee payroll account and since 2010 banks have been forbidden from making consumer loans to people who do not receive their primary income into an account at the bank.

The OBG said Islamic banks also have a higher non-performing loan ratio, 9.7 per cent compared to the 4.1 per cent conventional banks, citing figures provided to the International Monetary Fund by financial regulators. Despite this, OBG said that Islamic banks continue to be almost as profitable as conventional banks due to larger volume of high-earning loans. The report said that the average return on equity of Islamic banks was 9.2 per cent in the first nine months of 2013, compared to 10.9 per cent for conventional banks.

BIBD currently dominates the Islamic banking sector, accounting for about three-quarters of Islamic banking by assets said the report, citing OBG calculations from available data. OBG said TAIB is somewhat held back by its status as a trust fund, and because of this even government officials said that they would like to see at least one more Islamic bank enter the market. The OBG cited a consultant with AMBD’s banks and specialized marked division saying that there is room for two or three more banks in the Islamic segment.

Originally published on www.business.asiaone.com

Sohar Islamic Receives Best Branding Award From CPI Financial

Dec 16, 2014 by admin Leave a Comment

In recognition of its role in championing the growth and expansion of the Islamic financial sector in the country, Sohar Islamic – Bank Sohar ‘s Islamic Window, has received the ‘Best Branding Award – Middle East’ at the recently held CPI Financial – Islamic Business and Finance Awards 2014. This marks Sohar Islamic’s first award and a significant milestone in its journey towards becoming a leader in the Islamic Banking sector.

The prestigious award was handed over to the Bank at a glittering event held at the Emirates Towers Hotel, Dubai, United Arab Emirates. Receiving the award on behalf of the Bank were Mr. Mohammad Haris, AGM and Head of Sohar Islamic, and Mr. Khamis Masoud Al Rahbi, AGM of Branches at Bank Sohar .

Sharing his thoughts on the significance of the award, Mr. Mohammad Haris said,
“In less than two years of operations, Sohar Islamic has already taken a position as one of the key players in the Islamic Banking sector within the Sultanate. This award is a clear recognition and reflection of our comprehensive product offerings, flexible customer focused operation and sound business strategy. The ‘Best Branding Award – Middle East’, given by such a renowned organization as CPI financial, also provided us with an invaluable opportunity to network with some of the most influential people in the industry as well as positively position the Sohar Islamic brand on the regional map.”

To ensure that all products and services offered by Sohar Islamic adhere to the highest level of Shari’ah-compliance, they were specifically designed to meet certain key criteria — a complete segregation of funds; stand alone and independent branches, separate sales staff, a strong Shari’ah supervisory board and Shari’ah audit and compliance unit; committed management; the world’s best Islamic banking software; and compliance with the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

“The fact that these awards are based on a public vote, also stands as a testament to the trust and confidence our customers, as well as financial experts in the region, share in the Sohar Islamic brand. At Sohar Islamic we are on a never ending path towards operational excellence and we will continue to enhance our position as one of the leading Islamic banking institution in the region,” added Mr. Mohammad Haris.

In addition to the Bank’s Islamic Banking Window – Sohar Islamic receiving the “Best Branding Award”,Bank Sohar had also received ‘Best Customer Service- Retail Banking’, ‘Best Cash Management’ and ‘Best Corporate Card’ awards for its Retail Division by the same CPI Financial. The Bank has also won a slew of other awards locally, regionally, and internationally in 2014. Among its accolades, the Bank has received ‘Business Excellence Award’ by Texas based, World Confederation for Business (WORLDCOB) at the Bizz Arabic 2014 Awards, ‘Best Financial Brand Oman 2014’ award by renowned UK based Global Brands Magazine, ‘The Diamond Eye Award for Quality, Commitment & Excellence’ from the French based Otherways Management & Consulting Association, ‘Strategic Award’ for its corporate website (www.banksohar.net) from the Lebanon based Pan Arab Excellence Awards Academy as well as from Oman Web Awards.

The Bank was also awarded the ‘Best Bank for Fast Growth / Middle East’ Award from Milan based IAIR Magazine and recognized as one of the ‘Top 5 Large Corporate Enterprises in the Sultanate’ for the third consecutive year at the Alam Al Iktisad Wal Amaal (AIWA) Awards. On the Corporate Social Responsibility (CSR) front, the Bank’s yearlong environment awareness campaign ‘Saving Water Electricity…And Our Planet’ was also recognized at the ‘Oman Green Award 2014’ resulting in the Bank receiving the ‘Green Campaign of the Year’ award. Bank Sohar was also named the ‘Fastest Growing Bank in Oman 2014’ and, more recently, the ‘Most Socially Responsible Bank Oman 2014’ Award by UK based International Finance Magazine (IFM).

Originally published on www.zawya.com

Standards, Low Profit Hamper Islamic Banks

Dec 9, 2014 by admin Leave a Comment

The Islamic banking industry is being hampered by low profits and “mediocre” customer satisfaction despite impressive growth, officials and financial executives say at a financial conference in Bahrain. The sector, which provides banking services compliant with Islamic sharia law, has doubled in size over the past four years and is now worth more than $US2 trillion ($A2.16 trillion).

But a study by EY (formerly Ernst & Young) released at the World Islamic Banking Conference in Bahrain this week found that Islamic banks run at significantly lower profit margins than their conventional peers. The study, conducted on Islamic banks in nine countries including Saudi Arabia, Malaysia and Kuwait, found that their return on equity was 19 per cent lower than traditional banks in the same markets.

This could cost shareholders billions of dollars in forgone profit, it said. It also analysed the views expressed on social media by 2.25 million Islamic bank customers and found many unsatisfied with the service they had received.

“Results show that for many banks… customer satisfaction is, at best, mediocre,” EY said, attributing discontent to poor performance and a lack of use of technology. Islamic finance is based on shared profit and loss, which minimises risk for banks. The system forbids charging interest — banned as usury in Islam — and avoids dealing in debt and derivatives.

To meet an ever-increasing demand, the sector has developed numerous products compliant with sharia law, from loans for cars and houses to funding major infrastructure projects. Jaseem Ahmed, secretary general of the Malaysia-based Islamic Financial Services Board (IFSB), the leading regulatory body for Islamic banking, believes low profits in the sector are down to a lack of sharia-compliant investment opportunities.

“In Islamic banks, liquidity is primarily held in cash and reserves, which affects their profitability. Cash does not earn you returns. For Islamic banks, the options for investments are limited,” Ahmed told AFP. Bahrain’s central bank governor Rasheed al-Maraj called on Islamic banks to take a “giant stride” as they become more exposed to global markets. “It is time for us to reflect on where we are and where we intend to go,” Maraj told the two-day conference. Maraj said Islamic banks needed, among other reforms, to improve their regulation, risk management and standardisation.

Although Islamic regulatory bodies have established a number of standards, different interpretations of religious texts and weak implementation mean they remain far from industry-wide. Hamed Merah, secretary general of the Accounting and Auditing Organisation for Islamic Financial Institutions — a major sector regulator — said standards should be mandatory.

“If regulators make these standards compulsory, it will help the industry immensely,” Merah said. But Sheikh Essam Ishaq, a religious scholar on Islamic finance, said sector-wide regulation was difficult “because the understanding of Islam and its interpretation is different”.

Around 40 million of the world’s 1.6 billion Muslims are now clients of the Islamic finance industry, which has surged in popularity since its days as a small niche market in the early 1970s. But it continues to represent less than two per cent of the global banking assets of $US140 trillion, according to EY.

Originally published on www.au.finance.yahoo.com

Abu Dhabi Islamic Bank Net Profit For Q3 2014 Rises 20.5%

Nov 4, 2014 by admin Leave a Comment

Abu Dhabi Islamic Bank (ADIB) Group posted a 20.5 per cent increase in net profit to AED 476.8 million for Q3 2014. The financial performance, which included the cost of acquiring Barclay’s UAE retail banking business, was underpinned by the main banking business in the UAE, with the Group’s net customer financing assets growing 21.7 per cent in Q3 2014 vs. Q3 2013 to AED 71.6 billion.

ADIB increased its deposits by 18.2 per cent to AED 82.9 billion and its total assets by 12.2 per cent to AED 109.0 billion while simultaneously managing its cost of credit and impairments. As a result, total non-performing accounts as a percentage of gross customer financing decreased to 6.2 per cent vs. 8.9 per cent at 30 September 2013 while total credit provisions and impairments decreased by 3.5 per cent to AED 186.8 million during Q3 2014.

Business highlights for Q3 2014 were:

The completion of ADIB’s acquisition of the retail business of Barclays Bank in the UAE and the initiation of seamless customer, staff and business transfer process;
The continued expansion into new customer segments, including further penetration of the expatriate segment through the Barclays retail acquisition while remaining loyal to the core UAE National customer base and community, corporate and commercial clients, saw the number of active customers served by ADIB increase by 21.7 per cent quarter-on-quarter to 752,168 (including transfer of 110,672 from Barclays). This represented a 34.6 per cent increase year-on-year.
The bank further enhanced its position as one of the top three Retail Banking networks in the UAE with 85 branches (including transfer of two from Barclays), 656 ATMs (including transfer of 29 from Barclays) and the leading mobile and internet banking platforms at the end of Q3 2014.
A strong performance across all banking related businesses units, particularly Wholesale Banking in Q3 2014, saw ADIB’s net customer financing assets increase by 16.0 per cent vs. 31 December 2013, a 21.7 per cent increase during last 12 months.
Customer deposits grew to AED 82.9 billion, an increase of 18.2 per cent from AED 70.2 billion at the end of 30 September 2013, and 9.8 per cent over the AED 75.5 billion at 31 December 2013, as the Bank maintained its best in market liquidity ratios.
Priority and Private Banking increased Assets under Management by 253 per cent to AED 4.2 billion vs. AED 1.2 billion at the end of Q3 2013.
Fee income for the first nine months of 2014 increased by 19.1 per cent vs. the same period in 2013 as the Corporate Finance and Investment Banking, Transaction Services and Treasury units along with Retail and Private Banking expanded their range of services to clients.
ADIB Securities increased net profit for Q3 2014 by 91.4 per cent to AED 17.6 million vs. AED 9.2 million for Q3 2013, as it continued to build its position as the leading retail stockbroker in the UAE.
Maintaining the conservative policy of non-performing asset recognition and remedial management, including taking an additional AED 186.8 million in total credit provisions, to ensure a healthy pre-collateral non-performing asset coverage ratio of 91.9 per cent of the impaired portfolio, net of write-offs.

Risk management

ADIB continued its well-established, best-practice approach to managing its non-performing portfolio. As a result, total non-performing accounts, as a percentage of gross customer financing assets decreased to 6.2 per cent vs. 8.3 per cent at 31 December 2013 (8.9 per cent at 30 September 2013).

The Bank’s collective provisions have been increased by an additional AED 62.8 million to 1.73 per cent of total customer risk weighted assets as the Bank incorporated the Barclay’s UAE retail assets for the first time while simultaneously increasing its buffer over the 1.5 per cent Central Bank prescribed ratio as a prudent measure linked to the launch of the new credit bureau in the UAE. Furthermore, the Bank took AED 123.6 million in additional specific credit provisions which, when combined with the decline in total non-performing accounts, means that the combined collective and specific provisions now represent a pre-collateral non-performing coverage ratio of 91.9 per cent of which specific credit provisions represent 58.6 per cent.

Asset and Liability Management

ADIB, as an early adopter of Basel III liquidity measures, maintained its position as one of the most liquid banks in the UAE while simultaneously continuing to manage its cost of funding. Customer deposits increased by 18.2 per cent year-on-year and stood at AED 82.9 billion at the end of Q3 2014, with Central Bank placements at AED 7.8 billion and the net interbank position at AED 1.0 billion. At the same time, net customer financing assets grew by 21.7 per cent vs. Q3 2013 to reach a new high of AED 71.6 billion (an increase of 10.4 per cent over AED 64.9 billion as at 30 June 2014) and, as a result, ADIB ended the quarter with a customer financing to deposits ratio of 86.4 per cent and advances to stable funds ratio of 86.6 per cent, which is significantly better than the regulatory threshold of 100 per cent.

Capital strength

Given the 21.7 per cent growth in net customer financing assets since Q3 2013 and the increase in total assets to AED 109.0 billion, along with both the acquisition of the Barclay’s UAE retail business (a once off capital impact of approximately 0.8 per cent) and the introduction of regulatory changes to the treatment of risk-weighted assets by the Central Bank of the UAE, ADIB’s capital adequacy ratio under Basel II principles declined to 14.34 per cent and the Basel II Tier 1 capital ratio to 13.85 per cent. However, notwithstanding the above market business growth and regulatory changes, ADIB’s capital ratios continue to be well above both global averages and the Central Bank of the UAE’s prescribed minimums of 12 per cent for capital adequacy and 8 per cent for Tier 1. Furthermore, Equity and Capital Resources were AED 18.0 billion at the end of Q3 2014, an increase of 2.8 per cent year-on-year.

Cost management

ADIB has continued its efficient and effective cost management practices while simultaneously investing strategically across an increasing number of customer segments in the UAE and expanding its operations in new markets. Aside from the costs associated with the Barclay’s retail acquisition, which was completed in Q3 2014, the primary areas of focus in the past 12 months included: distribution (increasing the number of branches by eight to 85 in the UAE); alternative channels (a 13.3 per cent increase in ATMs to 656); rolling-out the Arablink foreign exchange broking joint venture in the UAE (five branches now opened); launching a new merchant-acquiring joint venture, ADIMAC; and in building its regional and international capabilities as appropriate in the seven countries in which ADIB is present. Behind this investment is a clear strategy to ensure that ADIB continues to consolidate its position as one of the top banks in the UAE while working towards the Group’s vision of becoming a top-performing bank across four unique regions by offering Islamic financial solutions for everyone. Despite the continued emphasis on growth, the concurrent focus on efficiency saw the Group’s cost to income ratio for the first nine months of 2014 remain flat at 42.3 per cent vs. same period in 2013.

Human resources

ADIB’s continued expansion strategy, including servicing an increasing number of client segments through a broader range of products and solutions, has seen the Bank’s headcount in the UAE increase to 2,059 and the Bank employs 872 Nationals in the UAE.

Tirad Al Mahmoud, CEO of ADIB, said, “This quarter saw ADIB welcome our 750,000^th client as we completed the acquisition of Barclay’s UAE retail banking business and turned our focus to the seamless transfer of the clients onto the award winning ADIB platforms. Furthermore, all customer facing units: Retail Banking; Private Banking; Community Banking; and Wholesale Banking, continued to grow market share and as a consequence we have seen ADIB’s customer financing assets increase 21.7 per cent year-on-year to AED 71.6 billion backed by an 18.2 per cent increase in customer deposits to AED 82.9 billion over the same period. As a result of the continued success of ADIB’s strategy, and our ability to implement it while keeping margins at a competitive level, the Group has delivered a 20.5 per cent year-on-year increase in net profit to AED 476.8 million for Q3 2014.

“Furthermore, it is pleasing to note that, notwithstanding the continued improvement in resolving our legacy non-performing asset portfolio, where total non-performing assets as a percentage of gross customer financing decreased to 6.2 per cent, that the record quarterly performance did not rely on reducing provisioning and impairment levels. In fact the sustained strength of our core banking businesses enabled ADIB to add a further AED 186.8 million in total credit provisions during Q3 2014 and now represent a pre-collateral non-performing coverage ratio of 91.9 per cent of the impaired portfolio. Total credit provisions and impairments taken by the Group, including write-offs, since 2008 now stand at AED 5.64 billion and we are determined to continue our remedial efforts backed by a conservative approach to both problem account recognition and appropriate levels of provisioning until our non-performing asset ratio is best in market.

“We are also well aware that the quarter-on-quarter growth in net customer financing assets by 10.4 per cent, and the follow-through increase in total assets to AED 109.0 billion at the end of Q3 2014, has resulted in ADIB’s capital adequacy ratio declining to 14.34 per cent. ADIB has always been at the forefront of banks in the UAE when it comes to capital management, having issued the first hybrid Tier 1 instrument in the region, and notwithstanding the fact that the Central Bank has not yet issued its capital guidelines in regard to Basel III we fully expect to be able to support our continued growth in the most effective and efficient manner while maintaining all our capital ratios well above the levels expected by regulators, rating agencies and investors.

Securities

“Despite the recent volatility in the UAE equity markets, our stock-brokerage subsidiary, ADIB Securities, registered a net profit of AED 17.6 million in Q3 2014, up 91.4 per cent from the previous year. We further enhanced our digital portals, which now account for almost 50 per cent of our volumes, by launching our new mobile customer order and market information channel and will continue to invest in the business as an important component of our Priority and Private Banking proposition”

Real Estate

“With regard to Burooj Properties, the Group’s real estate subsidiary: “Our systematic approach to repositioning Burooj is ongoing, as are the negotiations with some of our partners in regard to restructuring its legacy commitments. Q3 2014 saw no further impairments on the land portfolio and we are now focused on enhancing Burooj’s future prospects. In this regard, the goal is to complete the sale of Burooj’s last trading assets by year-end and, subject to regulatory approval, consolidate the Group’s real estate investment property portfolio into a fund-based structure.”

In respect to the Group’s property management subsidiary, MPM: “Our twin focus remains on bringing MPM’s customer service levels up to the same standards at the Bank while simultaneously building MPM’s new business model as an integrated real estate services company. Today, MPM manages over 22,000 units in the UAE and is successfully expanding its business by offering a mix of property management, valuations, sales and leasing agency and related services nationwide. We continue to expect MPM to complete its repositioning by year-end and make a positive contribution in 2015.”

Outlook for 2014

Providing further guidance on the Bank’s outlook for the remainder of 2014: “Our core business remains our UAE banking activities, where we continue to build a diversified financial services proposition and deploy the majority of ADIB’s capital. Notwithstanding the return of volatility in global financial markets and the ongoing economic concerns in multiple markets, and the resultant impact on energy and related prices, we remain positive about the UAE’s economic outlook and will continue to invest in growing our market share in an increasing number of segments by delivering an award winning customer experience in the most convenient manner, be it through our people or our digital channels. In this regard, we look forward to completing the seamless integration of the Barclays UAE retail customers into their new home as well as the continued performance of our existing segments, including our core UAE National customer base.

“Notwithstanding our positive outlook for the rest of the year, we will continue with our remedial efforts in regard to our legacy credit portfolio. As previously stated, we do not believe that the impact of the recent financial crises on the UAE credit cycle has concluded and until the remedial portfolio is dealt with in a manner that we consider sustainable, we will continue our problem credit recognition, provisioning and related recovery management processes. In this regard we are also focused on the impact of the launch of the new UAE credit bureau given that we believe that it will bring much welcomed clarity to the risk recognition of individual customers.”

Originally published on www.cpifinancial.com

Islamic Bank of Britain launches UK’s First Home Purchase Plan

Oct 2, 2014 by admin Leave a Comment

Islamic Bank of Britain plc (IBB), (www.islamic-bank.com), the UK’s only wholly Sharia compliant retail bank, today announced the launch of its new Home Purchase Plan (HPP). The home finance product is the first in the UK to be backed by the Government’s new Help to Buy: HPP guarantee scheme.

Commenting on the launch, Sultan Choudhury, Chief Executive Officer, IBB said, “Having worked directly with the government to adapt its Help to Buy mortgage guarantee scheme to include HPPs, IBB is delighted to be the first provider to take advantage of the initiative. We know from experience that some customers, especially first time buyers, struggle to raise a deposit greater than 10% of the property value but can afford the necessary monthly payments. IBB’s new product has been designed to meet their needs and we are very pleased to be putting the reality of home ownership within the reach of many more individuals.”

Offering a rental rate of 4.99%*, fixed until 31 December 2017, IBB’s new Sharia compliant HPP provides finance up to 90% of funds to value (FTV), meaning that customers can secure home finance with an initial contribution of just 10% of the value of the property. This is half the amount previously required by the Bank.

The HPP is expected to appeal to customers of all faiths as it offers flexibility and a more transparent fee structure compared to many conventional mortgages; IBB does not charge any penalties for terminating the HPP agreement early, and there are no hidden fees. The £999 administration fee of the new 90% FTV HPP represents the Bank’s standard fee of £399, which is proportional to the work undertaken by IBB to process the arrangement, plus a fair contribution towards the amount that the Government charges IBB to be part of its Sharia compliant Help to Buy scheme.

IBB’s new HPP marks an important milestone for Islamic finance in the UK as it puts ethical and affordable home finance within reach of many more people looking to get on, or move up, the housing ladder. Under the rules of the Scheme, it is not available to those wishing to purchase a second property.

An inclusive bank, currently celebrating its 10th anniversary, IBB welcomes customers of all faiths and is attracting increasing numbers of non-Muslims. The Bank believes that nearly 83% of customers who joined the bank between 1st January 2013 – 15th August 2014 and opened a Fixed Term Deposit account, were non-Muslim, drawn by its great rates, excellent service and its ethical approach to doing business.

As a Sharia compliant product, IBB’s HPP differs from a mortgage where the customer borrows money from a lender, which is then repaid with interest. A HPP uses the Islamic finance principles of co-ownership (Diminishing Musharaka) with leasing (Ijara), where IBB and the customer buy the property as partners and the customer pays rent on IBB’s share in the property. At the end of the term, when all acquisition payments have been made and the finance has been settled, ownership of the property transfers fully to the customer. See the ‘How does a HPP work’ section below for a full explanation.

The home finance provided by IBB is generated from ethical activities, and not from businesses that are considered unlawful under Sharia law, i.e. companies that deal in interest, alcohol, gambling, pornography, speculation, tobacco, arms and other commodities contrary to Islamic values.

The Help to Buy: HPP guarantee scheme works in a similar way to the Help to Buy: mortgage guarantee scheme, but takes into account the different way that a HPP is structured. It enables Islamic banks to take a guarantee for their Home Purchase Plans where the consumer has an initial contribution of between 5% and 20%. The guarantee compensates the bank for a portion of net losses suffered in the event of default. This reduces their risk of offering home finance to consumers with a low initial contribution. The original Help to Buy scheme was launched in October 2013 in order to increase the availability of low-deposit finance for UK households.

Since IBB opened its doors as the UK’s only wholly, Sharia compliant retail bank in 2004 it has developed the largest range of Islamic retail financial products in the UK. In February 2014, the Bank was acquired by Masraf Al Rayan QSC (Al Rayan). Al Rayan intends to build upon IBB’s excellent foundations and has invested over £75m to support its expansion.

*At the end of the term, rental rates will revert to the IBB Variable Rental Rate, which for IBB’s Home Purchase Plan products is currently 4.49% (Bank of England Base Rate (BBR) + 3.99%). This is the Bank’s revert rental rate. The IBB Variable Rental Rate is subject to quarterly rental reviews when the Bank will consider changes to its rental rate as well as changes to the Bank’s margin, though margin increases are capped at 2.00% above the margin that applied at the outset.

‘How does a HPP work’
The principle difference between a HPP and a conventional mortgage is that the lending/borrowing relationship does not exist. Instead, HPPs are based on co-ownership and lease agreements arranged using two separate principles of Islamic finance. For this reason interest does not form part of the arrangement and each monthly payment consists of the following two elements:

Rental element – this is the amount that the customer is paying to the Bank as rent on the Bank’s share of the property. This is in accordance with a lease (Ijara) agreement.

Acquisition element – this is the amount that the customer is paying to purchase a part of the Bank’s share in the property. This is in accordance with a co-ownership (Diminishing Musharaka) agreement. With every payment the customer’s equity in the property increases and the rental element decreases, reducing the Bank’s share in the property on a diminishing basis.

For all of IBB’s HPPs, including its fixed rental rate products, the customer can buy the Bank’s share in full, or sell the property at any time, without incurring an early settlement penalty charge, subject to clearing the IBB finance amount in full. The Bank does not claim any share in any appreciation of the property. Part acquisition payments may also be made subject to a small admin fee, except whilst a fixed rent rate applies.

Minimum finance £30,000, maximum finance £540,000. Minimum property value £90,000. Maximum property values £600,000. Islamic Bank of Britain plc uses affordability criteria under which a customer’s income and expenditure are assessed. There are also eligibility criteria specific to the Help to Buy HPP guarantee scheme which customer’s will also need to meet.

Offer may be withdrawn at any time without notice. Subject to status. Terms and conditions apply.

About Islamic Bank of Britain
Islamic Bank of Britain plc (the Bank, IBB) has pioneered Sharia compliant retail banking in the UK and now offers the largest range of Sharia compliant retail financial products in the UK. These include Sharia compliant mortgage alternatives, the Home Purchase Plan (HPP) and Buy to Let Purchase Plan (BTLPP), current accounts and savings accounts. The Bank was also the first to introduce Sharia compliant business banking to the UK, and now offers a wide range of institutional and business banking products and services, including Commercial Property Finance. Several of the Bank’s products remain unique in the UK retail financial market.

The Bank is authorised by the Prudential Regulation Authority, regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of Financial Services Compensation Scheme.

Sharia compliant banking operates without the use of interest and is founded on Islamic finance principles derived from trade, entrepreneurship and risk-sharing.IBB has a dedicated Sharia Compliance Officer (SCO) and a panel of respected Sharia Scholars, called the Sharia Supervisory Committee (SSC), which acts as an independent body to ensure that IBB’s products and activities are Sharia compliant.

As a Sharia compliant bank, the source of IBB’s funding, profits and business investments must be ethical. They cannot be from businesses that are considered unlawful under Sharia law, i.e. companies that deal in interest, alcohol, gambling, pornography, speculation, tobacco, arms and other commodities contrary to Islamic values.

Whilst IBB offers products and services that are designed in accordance with Sharia principles, it is an inclusive, ethical organisation and welcomes customers of all faiths looking for a bank with a transparent, prudent and community-focused approach.

Originally published on www.zawya.com

Mega Islamic Bank Will Boost Islamic Finance Growth, Says Expert

Sep 9, 2014 by admin Leave a Comment

The creation of a mega Islamic bank will push Malaysian banks to look beyond local shores should the proposed merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd materialise.

“If the merger goes through, it may be the starting point for banks to seriously look beyond Malaysia because it makes no sense for them to compete with smaller banks [here],” Datuk Dr Mohd Daud Bakar, group chairman of Amanie Advisors told The Edge Financial Daily in an interview.

“It will be very much a catalyst for global Islamic finance and banking from Malaysia. We are hopeful that it will be the reality in the near future,” said Mohd Daud, who is also president of the International Institute of Islamic Finance.

He said while the local market for Islamic finance remains lucrative, banks should not be content to remain in the local market as a market downturn could cause a reversal of fortunes.

“If they do not create their name in the global market in good times, it will be more difficult for them to get [a piece of] the market in the future should there be low liquidity here in the event of a market slowdown,” said Daud Bakar.

According to Baiza Bain, director for global business at Amanie Advisors, low risk tolerance is why local banks are not expanding their reach overseas.

Baiza said currently, Malaysian banks have a “very tight” risk policy which will need time to evolve in order for them to go abroad, adding that the few attempts thus far have been on a partnership basis with the bulk of their contribution being knowledge and technical expertise.

Some Malaysian banks have partnered with locals in Bahrain and Saudi Arabia, he said, “but because they are so small, they’re not really pushing to be a part of the market”.

In addition, local banks’ issuance of Islamic sukuk in the international arena is still low relative to international banks such as HSBC and Standard Chartered Bank, he said.

“For Malaysian banks to move forward, they have to be able to be involved in debt issuance. Currently, the same few international banks in the market are taking most of the opportunities,” said Mohd Daud.

Bank Negara Malaysia aims to capture a 40% market share of the Islamic banking industry in terms of assets by 2020.

Mohd Daud suggested converting certain conventional banking products to be shariah-compliant to help Islamic banking and finance achieve its critical mass at a quicker pace.

“Many [financial] products that we have in the market can be turned Islamic without great difficulty, as Muslims and non-Muslims may be using these products without realising that it’s shariah-compliant,” he said.

He dismissed concerns about cannibalisation of conventional products by Islamic ones in conventional banks with Islamic banking subsidiaries.

“We need to relook the meaning of that word (cannibalisation) differently, because they are owned by the same shareholders at the end of the day,” he said.

He added that more retail sukuk should be issued to allow the public to participate in government infrastructure projects.

“Although we have the Danainfra sukuk, it’s just for specific industries such as infrastructure and transportation. It’s a good move, but we have to widen the scope further.”

Originally published on www.themalaysianinsider.com

Maybank Islamic Denies Talks Of Merger With Bank Islam

Sep 4, 2014 by admin Leave a Comment

KUALA LUMPUR: Maybank Islamic Bhd has dimissed speculations that it is in talks with Bank Islam Malaysia Bhd over a potential merger and acqusition (M&A).

Its chief executive officer Muzaffar Hisham said the proposed merger of three local financial institutions to create a mega Islamic bank has not prompted Maybank Islamic, the region’s largest Islamic banking institution, to rush into M&A for expansion.

“We continue to seek the best option to enhance value and maintain our market leadership. All options are on the table, including M&A.

“Our emphasis has always been not on the size, but on the value of the bank… that has always been our objective,” he said on the sidelines of the Global Islamic Finance Forum 2014, here, yesterday.

Muzaffar said Maybank Islamic will continue to focus on its key objective, namely humanising financial services, which has been the driver of the bank’s outstanding track record over the last three to four years.

“Gaining market share in asset growth is actually straight forward, the challenge is in maintaining value and sustaining it. If we can grow bigger and faster but it doesn’t come with value and doesn’t give return to the stakeholders and customers, then it would not be sustainable.

“We need to look at things in the long term. We look at what is the best possible option and recommend it to the board and shareholders,” he said.

Meanwhile, Muzaffar said Maybank Islamic is optimistic of maintaining its growth momentum in the second half of the year after recording an encouraging performance in the first half.

He said for the first six months ended June 30, its revenue grew by an average of 40 per cent year-on-year. -NST

Originally posted on

Scale A Priority, With Or Without Merger, Says CIMB Islamic CEO

Sep 4, 2014 by admin Leave a Comment

CIMB Islamic, the sharia compliant unit of Malaysia’s second-biggest lender, said it will pursue a larger balance sheet to help win more business, regardless of whether a proposed merger with two smaller peers happens.

In July, CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd secured regulatory approval to begin merger talks, with plans calling for the creation of a separate Islamic bank.

The enlarged entity aims to compete against conventional banks that dominate larger and more lucrative deals in Islamic finance and could prompt further consolidation in the domestic market if smaller firms see their profit margins squeezed.

“It goes back to our belief that scale is important in being effective in business, so whether that scale is achievable under the current proposed merger talks or something else, we will continue to pursue it,” chief executive Badlisyah Abdul Ghani said on the sidelines of the Global Islamic Finance Forum.

“You need to have scale that allows you to have bigger firepower in the market, so when you come into a deal you can have some balance-sheet play to make it more enticing for customers,” he added.

The lenders have until October 8 to finalize the pricing, structure and other terms of the merger. Details have yet to be ironed out, but the new Islamic bank could have assets worth RM122 billion, according to one analyst, roughly matching those of Maybank Islamic, a unit of Malayan Banking Bhd (Maybank).

Earlier this week, Maybank dismissed rumors that it was considering a merger with Bank Islam, the country’s largest, full-fledged Islamic bank.

CIMB is a major arranger of Islamic bonds, or sukuk, helping arrange a maiden deal from Hong Kong that aims to raise as much as US$1 billion (RM3.1 billion). In June, it helped arrange a 200 million pound (RM1 billion) sukuk from Britain.

But those deals are dominated by big conventional banks and the sector is attracting a growing number of Gulf-based lenders, all eager to capitalise on the expected rush of global issuance.

Last month, CIMB Islamic setup a Basel III compliant sukuk programme to raise as much as RM5 billion.

Originally published on www.themalaysianinsider.com

Islamic Bank

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