Entries in English and Malay (Bahasa Melayu)

Monday, 31 August 2015

Islamic finance & management events in Kuala Lumpur Malaysia

Date: 18-19 August 2015
Event: KL International Conference on Islamic Finance
Event site:

Date: 1-2 September 2015
Event: KL International Conference on Islamic Wealth Management & Financial Planning
Event site:

Date: 14-15 September 2015
Event: KL International Conference on Shariah & Legal Aspects of Islamic Finance 2015
Event site:

To register or reserve a seat online, please go to:

Organizer: Alfalah Consulting

Saudi's Othaim Malls raises 1 bln riyals in debut sukuk -sources

Aug 30 Saudi Arabia's Al Othaim Real Estate and Investment Co, owner of five shopping malls in the kingdom, has raised 1 billion riyals ($267 million) through a debut sukuk issue, two banking sources said on Sunday.
The five-year issue was priced at 170 basis points over the six-month Saudi interbank offered rate, the sources said.
The company, also known as Othaim Malls and part of family owned conglomerate Al Othaim Holding, began marketing the sukuk in early August, earmarking part of the planned proceeds to fund expansion plans.
Othaim Malls is building five shopping centres, three of which are likely to be completed by end of the year, with the rest finalised by the end of 2016.
A company source, who declined to be named, said the sukuk settlement was on Sunday.

The transaction was arranged by the investment banking arms of Banque Saudi Fransi, Gulf International Bank and National Commercial Bank.
(Reuters / 30 August 2015)
lfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

The huge potential in Islamic Finance

SANDTON – Responsible investing is becoming a major theme across the global industry. And one of the most significant areas within this sphere is faith-base dinvesting.
Speaking at the Money Expo 2015 at the Sandton Convention Centre, investment analyst at 27Four Investment Managers Nadir Thokan said that the Islamic Finance industry is still in the early stages of growth, but the potential is significant.
“The conventional financial services industry is more than 400 years old,” Thokan said. “But Islamic finance only dates back 40 years.”
While there has been substantial innovation over that time, the market remains relatively small.
“Currently the global market for Islamic finance is $1.5 trillion and its growing at 30% per annum,” Thokan said. “But penetration levels are still very low. Twenty-six percent of the world’s population is Muslim, but just 1% of banking assets globally are Shari’ah compliant. Given the huge pools of wealth in the Muslim world, this is poised for massive increases over the next few years.”
Thokan believes that the biggest potential for growth is in asset management, which still makes up a very small part of the Islamic finance industry as a whole.
“Of the $1.5 trillion in Shari’ah compliant assets, only $64 billion sits in fund management,” he said. “Only $25 billion of that is in equity mandates. But this is a multi-trillion dollar industry in the conventional asset management space.”
He argued that as penetration of products increases and as more people take a greater interest in Shari’ah compliant finance, this will also be a platform for very attractive returns moving forward. As flows into these products increase, returns will move upward.
In particular, he highlighted the global Sukuk market as one in which 27Four sees huge potential.
In simple terms, Sukuk can be described as a Shari’ah compliant bond product. With a bond, an issuer will receive capital from a pool of investors and in return will pay them an interest coupon over a set period and return their capital to them at the end of it.
Sukuk works in a similar way, but it is structured differently in that it gives ownership in a particular product. It therefore does not pay interest, but rather a share of the issuer’s earnings.
“With a conventional bond you take very little risk because unless the company goes bankrupt you are guaranteed the interest and your money back at the end of the term,” Thokan explained. “With Sukuk, however, you participate in profit and loss of that company. Typically what we’ve seen happening though is that it finances fairly low risk projects where cash flows are reasonably certain.”
Thokan said that there is huge potential in this market as it is tapping into a huge source of potential funding that is looking for good rates of return.
“In the Sukuk market there has always been more demand than supply,” he said. “So people have been willing to pay up. And as the industry grows and more people realise the benefits of issuing Sukuk we are likely to see the depth and liquidity of the market increasing.”
A significant benefit of Sukuk is that it shows very low correlation to other asset classes, including global bonds. It is therefore a great tool for diversification, making it appealing not only to investors looking for Shari’ah compliant products, but any investor looking for alternative sources of return.
The market is already showing signs of expanding out of its traditional base, with increasing numbers of issuers coming from outside of Asia and oil-producing nations. Recently Sukuk has been issued by the likes of investment bank Goldman Sachs, multinational conglomerate General Electric, and the German state of Saxony-Anhalt.
“We are going to continue to see rapid rates of growth because it is an attractive avenue for issuers to look at in terms of diversifying their funding base,” Thokan said. “And as the market gets bigger it will attract larger pools of money, bigger issuers and more attractive returns.”
(Money Web / 25 August 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Sunday, 30 August 2015

Oman’s Islamic banking could achieve 17% of total banking asset in 5 years, Bank Nizwa CEO

MUSCAT: Islamic banking in Oman could achieve around 15 to 17 per cent of the total banking asset within the next five years in normal market conditions with recovery and stability in the oil market, says a bank official.

Speaking to the Times of Oman, Dr Jamil El Jaroudi, chief executive officer of Bank Nizwa, said it is ‘difficult’ to estimate the share of Oman’s Islamic banking operations at this juncture due to the volatility in oil prices, which is affecting the country’s growth.

According to the Central Bank of Oman, the combined assets of Islamic banks and window operations surged ahead by 64.08 per cent to OMR1,832.6 million by end-June 2015, from OMR1,116.9 million for the same period last year, while conventional banks’ total assets moved up by 11.22 per cent to OMR27,391.9 million, over the same period of 2014.

“This is an important variable that would determine the nature of the competition for the banking sector going forward,” El Jaroudi noted.

However, assuming a normal market condition and recovery with some stability in the oil price, it is fair to assume that Islamic banking could achieve a level of around 15 to 17 per cent of the total banking asset within the next five years, he added.

“This level would be similar to the other markets in the region including the United Arab Emirates (UAE) and Bahrain,” said the CEO of Bank Nizwa.

Remarkable growth

Commenting on the performance of Islamic banking in Oman, El Jaroudi said, “If you look at the industry reports, both fully-fledged Islamic banks in Oman and Islamic windows combined saw an average growth rate of over 40 per cent year-on-year, in terms of total assets.”

The average growth for conventional banks on the other hand was around nine per cent for the same period, he added.

“In terms of financing portfolio growth, it is even more remarkable, as we have grown by more than 300 per cent on an average during the same period, compared to the conventional banks’ average of approximately 15 per cent,” the official noted.

Other countries

He added that these figures are in line with the other countries in the region which are experiencing the same challenges in growing their Islamic banking industries.

“For example, the five-year compound annual growth rate (CAGR) in Qatar was 31 per cent which is 1.8 times faster than its conventional banking with $54 billion worth of Islamic assets representing 24 per cent market share,” he said.

In the UAE, it is lower at 14 per cent but still three times faster than its conventional banking sector with $83 billion worth of Islamic assets representing 17 per cent market share, El Jaroudi explained.

He added that in some other countries, the Islamic banking sector has experienced more challenges that curtailed its growth altogether, although it could be due to geo-politics or that Muslims are not the majority in those markets.

“So we have to look at the growth of this growing sector in Oman and appreciate its achievements thus far,” the CEO of Bank Nizwa concluded.

(Times Of Oman / 30 August 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Islamic finance assets to touch $3.2t by 2020

The islamic finance industry will continue to grow strongly as the value of assets is expected to increase by 80 per cent to reach $3.24 trillion over the next five years, according to initial findings of State of the Global Islamic Economy (SGIE) report.
The report, which is commissioned and supported by Dubai Islamic Economy Development Centre (DIEDC) in partnership with Thomson Reuters, and in collaboration with DinarStandard, will be published ahead of the second Global Islamic Economy Summit (GIES), taking place in Dubai this October.
The 2015 summit, organised by Dubai Chamber, DIEDC and Thomson Reuters, is set to gather over 2,000 policymakers, thinkers and business leaders on October 5 and 6 at Madinat Jumeirah, Dubai.
Islamic finance is considered the most developed sector within the various pillars of the Islamic economy. The growth in the global Shariah-compliant economy is broadly measured by the value of Islamic finance assets.
In 2014, Islamic finance assets had an estimated value of $1.8 trillion, with Islamic banking representing 74 per cent of total Shariah-compliant assets, followed by 16 per cent in outstanding sukuk, based on ICD Thomson Reuters Islamic Finance Development Indicator (IFDI 2015).
According to Thomson Reuters' projections, Islamic finance is expected to grow to reach $3.2 trillion by 2020, with Islamic banking constituting $2.6 trillion of this figure.
The total number of Islamic financial institutions operating globally has reached 1,143, divided between 436 Islamic banks/windows, 308 takaful institutions and 399 other Islamic financial institutions, such as financing and investment companies.
Most of these Islamic finance institutions are located in GCC countries and Southeast Asia, while the others are distributed between other Mena countries, South Asia and other regions. Most Islamic finance assets are held by Saudi Arabia, Iran, Malaysia and the UAE.
As global acceptance of Islamic finance continues to grow, more corporates and non-Muslim sovereigns are announcing Islamic finance initiatives such as ethical or Shariah-compliant regulations, as well as products such as sukuk issuances. This increased appetite demonstrates that the market is attracted to the benefits surrounding the ethical principles of Islamic finance, linking finance to physical assets, productive fiscal activities and real economic growth.
One of the key sessions at GIES 2015 will discuss the importance of the Islamic economy's broader sectors to Islamic finance. It will feature a debate by Tirad Al Mahmoud, Jamal Bin Ghalaita and Dr Adnan Chilwan, the chief executives of leading Islamic banks Abu Dhabi Islamic Bank, Emirates Islamic and Dubai Islamic Bank respectively.
The debate will be followed by one of the key sessions of the summit, covering how Islamic financial institutions have moved from niche to mainstream by being part of the global agenda. The session will discuss whether Islamic financial institutions can meet the needs of people who are financially excluded solely for religious reasons, and whether Islamic finance can act as a financial inclusion mechanism for non-Muslims.
The GIES 2015 is taking place under the patronage of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. Featuring more than 60 international speakers across 15 sessions, the summit will offer insights on the seven pillars of Islamic economy: Islamic finance, halal industry, family tourism, Islamic knowledge, Islamic arts and design, Islamic digital economy and Islamic standards.
(Khaleej Times / 30 August 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Latest Posts

Upcoming Events on Islamic Finance, Wealth Management, Business, Management, Motivational

Alfalah Consulting's facebook