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Saturday, 31 January 2015

Islamic finance & management events in Kuala Lumpur Malaysia

Date: 17-18 March 2015
Event: KL International Conference on Islamic Finance
Event site:

Date: 21-22 April 2015
Event: KL International Conference on Islamic Wealth Management
Event site:

Date: 9-10 June 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

Islamic Financing, alternative investment source to Azerbaijani economy

The International Bank of Azerbaijan, the largest lender and the only state-owned bank in the country remains confident to promote Azerbaijan as an Islamic Banking hub in the region.
Behnam Gurbanzade, Director of the Islamic Banking Department of the IBA, spoke quite positive about the prospects of Azerbaijan’s eventful role in the Islamic finance markets.
“Developing Islamic Financing in Azerbaijan gives us an advantage to set up a center for the development of Islamic Financing in the CIS based in Baku,” Gurbanzade wrote in an e-mail to AzerNews.
“Thus, in 2015 we are planning to increase the amount of Islamic financing in Azerbaijan. To this end, an alternative banking division was set up within Bank IBA-Moscow where the Islamic Banking is also part of new duties,” he said.
The IBA concluded last year with $526 million sharia compliant assets compared to the Islamic Banking assets at the level of $220 million at the beginning of 2014.
Islamic finance has not developed well in Azerbaijan, which has a predominantly Muslim population. The IBA assists the government to draft the relevant regulation. It also plans to convert its Islamic unit into major Shariah-compliant lender after the country OKs the Islamic legislation licenses.
The Baku-based bank actively works in this direction, which is encouraging the development of Islamic Finance here. The bank currently offers Shariah-compliant products through an Islamic window introduced in September 2012, a practice which allows conventional lenders to provide Islamic financial services as long as client money is segregated from the rest of the bank.
Gurbanzada said the IBA Islamic Banking department is working on draft legislation together with consultants. “The initial documents including Islamic Financial Policies and Procedures, Operational procedures and Products and Services are under consideration,” he said.
Laws allowing Azerbaijan to OK Islamic bond offerings is expected to be passed in 2015, and the government may issue securities that adhere to Islam’s ban on interest the next year.
Speaking about the role that the Islamic bank could play in driving the banking sector of the country, Gurbanzada said Islamic Financing is considered as alternative investment sources to the economy of Azerbaijan.
“Azerbaijan and CIS markets are growing and there is a huge demand for direct investments. The IBA realizes that sources of funding should be diversified in order to secure economic safety. All this comes against the backdrop of the world financial crisis in which the liquid capital stands as the primary issue,” he noted.
Gurbanzada said the current Islamic Banking portfolio of the IBA is 386 million manats ($493 million) which is approximately 6.2 percent of the total credit portfolio.
The loan portfolio of the Bank hit 5.868 billion manats as of early January with an increase of 16.6 percent since early 2014.
IBA Islamic presented a new Murabaha card which was set up on MasterCard Gold basis. The card is for retail financing in Azerbaijan and outside of the country. “Furthermore we are also strutting Musharakah refinancing products and unrestricted and restricted Mudarabah financing. Most of products and services will be implemented after legislation development,” he concluded.
The bank, 50.2-percent owned by the Azerbaijani Ministry of Finance, holds over 40 percent of banking assets in the country and enjoys huge importance for Azerbaijan's economy. The IBA‘s reported consolidated total assets of 8.8 billion manats, aggregate capital of 1.008 billion manats and net profit of 64.5 million under audited IFRS as at year-end 2014.
(Azernews / 30 January 2014)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Thursday, 29 January 2015

The Globalization of Islamic Finance

Islamic finance remains one of the bright spots in the global financial industry post the 2008 financial crisis. Despite two decades of strong growth, the industry is now finally poised to break into conventional financial markets in the West.
Islamic finance is comprised of instruments, infrastructure, institutions, and markets that apply Sharia rules and principles. You might be wondering how Islamic finance impacts you, if you’re based in a non-Muslim country. Increasingly it’s being viewed as an avenue of growth for global banks, as the industry caters to the world’s 1.6 billion Muslims.
The advent of Islamic finance allowed devout Muslims the ability to access financial products and services without compromising on their beliefs. As a result, total global Islamic banking assets are projected to surpass US$2 trillion in 2014.
The Islamic finance sector is primarily comprised of Islamic Banking, Sukuk (Islamic Bonds), Takaful (Islamic Insurance), and Islamic Mutual Funds. The geographic centers of Islamic finance are primarily in Asia (Malaysia and Indonesia) and the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates).
At its core, Islamic finance is governed by fundamental principles outlined in Sharia law. The main distinction between conventional finance and Islamic finance is that the latter prohibits riba (usury/interest). Thus, virtually all Islamic finance products are based on the principle of risk sharing as opposed to risk transfer.
For example, an Islamic mortgage transaction would entail the bank purchasing a property and then reselling it to the homebuyer at a fixed profit. The buyer would then have the option to make the payments in installments. However, due to the concept of risk sharing, the bank could not charge additional penalties for late payments but would retain ownership until the loan was paid off.

Global Investors and Islamic Finance

For global investors, the sukuk (Islamic bond) market is probably the area of greatest interest within Islamic finance. The sukuk is an asset-backed security, which represents ownership in a tangible asset. With a sukuk the initial face value of the bond isn’t guaranteed. Unlike a conventional bondholder, a sukuk investor shares the risk from the underlying asset.
In practice, some sukuks are issued with repurchase guarantees, which would result in the investor receiving face value at maturity, much like a conventional bondholder. However, not all Sharia scholars agree this structure isSharia compliant.
Traditionally, governments and government-related entities in Asia and the Gulf Cooperation Council (GCC) issuedsukuks denominated in the local currency to domestic investors. However, increased demand from global investors has led to increased cross-border issuance from non-traditional sources.
Last September, rating agency Moody’s observed,
The year 2014 has become a landmark year for sovereign sukuk, with the UK issuing its inaugural sukuk, and with Hong Kong and South Africa expecting to conclude sales in September 2014. All three are major non-Islamic countries, and the transactions indicate a significant change in the potential size, depth, and liquidity of this market.
This move into sukuk finance by countries with populations that are not predominately Muslim marks a shift in the long-held perception that Islamic finance is the domain of Muslim countries.
In an effort to assist countries that seek to issue sukuk, Islamic institutions like the Islamic Corporation for the Development of the Private Sector offer help with the structure of sovereign sukuk finance.
(Casey Research / 28 January 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Islamic banks eye market share in strife-torn Iraq

Baghdad: For all the sectarian violence gripping Iraq, Sharia-compliant banks operating in the nation see opportunities for growth.

Elaf Islamic Bank, the 14-year-old Baghdad-based lender, is targeting a 28 per cent increase in profit this year, even as rival Cihan Bank said its income dropped last year as rebels seized parts of the country. 

Iraq's cabinet approved a draft law on Tuesday regulating the Sharia-compliant banking industry, which will now move to the country's parliament for passage.

Airlines cancelled flights to Baghdad on Tuesday after a United Arab Emirates passenger jet was shot at, highlighting the growing security threat in a country where IS group has declared a caliphate. Amid the strife, at least eight Sharia-compliant lenders are operating, including Abu Dhabi Islamic Bank, seeking to tap a population of 36 million that has one of the lowest penetrations of formal banking in the Middle East.

"It's a high-risk market, but at the same time there's strong potential," Montasser Khelifi, a Dubai-based senior manager at Quantum Investment Bank, said by phone. "There is a huge population, it's a big country with important oil resources. But the banking market is still not developed."

Huge opportunities
About 11 per cent of Iraqis aged 15 years and older have accounts at formal banking institutions, according to World Bank data, compared to about 60 per cent in the UAE.

Elaf expects to increase income to about $15 million this year from $11.7 million in 2014, according to Manjula Mathew, the bank's executive director of research, investments and asset management. Kurdish International Bank's profit increased 5 per cent to $36.7 million in 2014, according to chief executive officer Bustam Al Janabi. Cihan's earnings fell 37 per cent to $22.6 million, said deputy chief executive officer Naz Bajger.

Iraq's Islamic banks are still in their early phase and "the challenges are acute, but the opportunities are enormous," Mohieddine Kronfol, the Dubai-based chief investment officer for global sukuk and Mena fixed-income at Franklin Templeton Investments, said by phone. "We find that Islamic banks, wherever they operate, they tend to grow faster than conventional in acquiring market share."

Security concerns
Iraq's lenders have been constrained by the dearth of legislation governing Islamic banks and advances by IS, which threaten to drag the country into the worst sectarian conflict since 2007. The central bank said it will spend $4.2 billion to support economic activity and create jobs as the nation also grapples with oil prices close to the lowest in six years.

The yield on Iraq's 2028 dollar bond rose 37 basis points this year to 8.3 per cent. That compares to a 28 basis-point decline through January 27 to 4.1 per cent in the average yield of Middle East bonds, according to JPMorgan Chase indices.

Iraqi Prime Minister Haidar Al Abadi said this month that the country's economic recovery isn't complete and the fight against IS is far from over, more than a decade after the fall of Saddam Hussein.

"The challenges are huge," he told Bloomberg TV's Charlie Rose on January 23. "Our economy cannot sustain two major spendings. One is to sustain our society and two is to sustain this awful war. We need help on this."
Abu Dhabi Islamic Bank, the second-biggest Sharia-compliant lender in the UAE, has been operating in Iraq since 2012 and is taking a long-term view of the country where it sees "great potential," Nuhad Saliba, head of ADIB International Banking Group, said. Cihan Bank said its outlook improved toward the end of last year as the United States began airstrikes on IS.

"The last quarter of the year was better," Bajger said by phone from Erbil. "The first half of the year will be tough, but I can say that it would not be hard as the third quarter of 2014.

(Times Of Oman / 28 January 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Monday, 26 January 2015

Islamic banks show off earings strength and asset quality

Dubai: In a new set of bank results announced on Sunday, the country’s two Islamic banks displayed their balance sheet strength and high profitability, reinforcing the robust health of the UAE’s banking sector.
Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE by total assets reported a net profit of Dh2.8 billion for 2014, up 63 per cent compared to Dh1.7 billion for 2013.
DIB’s net financing assets at Dh74 billion at the year-end 2014 was up by more than 32 per cent compared to Dh56 billion at the end of 2013.
The bank’s total assets were up by 9 per cent Dh123.9 billion at the year-end 2014 compared to Dh113.2 billion at the end of 2013.
“Despite the relatively subdued market, the bank has witnessed a 63 per cent hike in net profit and 32 per cent jump in financing book,” said Dr. Adnan Chilwan, CEO of DIB.
Abu Dhabi Islamic Bank (ADIB) Group’s net profit for 2014 increased by 20.7 per cent to Dh1.75 million compared to Dh1.45 billion in 2013. The bank’s net revenues for 2014 increased by 16.6 per cent to Dh4.58 billion compared to Dh3.93 billion in the same time period.
The bank’s customer financing assets increase by 18.2 per cent to Dh73 billion, while customer deposits increased by 12.3 per cent to Dh84.8 billion over the same period.
Abu Dhabi Commercial Bank (ADCB) reported a full year net profit of Dh4.2 billion, up 16 per cent compared to 2013. The bank’s total assets crossed Dh200 billion mark this year.
ADCB’s net loans and advances increased 7 per cent to Dh141billion in 2014 as customer deposits from increased 9 per cent to Dh126 billion. Bank’s Islamic banking business remained a prime driver of growth, with Islamic financing assets (gross) up 5 per cent and total Islamic deposits up 15 per cent over 2013.

(Gulfnews.Com / 25 January 2015)
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