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Monday, 1 October 2012

Islamic banking data for Malaysia (as at 31 July 2012)

Islamic banking data for Malaysia (as at 31 July 2012).
Alfalah Consulting - Kuala Lumpur:
 Islamic Investment Malaysia:

Malaysia: Ongoing efforts to cement lead in Islamic finance sector

CONTINUOUS efforts were taken to further position Malaysia as the leader in Islamic finance as Islamic finance continued to gain significant importance in the global financial market.

These included a recent review of laws relating to land, hire purchase and contract applicable to Islamic finance by the Law Harmonisation Committee to ensure their compatibility with Shariah and proposed amendments to the legislation to facilitate Islamic finance transactions. On the international front, global engagement and alliances in Islamic finance continued to be fostered in the first seven months of 2012.
The International Centre for Education in Islamic Finance has signed MoUs with the World Bank and the Islamic Financial Services Board in efforts to enhance collaboration on sharing of knowledge, undertaking research, development, training, and education in the Islamic financial services industry.
The Islamic capital market has contributed significantly to the development of the overall capital market and remains as important alternative source for raising capital. As at end-July 2012, 825 Shariah-compliant securities were listed on Bursa Malaysia, representing 89% of total listed securities with a market capitalisation of RM931bil or 65% or total market capitalisation.
In the first seven months of 2012, the trading volume of shariah-compliant securities increased to 148.4 billion units of the total 222.2 billion units traded.
Malaysia remains on the forefront of innovation and development of sukuk and continues to be the global leader in the sukuk market, accounting for 68% of total global sukuk outstanding as at July 31.
Malaysia retained its number one position for issuing sukuk, with a market share of 71% as at end-July. Bursa Malaysia remains the top sukuk listing destination, with 19 sukuk listed totalling RM99.6bil as at July 31.
During the first seven months of 2012, two Islamic fund management licences were approved, bringing the number of full-fledged Islamic fund management companies to 18. During the same period, an additional Islamic unit trust fund and four Islamic unit trust and four Islamic wholesale funds were launched.
As at end-July, the total net assets value (NAV) of Islamic unit trust funds stood at RM33bil and the Islamic wholesale funds at RM14bil.
Meanwhile, the number of Islamic REITs stood at three, with a market capitalisation of RM3.6bil as at end-July. Similarly, the Islamic ETF remained at one with total NAV of RM300mil.
Bursa Suq Al-Sila’ being the world’s first end-to-end Shariah-compliant commodity trading platform, has added Refined, Bleached and Deodorised palm olein as new commodity offering to meet greater demand from local and international players for commodity-based Islamic financing and investment.
Meanwhile, the Islamic banking business continued to expand in the first seven months of 2012.
Total assets grew 20.6% to RM469.5bil as at end July, representing 24.2% of the total banking system assets.
Total deposits rose 21.3% to RM362.7bil, or 26.1% as at end-July.
Total Islamic financing continued to grow 19.3% to RM294.2bil and accounted for 26.6% of total loans by the banking system.
Financing of the Islamic banking system was predominantly channeled to the household sector and accounted for 65%, or RM191.1bil as at end-July.
The takaful industry expanded further during the first seven months of 2012, with assets increasing to RM18.3bil and accounting for 9% of the total insurance and takaful industry assets as at end-July.
The bulk of takaful assets were concentrated in Islamic debt securities and Government Investment Issues, which amounted to 74.4% of total takaful assets.
(The Star Online / 28 Sep 2012)

Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Glossary of Islamic Financial Terms - List No. 4

1. 'Aqd Contract
2. Bai' Sale
3. Bai' Bithaman Ajil
A contract of sale and purchase of an asset in which the payment of price is deferred and paid in installment within an agreed period of time. The selling price includes profit
4. Bai' Dayn
Sale of debt that is created under Shariah compliant business activities
5. Bai’ ‘Inah
• A contract of sale and purchase of an asset whereby the seller sells to buyer in cash and subsequently buys back the asset at a marked up deferred price
• A contract of sale and purchase of an asset whereby the seller sells to buyer at a deferred price and subsequently buys back at a lower cash price
6. Bai' Ma'dum Buying and selling something that does not exist
Bai' Mua'toh
A contract of sale and purchase of an asset in which the contracting parties agreed on the exchange of the asset and the price without verbal or written ijab and qabul
8. Bai' Muzayadah Sale by auction
9. Bai' Salam
Refers to an agreement whereby payment is made immediately while the goods are delivered at an agreed later date. It is equivalent to an advance payment
10. Bai' Sarf Refers the buying and selling of foreign currencies
11. Dalil Evidence, indicative legal text
12. Dayn Debt
13. Dharurah Necessity
14. Fatwa Decree, religious edict from a qualified scholar
15. Fiqh Muamalat Islamic Commercial Law
16. Fuqaha' Islamic jurist
17. Gharar Element of uncertainty and/or deceit
18. Hadith Prophetic tradition
19. Halal Lawful
20. Haq Right
21. Hawalah Debt assignment contract
22. Hibah
Gift. An act of transferring of ownership of an asset or usufruct without an exchange of counter value during the lifetime of the transferor
23. Hukm Shariah ruling
24. Ibra' Rebate. Waiving partially or totally a right to claim a debt
25. Ijarah
Leasing contract. A contract between a lessor and a lessee in which the lessor being the owner of the property allows the lessee to enjoy the usufructs of the property at agreed terms on the rental and period of lease
26. Ijarah Thumma al-Bai' A contract of lease which subsequently followed by a sale contract
27. Ijma' Consensus of Islamic scholars and jurists
28. Ijtihad Reasoning by qualified scholars to obtain legal ruling from the sources of the Shariah
29. 'Illah Cause
30. Istihsan
Juristic preference, disregarding a hukm backed by a dalil and supported by another hukm that is sounder
31. Istisna' Sale and purchase by order
32 Jahalah Ignorance or lack of knowledge
33. Kafalah
A contract of guarantee in which one party guarantees the fulfillment of a claim or performance of an obligation which is due to another party in a case of default. Synonym: Dhaman
34. Mal Asset or property
35. Maslahah Consideration of public interests
36. Mazhab School of thought
37. Muamalah (singular) / Muamalat (plural) Transaction(s)
38. Mudharabah
A partnership in profit whereby one party provides capital (rabb al mal) and the other party provides labour (mudharib)
39. Muqasah Settlement of debt by set off
40. Murabahah Cost plus profit sale
41. Musyarakah Partnership
42. Musyarakah Mutanaqisah
A form of partnership in which one of the partners promises to buy the equity share of the other partner gradually until the title to the asset is completely transferred to him
43. Nas Explicit legal text
44. Qabd Taking possession and having control of purchased asset
45. Qiyas Analogy
46. Qardh Islamic loan
47. Rahn Pledge or Collateral
48. Riba Usury
49. Sadd Zari'ah Blocking the means to something (evil)
50. Sahibul Mal Capital Provider
51. Sahih Valid or authentic
52. Sarf Contract of currency exchange
53. Sukuk Financial notes/documents whose value is backed by certain assets
54. Ta'widh Compensation charged to a debtor for late payment
55. Tawarruq
An arrangement that involves a purchase of an asset based on Musawamah or Murabahah and a subsequently sale of the same asset to a third party in order to gain cash money
56. Ujrah Service fee
57. Ulama' Islamic scholars
58. 'Urbun Earnest money, down payment
59. Urf Customary practices
60. 'Uqud mu'awadat Exchange contracts
61. Wa'ad Promise
62. Wa'ad Mulzim Binding promise
63. Wadi'ah yad Dhamanah A guaranteed safe keeping contract
64. Wakalah
A contract where a party authorises another party to act on behalf of the former as long as he is alive

(source: Bank Muamalat Malaysia)

Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Islamic banks' market share grows in Malaysia

Islamic banks accounted for 24.2 percent or 69.5 billion ringgit of the country's total banking assets as at end-July, up from 23.7 percent at the end of last year.

Total assets grew at a faster rate of 20.6 percent between January to July, compared to 15.4 percent in the same period last year.

The Islamic banks' deposits amounted to 362.7 billion ringgit at the end of July, increasing the share of total deposits to 26.1 percent from 25.8 percent at the end of last year.

Islamic financing accounted for 26.6 percent of total loans at the end of July, compared with 25.9 percent at the end of last year.

The household sector accounted for over two-thirds of loans made through Islamic financing.

Islamic financing is expected to account for 40 percent of total financing by 2020 due to greater participation and more diverse offerings, under the financial sector blueprint prepared by the central bank.

The Islamic capital market, consisting of equities compliant to sharia or Islamic law, improved its share of total trade volume to 66.8 percent from 59.1 percent last year.

"This market has contributed significantly to the development of the overall capital market, it remains an important alternative source for the raising of capital," said the report.

The share of sharia-compliant equities was unchanged at end-July, accounting for 65 percent, or 931 billion ringgit, of the total market capitalization.

Malaysia retained its pole position in the issuance of Islamic bonds, or sukuk, with a 71 percent share of global issuances, and it accounted for 68 percent of sukuk outstanding globally as at end-July.

The takaful industry increased its assets to 18.3 billion ringgit, or 9 percent of total insurance assets in the seven months, with nearly 80 percent concentrated in fixed income and government securities.
(Reuters / 28 Sep 2012)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

KFH Issues $1.5b ‘Sukuk’ For Turkish Treasury

KUWAIT CITY, Sept 29: Kuwait Finance House “KFH” represented by its subsidiary, Liquidity Management House “LMH”, succeeded in arranging for Ijarah Sukuk for the Turkish Treasury amounting $1.5 bln for 5-1/2 years, in cooperation with Citigroup and HSBC, where this is the first issuance of its kind for the Government of Turkey.
The deal was signed by the CEO of KFH and Chairman of KFH – Turkey, Mohammed Al-Omar, and the Vice Chairman and CEO of LMH, Emad Al-Monayea. 

The issuance witnessed a large turnout exceeded expectations. 250 investors have requested to participate in the issuance totaling $7.1bln (i.e. 5 times oversubscription coverage). This reflects the great confidence in the Turkish economy, and in those who lead the issuance process. Furthermore, it reflects the confidence of the global financial markets in sukuk product.
This typical issuance is a fruit of cooperation between many entities, particularly the Turkish Treasury that exerted great efforts to develop legislative and regulatory frameworks for the issuance of this sukuk and other instruments. 
Furthermore, if the government of Ankara wishes any further issuance, now it has a clear and steady legislative building could enables Turkey to become an important and prominent market for sukuk issuance. Thus, Turkey will benefit from the high demand for this product from investors in the region and the whole world.

In this regard, KFH expresses through its subsidiary LMH its readiness to assist the governments wishing to introduce sukuk, which are considered the Shara’i alternative to bonds, to their economic systems. 
They also can benefit from the advantage of the high financing capacity of sukuk in promoting the national economy and providing alternative funding.
The annual rate yield on these sukuk is 2.8% and to be distributed every 6 months. As for the geographical participation, the largest share is coming from the Middle East with 58%, followed by Europe (13%), then Asia (12%), Turkey (9%) and USA (8%).
As for the investors’ type, the largest share is for banks (59%) followed by asset managers (22%). Moreover, international institutions and central banks formed 10%, then wealth managers (5%), and finally hedge funds (4%).
LMH in 2010 arranged in coordination with Citigroup first Sukuk issuance in Turkey of $100mln for the benefit of KFH – Turkey, a bank operating in Turkey and KFH owns 62.4% of the bank’s share. Furthermore, LMH in cooperation with HSBC and Standard Chartered Bank has arranged for sukuk issuance for KFH-Turkey in 2011 amounted $350mln.

(Arab Times / 01 Okt 2012)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Al Hilal Bank’s Global Sukuk Fund generates 4.3 per cent return

The fund invests in a diversified portfolio of Shari’ah-compliant Sukuk issued by sovereign, quasi-sovereign and corporations and aims to generate regular income as well as capital appreciation.
Global Sukuk issuances have topped $36 billion while total GCC Sukuk issuances have reached $17.7 billion compared to only $7.3 billion during 2011. Several regional and global issuers have increasingly tapped the Sukuk market to take advantage of the prevailing low interest rate environment while debt refinancing needs support a healthy pipeline of new issues. In the secondary market, scarcity value and abundant liquidity has bolstered Sukuk prices. These factors along with the fund manager’s superior Sukuk selection capabilities have contributed to the strong performance returns of Al Hilal Global Sukuk Fund. The fund is also well positioned to capitalize on the future upside potential of Sukuk.
Al Hilal Global Sukuk offers an extremely competitive fee structure with subscription fees of 0.75 per cent and management fees of 0.85 per cent. Furthermore, a low minimum subscription amount of $10,000 makes the fund attractive for retail investors.
“We believe through prudent investment strategy and good timing for the fund launch has contributed to the fund’s success and has attracted strong investor demand. The fund has more than doubled in size from $16 million at inception to $40 million,” says Lim Say Cheong, EVP of Investment Banking Group of Al Hilal Bank.
(C.P.I Financial / 30 Sep 2012)

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Islamic Investment Malaysia:

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