Takaful Malaysia eyes bigger revenue contributions

KUALA LUMPUR: Syarikat Takaful Malaysia Bhd expects revenue contributions from its Indonesian operations to easily increase to 20% once the ruling on sales of takaful products by stand-alone takaful companies comes into force in 2015.

Group managing director, Hassan Kamil, said currently the Indonesian operations contributed about 10%.

“Our takaful company in Indonesia is a stand-alone company. So by then we hope the competition will be more equal and fair.

“Currently, the playing field is not level. A lot of conventional companies operate as a window, so they have a significant advantage compared with us as they use the conventional arm to support the takaful window, without the need of a separate capital,” he told a media briefing after the group’s annual general meeting today.

On the group’s plan to acquire a property in London, Hassan said, the plan was put on hold as the Islamic Financial Services Act (IFSA) would be in place this June.

“The IFSA will allow us to have a structure where there is a financial holding company, so we will wait for specific guidelines from Bank Negara Malaysia before we proceed with our next steps in acquiring the property in London.

“With the existence of the financial holding company, this will probably allow us to benefit more from the tax structure if we were to establish the financial holding company in Labuan,” he said, adding that the group expected to restart negotiation on the acquisition in London next year.

The new Act would require conventional and takaful insurers to relinquish their composite licences and conduct their life and general insurance businesses under separate units.

On other possible overseas venture, he said, Takaful Malaysia has looked at the China and Middle East markets, which had large Muslim population.

However, he said, China lacked Syariah-compliant instruments for the group to invest its premiums while Middle East was unstable in terms of security.

Moving forward, Hassan said, the industry’s prospects remained positive and it was anticipated to grow between 20% and 25% this year.

“We hope to ride on that momentum and to grow at least at that percentage to ensure that our market share is sustained,” he said.

Takaful Malaysia, which will present its internal target capital level to BNM by September, is set to have a dividend policy next year.

Hassan said even without a dividend policy, the group has been distributing a good amount of returns to shareholders.

Last year, a total of RM57 million was paid out against net profit of RM100.1 million, he said.

(F.M.T news / 29 April 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
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Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Noor Islamic Bank profit jumps 54%

Noor Islamic Bank on Monday said its net profit rose Dh26.4 million, or 54 per cent, to Dh75.5 million in 2012 year-on-year.

Based on the significant progress made in 2012, the shareholders have underlined their confidence in the bank’s future performance, approving a capital injection of Dh150 million. Currently, Noor Islamic Bank’s capital adequacy ratio stands at 19.54 per cent, with the tier-1 ratio at 14.1 per cent.

Hussain Al Qemzi, Chief Executive Officer of Noor Islamic Bank and Group CEO Noor Investment Group, said: “In line with our strategic road map, building a healthy balance sheet and diversifying core revenue generation capabilities remain our key priorities.

“Following a second consecutive year of registering net profits, the capital injection reflects the shareholders’ confidence. It places the bank in a strong position to take advantage of the much improved economic situation in the UAE and growth opportunities in key emerging markets.”

In 2012, Noor’s liquid asset ratio rose to 27 per cent, marking a 13 per cent increase year-on-year.  The bank also saw its advances to deposit ratio fall by 17 per cent, to stand at 75 per cent and a growth of 18% in customer deposits. Overall, the bank’s balance sheet recorded a growth of 6.4 per cent, compared to 2011.

Streamlining remedial management and credit undertaking criteria, which are key priorities for Noor’s management, allowed Noor to improve its nonperforming loan (NPL) ratio by 7.6 per cent, compared with 2011. In addition, its NPL coverage ratio also improved by 16 per cent year-on-year. Provisions for the year amounted to Dh166 million, a 74 per cent decrease from last year, representing 1.4 per cent on gross advances of Dh11.8 billion.

Since its launch in 2008, Noor has gained a reputation for offering innovative, client-focused, banking products and services. It continues to lead the retail banking market in providing convenient banking solutions, including the UAE’s first fully operational mobile internet banking experience in the Arabic language. Noor was also the first Islamic bank to offer an on-line account opening service.

(Emirates / 29 April 2013)


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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

India: Sharia market goes mainstream

Hyderabad: The subject of Islamic finance has surfaced at copious controversies in India, travelling through court cases, to political podiums, after all of it; finally this vast lucrative finance market is getting a mainstream acceptance, at least academically.

Monad University Uttar Pradesh is introducing Islamic finance as higher educational courses. The university, in collaboration with Institute of Islamic Banking Finance & Insurance (IIBFI), Chennai is providing three passages for Islamic finance education. MU is introducing Post Graduate Diploma in Islamic Banking & Finance (PGDIBF), MBA in Islamic finance and PhD in Islamic finance.

Few years back the Aligarh Muslim University also started a diploma in Islamic banking and finance.

According to MU, these three courses ‘will give students an edge to meet the growing interest in Shariah-compliant finance across the world’, which is according to them, ‘is currently the fastest-expanding sector of the global financial market’.

The entry in the courses is according to the UGC guidelines, as any degree from UGC recognized university is required for enrolling into Post Graduate Diploma in Islamic Banking & Finance (PGDIBF), and MBA in Islamic finance and for enrollment in Ph.D. Islamic finance a Post-Graduation degree and approval of university academic syndicate is essential.

Vice Chancellor of the university Dr. Mian Jaan introducing the university’s Islamic finance courses in Hyderabad addressed a press conference. Dr. Mian Jaan said “In every age, there is a need of knowledge specialization according to the changing trends in the world, and Islamic finance is the next big thing in the coming decade, as already 100 nations has introduced this market, which has now grown to be 1.3 trillion dollar financial service.”

Dr. Mian reiterated that in coming decade there will be a requirement of 5 lakh professional to monitor Islamic finance and his university want to provide job opportunities to the students globally.

He said Monad University, Hapur near Gaziabad which has been established vide Act No.23 of 2010 of the Government of Uttar Pradesh, is offering Islamic finance higher education from this academic year of 2013-2014, the department of Islamic finance will be formally inaugurated by Moulana Arshed Madani of Jamiatul Ulema on May 5th.

Zahid Ali Khan, chief editor of Siasat Urdu daily, who was also present in the conference praised MU for taking a pioneering step in the field of Islamic finance education. Khan urged that India should not shy away from Islamic finance which is a safe investment market and growing many folds every year. He stressed that many nations like America and European countries which has nothing do with Islam is getting attracted towards the market due to its safe and lucrative investment policies.

Khan advised other universities in India to introduce higher educational Islamic finance courses to provide diverse job opportunities to the students.

Md. Asim Farooq Director Academics and Administration IIBFI said Monad University has already selected six students for P.h.D in Islamic finance for this academic year, and University along with IIBFI is planning to start distance educational courses in Islamic finance from next academic year.

(TwoCircles.net / 28 April 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

UK aims to boost role in Islamic finance

Prime Minister David Cameron is looking to Southeast Asia to boost the UK’s role in Islamic finance. It’s the Bank of England he needs to convince first, say Shariah-compliant lenders based in Britain. 

Central bank rules require lenders to hold easy-to-sell assets as protection against short-term funding shocks. Most are off-limits for Islamic banks because they pay interest. 

Islamic lenders are "disadvantaged," Sultan Choudhury, managing director of Islamic Bank of Britain, said in a phone interview from Birmingham, England, on April 22. "We want the ability to operate without the restrictions that we are facing. The biggest example of that is in the liquidity rules." 

Cameron visited Malaysia, the biggest center for the more than US$1 trillion-a-year market, last year to build on a pact to promote bilateral engagement in the industry and created an Islamic Finance Task Force in March. Britain’s six Shariah-compliant lenders will struggle to grow unless regulators adapt bank liquidity rules or highly rated borrowers issue sukuk in pounds, according to Choudhury and Bank of London & the Middle East’s Nigel Denison.

"For an Islamic bank, there is a lack of liquid assets available," Denison, the London-based lender’s head of markets, said by phone. "If there were a liquid sukuk, particularly in sterling -- because we report in sterling -- that would make our lives a lot easier." 

The UK announced plans five years ago to become the first western government to issue sukuk, only to disband the initiative in 2011 when the Debt Management Office said they don’t "provide value for money." 

The average yield on Shariah-compliant debt has climbed 16 basis points this year to 2.8 per cent on April 24, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index. The yield on 10-year gilts fell 14 basis points to 1.69 per cent, data compiled by Bloomberg show. 

"The cost of funding via conventional sovereign bonds -- gilts -- is still more advantageous than the cost of funding via sukuk," Haissam Saleh, Qatar Islamic Bank UK Plc’s London-based head of Middle East and North Africa treasury structuring and sales, said by e-mail April 17. 

A Treasury spokesman said March 11 there are no immediate plans to issue sukuk. The press service didn’t respond last week to requests for comment. 

"The UK’s liquidity regime applies to all firms equally," Liam Parker, a spokesman for the Bank of England, said in an e-mailed response April 24. "An allowance is made for Shariah-compliant firms with regard to the instruments they are required to hold to meet their liquidity requirements, but not to the quantity of liquidity." 

The overhaul of bank rules known as Basel III may take account of Shariah lenders in the European Union, Parker said. 

"The UK is actively engaged with international regulatory counterparts both in Basel and within the EU on this issue," Parker said. "We would expect that EU implementation will make suitable allowance for Shariah-compliant firms." 

The only sukuk currently meeting Bank of England criteria are dollar notes from Islamic Development Bank, a Saudi-based multilateral lender, according to Choudhury and Denison. The bonds rank AAA at Fitch Ratings, one above the UK. 

The lender may issue sukuk in pounds, Wayne Evans, an adviser to TheCityUK, a group representing financial services companies, said by phone April 2. IDB "is not yet in a position" to comment, Abdul Aziz Al Hinai, vice president for finance, said by e-mail April 22. 

Global Islamic debt sales jumped to US$7.23 billion in March, the third-highest monthly total, data compiled by Bloomberg show. The debt avoids interest through contracts such as Murabahah, where lenders own an asset and sell it back at a mark-up. 

Borrowers are put off selling sukuk in the UK in part because the holder would be liable for value added tax, Gary Campbell, a partner at Deloitte LLP in London, said by phone March 25. The underlying assets would need to be based outside of the UK for exemption, he said. 

"We understand that the UK government is very sympathetic and is keen to eliminate any kind of discrepancies," Campbell said. "Whilst they are sympathetic, they haven’t issued anything formally in writing on the VAT treatment of sukuk." 

Only one Shariah-compliant lender has set up in the UK in the past five years -- Abu Dhabi Islamic Bank PJSC, according to TheCityUK. HSBC Holdings Plc stopped offering Shariah-compliant services in the UK last year. 

The Islamic Finance Task Force will look at ways to encourage sukuk, Richard Thomas, a member of the working group and chief executive officer at Gatehouse Bank Plc, said in a March 14 interview from Dubai. 

"We need to have appropriate liquidity instruments," Mansur Mannan, executive director of DAR Capital, a London-based financial adviser, said in a phone interview March 21. "If regulations can be changed somewhat, that would be a step in the right direction.

(Business Times / 30 April 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com