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Saturday, 23 November 2013

Bangladesh: IFIC to become Islamic bank

IFIC Bank, a first generation conventional private commercial bank, has decided to become a full-fledged Islamic or Shariah-based bank.

“Our board recently approved the proposal. The government, being the bank’s majority shareholder, has also given clearance,” said Shah A Sarwar, managing director of the bank.
“We are now approaching the regulators for necessary permissions. We will then start the conversion process by appointing world-class consultants. But it is subject to approval from different regulators,” he said in an interview with The Daily Star.

“There is a strong demand from customers and shareholders,” said Sarwar.

In addition, non-Muslims can also take the service and that “is the beauty of the Shariah-based banking.”

Sarwar who joined the bank in December last year could not give a definite time on how long the conversion process would take.

“The conversion is not a day’s job. We have to change the computer systems and business processes and we have to run parallel for the time being.”

The globally-booming Islamic finance is making strides and gaining popularity in Bangladesh, with experts predicting that the Shariah-compliant industry will continue in steady steps to become the mainstream banking system in the Muslim-majority nation.

Bangladesh entered the Islamic banking system in 1983, with the establishment of Islami Bank Bangladesh Ltd.

Since then, eight more full-fledged private Islamic banks and 23 Islamic banking branches of conventional banks have been established. Currently, Islamic banks hold 24 percent of total banking deposit and have around 10 percent of the total bank branches.

The combined share of Islamic banks (excluding Islamic banking branches/windows of conventional banks) is 16.85 percent in assets, 19.85 percent in investments (loans), 14.3 percent in equity and 17.1 percent in liabilities as of December 2012, according to the Financial Stability Report-2012.

International Finance Investment and Commerce Bank Ltd (IFIC Bank) was set up in 1976 as a joint venture between the government and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard.

In 1983, when the government allowed banks in the private sector, IFIC was converted into a full fledged commercial bank.

The government holds 32.75 percent of the bank, directors and sponsors 11.31 percent, institutions 33.91 percent, foreign investors 0.28 percent and the rest 21.75 percent is held by the general public, according to the DSE website.

(The Daily News / 21 Nov 2013)
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Libya aims to issue three Islamic bank licenses in 2014, says central bank

Libya hopes to have its first three dedicated Islamic banks operating next year to satisfy unmet demand for sharia-complaint financial services, a senior central bank official said on Wednesday.
Under former dictator Muammar Qaddafi, overthrown in 2011, the growth of Islamic banking was not encouraged and the entire financial system was kept undeveloped, as four state-controlled institutions dominated the industry.
Libya is now trying to build a modern financial system and has passed rules to cover Islamic finance, although political instability and a chaotic security situation are slowing its progress.
Authorities have decided to issue three Islamic banking licenses and the central bank has received five applications from local investors, which are currently being evaluated, said Abdulmajeed Almaguri, deputy director of the central bank’s banking supervision department.
He did not name the potential investors but said the evaluation process would be completed after four to five months.
“There is good demand for Islamic banking and we want a balance between conventional and Islamic banking,” Almaguri told Reuters on the sidelines of an Arab central bankers conference in Abu Dhabi.
Currently the 16 banks operating in Libya, including seven foreign banks, offer mainly conventional banking services with some providing interest-free Islamic banking through sharia-compliant windows, he said.
(Al Arabiya News / 20 Nov 2013)
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Malaysia: Maybank Posts Record Profit as Islamic Banking Income, Fees Grow

Malayan Banking Bhd. (MAY), Malaysia’s biggest lender, said third-quarter profit rose 16 percent, joining Public Bank Bhd. in posting record earnings as economic growth spurred credit demand.
Net income climbed to 1.75 billion ringgit ($545 million), or 20.05 sen per share, in the three months ended Sept. 30 from 1.5 billion ringgit, or 19.14 sen per share, a year earlier, the lender said in a stock exchange filing today. Fee income and Islamic banking boosted profit.
Maybank has been Malaysia’s top arranger of syndicated loans and number one underwriter for equity and rights offerings this year, according to data compiled by Bloomberg. It has helped manage some of the country’s biggest initial public offerings of the year, including share sales by UMW Oil & Gas Corp. and Westports Holdings Bhd.
“There continue to remain windows of opportunity in the different markets we serve,” Chief Executive Officer Abdul Farid Alias said in a separate e-mailed statement today. “Maybank’s three home markets consisting of Malaysia, Singapore and Indonesia, which contribute more than 90 percent of the group’s income and profit, are expected to record positive revenue growth.”
The lender benefitted from 5 percent growth in Southeast Asia’s third-largest economy last quarter, which spurred demand for credit.
Non-interest income rose 19 percent to 1.54 billion ringgit in the third quarter last year, Maybank said. Income from Islamic banking increased 29 percent to 734.9 million ringgit.

Interest Income

Shares of Maybank advanced 0.8 percent to 9.64 ringgit as of 3:26 p.m. in Kuala Lumpur after earnings were announced during the midday break. The stock has climbed 4.8 percent this year, trailing a 6.2 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index.
Net interest income, or revenue from borrowers after deducting interest paid to depositors, gained 1.1 percent to 2.38 billion ringgit in the third quarter, Maybank said. Allowances for losses on loans more than tripled to 280.3 million ringgit, it said.
(Bloomberg / 21 Nov 2013)
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