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Monday, 19 January 2015

Dubai: Qatar Islamic Bank plans $549 mln Tier 1 sukuk

DUBAI, Jan 18 (Reuters) - Qatar Islamic Bank (QIB) plans to raise up to 2 billion riyals ($549.4 million) through a capital-boosting sukuk; the latest Gulf bank eyeing debt markets to replenish its reserves after a period of strong lending growth.
Qatar's largest sharia-compliant institution by assets announced the sukuk after reporting fourth-quarter net profit that was up an estimate-beating 30.4 percent year on year, according to Reuters calculations.
Unlike European peers that have been dogged by capital concerns in recent years, Gulf banks have increasingly turned to capital-enhancing bonds for positive reasons, seeking to build on existing growth and diversify their sources of capital.
New Basel III banking standards, due to come into full force in 2019, will also oblige banks to set aside more capital.
A number of Saudi banks have used the local-currency sukuk market to raise instruments that enhance their Tier 2 -- or supplementary -- capital in the past two years, while banks from the United Arab Emirates have also sold bonds and sukuk that enhance core Tier 1 capital.
The latest was a Tier 1 sukuk from Dubai Islamic Bank , completed last week.
On Sunday QIB said that its board had proposed a Basel III-compliant Tier 1 sukuk worth up to 2 billion riyals, subject to shareholder and regulatory approval.
QIB's total capital adequacy ratio, a combination of Tier 1 and Tier 2 capital -- regarded as one of the key indicators of a bank's health -- stood at 14 percent at the end of 2014, against a 12.5 percent minimum prescribed by Qatar's central bank.
Qatari banks have been able to build their loan books at a fast pace in recent years as the Gulf state spends billions of dollars developing infrastructure and prepares to host the 2022 soccer World Cup finals.
QIB's lending book jumped 27 percent in 2014 to stand at 60 billion riyals on Dec. 31, while deposits surged by 32 percent to reach 67 billion riyals at the end of last year.
This helped the bank make a net profit of 470 million riyals during the fourth quarter, according to Reuters calculations based on financial statements, compared with 360.3 million riyals in the last three months of 2013 and well ahead of the 333.3 million riyal average estimate of five analysts polled by Reuters.

The bank's board proposed a cash dividend of 4.25 riyals per share for 2014, up from 4 riyals for 2013, the statement added.
(Reuters / 18 January 2015)
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Rise of Islamic finance and banking ‘to reach new heights in 2015’

The CIBE said the industry realised $2.1tn of assets in 2014, owing to “gains in popularity in traditional markets” such as Malaysia and the Middle East, and boosted by moves into new markets in Europe, Australia and China.
CIBE chief executive officer Muhammad Zubair Mughal said Islamic banking is likely to represent a share of 86% of the industry’s $2.5tn market in 2015, followed by sukuk, the Islamic equivalent of a bond (6%), Islamic funds (4%), takaful (Islamic insurance – 2%) and Islamic micro-finance (1%). He said Dubai will continue in its role as “a global Islamic finance hub”.
Zubair Mughal said there are more than 1,500 organisations working for Islamic banking, finance, takaful, sukuk, Islamic funds and micro-finance in more than 90 countries, some 40% of which are non-Muslim nations. He said Muslim countries, which have a 76% share of the global Islamic banking market, include Qatar, Saudi Arabia, the United Arab Emirates, Malaysia, Pakistan and Indonesia.
Zubair Mughal said that the sukuk market recovered in 2014 after a fall in 2013 and promises “a great chance of rapid growth” in 2015. He also anticipated that the sukuk market will reach $150 billion, with Islamic funds having “great potential” of attaining a market share worth around $100bn.
On takaful, Zubair Mughal forecast a growth rate of 15% and said the global takaful contribution is expected to reach $20bn during 2015. “Tanzania, Namibia, Morocco, and India are the new destinations for Islamic insurance,” he said. The new year is also expected to see increased take-up of Islamic micro-finance, which is being promoted by “many multilateral agencies” and backed by governments in countries such as Pakistan and Malaysia, Zubair Mughal said.
In September 2014, South Africa entered the sukuk market with the launch of a $500 million Islamic bond. The National Treasury said it had concluded its debut 5.75-year Islamic bond issuance in the international capital markets priced at a coupon rate of 3.90%, “representing a spread of 180 basis points above the corresponding benchmark rate”.
In October, the governor of Malaysia's central bank, Bank Negara Malaysia, said the $270bn global market for sukuk could become an "important source of funding" for infrastructure and other long-term projects. Zeti Akhtar Aziz told the 10th World Islamic Economic Forum in Dubai that the sukuk market had "significant potential" to fund infrastructure projects in the Gulf Cooperation Council, Africa and Asia. She said that some developing economies in Africa were already looking to the sukuk market as a means of obtaining financing for infrastructure.
(Out-Law.Com / 12 January 2015)
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