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

Sukuk issuances likely to face slowdown in 2015

Dubai: The global sukuk market is expected to face some slowdown in 2015 after reaching the second-highest year for sukuk issuance in 201, according to projections by credit rating agency Standard & Poor’s.
Sukuk issuance reached $116.4 billion in 2014 compared with $111.3 billion in2013, and despite the economic headwinds, the rating agency said it expects the total issuance to cross the $100 billion mark again in 2015.
“Supporting sukuk issuance is the still-positive economic performance of core markets such as nations in the Gulf Cooperation Council (GCC) and Malaysia, the implementation of new regulatory requirements such as the Basel III liquidity coverage ratio, and increasing interest in sukuk from countries that have not yet tapped the sukuk market looking to diversify their investor base,” said Mohamed Damak, global head for Islamic finance of S&P.
Despite the positive environment, Damak expects some emerging headwinds could slow its progress compared to 2014. “We foresee some turbulence ahead that could cause overall issuance volumes to be lower in 2015,” he said.
A serious potential threat could emerge from the US Federal Reserve’s plan to increase its benchmark interest rate in the second quarter of 2015. The rate hike is likely to reduce liquidity in global capital markets, including emerging markets.
A preview of such risk took place in 2013 and to a lesser extent in 2014 when the Fed announced the tapering of its quantitative easing. However, S&P said emerging market instruments will benefit, as a side effect, from the monetary stimulus that the European Central Bank is likely to implement in 2015.
The economic impact of rapid decline in oil prices is also expected to reduce demand for funding in core markets for sukuk such as the GCC. Analysts say a decline economic growth resulting form low oil prices could reduce financing needs in these markets, especially if the oil prices continue to decline. S&P forecasts economic growth in the GCC to average around 3.7 per cent in 2015 compared with 4.2 per cent in 2014.
But the slowdown in demand for sukuk in GCC could be offset by strong economic growth in Malaysia which is expected to grow at 5.5 per cent and new sovereign issuances.
“We expect new sovereign issuers to tap the sukuk market in 2015, continuing a trend that started few years ago. In 2014 alone, the UK, Luxembourg, South Africa, Hong Kong, Senegal, and others went to the market with their first sukuk issuances. The rationale for sovereign sukuk issuance can vary for different governments, but we think creating benchmarks and diversifying the investor base have been among the most important reasons for new sovereign sukuk issuance in 2014,” said Damak.
The implementation of new regulatory requirements, particularly Basel III, and the lack of high-quality liquid assets in the Islamic finance industry might increase sovereign and central banks’ issuances and provide the Islamic finance industry with much-needed instruments to manage liquidity.
Central banks are looking at the experience of Bank Negara, the central bank of Malaysia, which is the established leader in sukuk issuance. Total sukuk issuance from central banks reached $50.2 billion in 2014, or 43.1 per cent of all issuance, with Malaysia alone accounting for 92.1 per cent of that at year-end 2014, followed by the Central Bank of Bahrain at 3.7 per cent.
(Gulfnews.com / 25 January 2014)
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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

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