IslamicFinance.de

Consumer banking will continue to be an important revenue generator for banks with home loans being one of the major areas of focus amid the prevailing relatively low interest rates. Apart from home loans, the other sectors in consumer banking which banks are focusing on to beef up their revenue streams are car loans, credit cards, personal loans and wealth management. RAM Ratings head of financial institution ratings Promod Dass said the relatively low interest rate environment had fuelled consumer lending, which represented more than half of the banking system’s loans. Malaysian Rating Corp Bhd vice-president and head of financial institution ratings Anandakumar Jegarasasingam said the main challenge for banks would be to ensure the asset quality of household loans. Ernst & Young Malaysia partner (Assurance) Chan Hooi Lam foresee consumer banking facilities like car loans, purchase of residential properties and credit cards to continue its growth momentum into next year. RHB Banking group director of retail banking Renzo Viegas said that apart from credit cards, the focus would also be in debit cards as the bank saw tremendous growth potential in this area.

Saudi Basic Industries Corp will be granted a $1 billion credit facility by Alinma Bank, plugging a financing gap at the world's biggest petrochemicals group.

The facility aims to enhance SABIC's financing performance, boost competitiveness and help achieve its expansion and growth stategy.

The GCC conventional bond market recorded a poor performance in the first quarter of 2010 amid Dubai-linked and broader sovereign debt fears, NCB Capital, the largest investment bank in Saudi Arabia and a subsidiary of National Commercial Bank, reported.

Primary issuance fell by some 70 percent in value from the average of the previous three quarters to $3.4 billion and the GCC Sukuk market stalled even more sharply in marked contrast to global trends.

Sentiment was shaken by high-profile events such the disputes associated with the 100 million TID Global Sukuk issued by Kuwait’s Investment Dar and the Dubai World debt moratorium.

Both cases heightened market uncertainty and raised broader concern about Sukuk structures and the lack of widely accepted mechanisms for dealing with default-type situations.

Further anxiety was caused by rising sovereign risk worries in Europe, which spilled over into the conventional bond markets.

Aayan Saudi Leasing launched its business in Saudi Arabia with the opening of its headquarters on Madinah Road, Jeddah.

Engineer Emad Rajab asserted that the company's operations in the Saudi market comes as a continuation of its long success which started 10 years ago in Kuwait. Aayan is one of the largest companies working in the field of operating lease and retail in Kuwait, noting that the company aspires to achieve a similar performance in the Saudi market and the GCC, as well.

The company also provides comprehensive insurance services, towing services, excellent warranty service, trading and selling of new and second hand cars.

Bahraini investment house Arcapita plans to build a fund management business to complement its private equity operations after that segment was badly hit by the financial crisis, its chief executive said.

CEO Atif Abdulmalik told Reuters the firm plans to manage $10 billion worth of funds within three years and expects to generate half its revenues from recurrent fees earned on managing these funds.

Arcapita, which had $4 billion in assets as of year end, would launch a $750 million fund focusing on Asian infrastructure over the coming weeks, he said.

The company launched in February a $500 million Gulf property fund together with the investment arm of Saudi Arabia's Al Rajhi Bank.

Bahraini investment houses relied on earning up front fees on money they raised for private equity and property deals, a market which was swept away by the burst of the Dubai property bubble late in 2008.

While most of Arcapita's investments are outside the region, its income from placing them with investors in the Gulf dried up last year.

Kuwait's troubled Islamic investment firm Investment Dar said it posted a loss in 2008 as authorities allowed it to publish its result after a one-year delay.

The company which has debts worth an estimated three billion dollars, said on the Kuwaiti bourse website that it lost 279 million dollars in 2008 after a net profit of 458 million dollars the previous year.

Kuwait's central bank had prevented Dar from publishing its results after objecting to the company's asset valuations in 2008 amid reports that they were inflated. Permission to publish the 2008 figures only met after a number of demands. Results for 2009 has not yet been published.

Dar's assets declined from 4.37 billion dollars in 2007 to 4.16 billion dollars in 2008. The value of shareholder equity dropped to 700 million dollars from 1.35 billion dollars.

In December, Kuwait's top investment firm Global Investment House struck a deal with creditors to restructure loans worth more than 1.7 billion dollars.

Investors are betting Dubai World will pay off $980 million (Dh5.5 billion) sukuk issued by its property arm Nakheel to avoid a default as it negotiates a debt restructuring proposal with creditors worth about $24 billion. The sukuk, or Islamic bond matures May 13.

According to Zawya.com's Sukuk Monitor, Nakheel's sukuk is up 4.5 per cent since the beginning of April and closed at Dh98 on Monday in which it is up almost 85 per cent since the start of March.

People are expecting repayment, however Dubai World, owned by Dubai's government, declined to comment on the prospects of the sukuk being paid off.

Last month, Dubai World offered a debt restructuring proposal to creditors. The sukuk due in May comes after another $3.52 billion bond issued by Nakheel was paid off last December. In the weeks before that bond matured, hedge funds bought up the debt, hoping to go after the international assets of Dubai World, which had guaranteed the bond.

Deutsche Bank AG announced today the formation of Deutsche Gulf Finance, a joint venture Shariah-compliant home financing company owned 40% by the Bank’s Riyadh Branch and 60% by a group of prominent Saudi-based investors, led by Fahad Abdullah Abdulaziz Al Rajhi.

The Company has an initial capitalization of approximately USD110 million, and at first will provide Shariah-compliant home financing for properties located in Saudi Arabia, with plans to expand its operations into Bahrain, Qatar and Kuwait over time. Deutsche Gulf Finance has commenced financing completed units as well as those under construction on individual lots or at real estate developments.

The launch of Deutsche Gulf Finance comes at a pivotal time for consumer finance in Saudi Arabia. According to Deutsche Bank Research, the total outstanding home finance provided by the private sector in Saudi Arabia aggregates to less than 1% of GDP compared with well over 50% in most developed countries, and approximately 6% in Kuwait and 7% in the UAE.