Business Intelligence Middle East


S&P report discusses whether #Fintech could disrupt GCC banks' business models

S&P Global Ratings believes that financial technology could reduce the profitability of some business lines of Gulf Cooperation Council (GCC) banks. S&P's credit analyst Mohamed Damak said fintech could impinge on retail banking, particularly money transfer and foreign-currency exchange. This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization. He added that fintech alone is not expected to have a significant influence on GCC banks ratings in the next two years. He believes that banks will be able to adapt to the changing operating environment through collaboration with fintech companies and cost-reduction measures. Furthermore, regulators in the GCC will continue to protect the financial stability of their banking systems. Fintech is not yet a negative rating driver. However, it will increasingly become a force to be reckoned with.

Fitch: Tougher operating environment challenges #Saudi Islamic banks

According to Fitch Ratings, a tougher operating environment is continuing to challenge Saudi Islamic banks. Sustained low oil prices have taken their toll on economic growth and government spending and this affects certain sectors. Asset-quality metrics are likely to deteriorate from their current strong position due to slower Islamic financing growth. Islamic banks accounted for about 43% of the sector at end-1H16, up from 36.6% in 1H15. There are 12 licensed commercial banks in Saudi Arabia. Four are fully sharia-compliant, with the rest providing a mix of sharia-compliant and conventional banking products. The performance and credit matrices of Islamic and conventional banks are similar in many ways due to the largely Islamic finance nature of the lending market in Saudi Arabia.

DFSA launches #crowdfunding framework

The Dubai Financial Services Authority (DFSA) launched its regulatory framework for loan and investment-based crowdfunding platforms. The DFSA crowdfunding regulations have the ability to catalyse growth in the FinTech industry by targeting the specific requirements of crowdfunding platforms. The regulations ensure clear governance for FinTech businesses and provide appropriate protection for their customers. They also formalise the DFSA’s approach to regulating crowdfunding platforms which had operated since 2016. Data provided by the Khalifa Fund shows that approximately 50-70% of SMEs have had their applications for funding from conventional banks rejected. Crowdfunding is expected to grow further in importance in the UAE as entrepreneurs seek alternative sources of funding.

Arabia CSR Network successfully conducts Middle East's first ever training on global standards for #sustainability reporting

The Arabia CSR Network (ACSRN) conducted the Middle East's first round of training for Global Reporting Initiative (GRI) Standards for Sustainability Reporting. The course covered GRI Standards, including an overview of how to implement these standards. According to Habiba Al Marashi, CEO of ACSRN, the move demonstrates the increasing importance of sustainability reporting. The training focused on the frameworks of the standards, how to apply these in actual reporting and the process of putting together a GRI Standards compliant report. The training will allow the participants to use the right methodology for putting together their sustainability reports. Participants received a certificate each, presented by GRI for successful completion of the course.

Fitch: Index move boosts #sukuk; frameworks & standards still key

According to Fitch Ratings the inclusion of sukuk in major bond indexes would be a significant boost for the product, but initiatives to harmonise standards and improve transparency remain key to its long-term development. Reuters reported that JP Morgan would include eight sovereign and corporate sukuk in various bond indexes from 31 October. This may encourage issuers to supply index-eligible sukuk and support secondary market liquidity. However, Fitch Ratings believes the sukuk market's growth rate will be determined by two factors. Firstly, product-specific initiatives around regulation of sukuk issuance, which have been noteable in some jurisdictions, but have not always been harmonised across jurisdictions. Secondly, the broader attempts to deepen the investor base and improve transparency in the relevant capital markets. Sukuk issuance from key markets in 1H16 rose 11% from a year earlier to USD21.74bn, representing 30% of total issuance. Overall, Fitch expects this year's sukuk issuance to at least match 2015 issuance of around USD32bn.

GFH Capital acquires market leading bread and sweets producer in Saudi Arabia

GFH Capital has agreed to acquire a market leading bread and sweets producer in the Kingdom of Saudi Arabia (KSA) for a transaction value of US$50 million. The Company was established in 1984 and is a leading industrial scale producer of bread and sweets, employing 300 staff and supplying to over 3,000 clients across the Kingdom through its distribution network. The Company has reported strong, consistent growth year after year with revenues increasing at a CAGR of 11% between 2010 and 2014. The company is expected to maintain this level of growth over the investment period. GFH’s strategy is focused on investing in cash yielding opportunities in defensive sectors that have sound growth potential.

IFC-backed report finds growing supports for entrepreneurship in MENA

A new International Finance Corporation (IFC)-supported report by Wamda Research Lab finds that although support for entrepreneurs and start-ups has grown substantially across the Middle East and North Africa, many challenges remain, hindering job creation and economic growth. In Exploring Conditions for Entrepreneurs in Egypt, Jordan, Lebanon, and UAE Wamda surveyed nearly 500 entrepreneurs from the four countries, which have seen the majority of entrepreneurship development initiatives in the region. The report looks at the main trends in entrepreneurship and the challenges entrepreneurs face in growing their businesses. Access to finance is one of the main challenges cited by entrepreneurs in the report.

Ratings on Saudi Arabia lowered to 'A+/A-1'; outlook remains negative

On Oct. 30, 2015, Standard & Poor's Ratings Services lowered its unsolicited long- and short-term foreign- and local-currency sovereign credit ratings on the Kingdom of Saudi Arabia to 'A+/A-1' from 'AA-/A-1+'. The outlook remains negative. At the same time, S&P revised its transfer and convertibility (T&C) assessment on Saudi Arabia to 'AA-' from 'AA'. Standard & Poor's has converted its sovereign credit ratings on Saudi Arabia to "unsolicited" following Saudi Arabia's decision to terminate its rating agreement. A pronounced negative swing in Saudi Arabia's fiscal balance has prompted our downgrade. The kingdom has run fiscal surpluses over the 10 years to 2013 (averaging 13% of GDP).

Beehive P2P finance platform obtains independent Sharia certification from Shariyah Review Bureau

Beehive, UAE’s online marketplace for peer-to-peer (P2P) finance, has been certified as a Sharia-compliant P2P finance platform by the Shariyah Review Bureau (SRB). The SRB review was conducted over a period of several weeks in June and July 2015 during which SRB’s Sharia scholars reviewed all operational processes, documentation, and relationship management on Beehive’s Islamic platform. As the first online marketplace for P2P finance in the UAE, Beehive has channelled over AED 15 million ($4m) worth of finance to more than 32 small and medium-sized enterprises (SMEs) since its launch in November 2014. Finance requests on Beehive are processed under a ‘Commodity Murabaha’ structure, using the ‘DMCC Tradeflow’ platform.

Gulf-based Islamic banks grapple with weakening regional economies

After delivering strong results in 2014, Islamic banks in the Gulf region face a gradually weakening operating outlook in 2015-2016, largely due to declining oil revenues, says a report published today by Standard & Poor's Ratings Services. But as the report, titled "Gulf-Based Islamic Banks Grapple With Weakening Regional Economies," also points out, we believe investor demand for Sharia-compliant products and supportive government actions will enable Islamic banks in the region to continue to grow. In S&P's opinion, the two most important factors influencing the Islamic banks' faster growth are an increasing demand for both retail and corporate Sharia-compliant banking products and government initiatives designed to support Islamic finance.

UAE and Saudi lead private equity & venture capital investments by value in MENA region

The MENA Private Equity Association has launched its ninth “MENA Private Equity & Venture Capital” Annual Report. According to the Report, 2014 was a significant year for the industry and has demonstrated the highest levels since 2008 in investment values and fund raisings. 2014 has also seen growth in investment and divestment volumes compared to 2013. The year was characterised by some of the largest private equity deals seen in the region. Fund managers had demonstrable success in assembling and working with consortium partners, including international private equity investors, to close major transactions. Overall, there was a sense of returning confidence and increased opportunities as the region continued to emerge from the impact of the Arab Spring.

Takaful operators struggle with growth and profitability, finds A.M. Best report

The significant premium growth in the global takaful sector is expected to continue and reach USD 20 billion by 2017, with the majority of that increase originating from Malaysia and Saudi Arabia, according to a new A.M. Best special report. The Best’s Special Report, titled “Takaful Operators Struggle with Growth and Profitability,” also notes that despite the rapid growth of takaful on a global basis, it has struggled to take hold in Middle East markets, other than Saudi Arabia, which are considered to be concentrated with a few large players dominating their respective markets. To access a copy of this special report, please visit

PwC Middle East family business survey shows need to 'professionalise' the family as well as the business

Family businesses must adapt faster, innovate sooner and become more professional in the way they run their operations if they are to remain successful. These are some of the findings of the second PwC survey of 44 family firms in the Middle East, titled The family factor: Professionalising the Middle Eastern family firm. Overall, this year’s survey indicates that family firms remain dynamic and resilient. Indeed, family businesses in the Middle East have been markedly more successful than their global counterparts. Middle East family businesses are also more ambitious in the medium term. The report can be downloaded at

Why Saudi Aramco Entrepreneurship Center, Wa'ed, invested in PayTabs

One of the major reasons why Saudi Aramco's investment wing Wa'ed became a partner in PayTabs was because PayTabs has the ability to build entrepreneurs in Saudi Arabia. PayTabs can help build businesses and make entrepreneurs by tackling one of the major problems people face when they start an online business; collecting payments online. PayTabs is a payment gateway with its instant online invoicing system PayPage and ready to integrate eCommerce APIs/Plugins. PayPage can be used even without a website. With additional features like Express CheckOut, PayTabs has introduced some features enabling the customer to pay without leaving the merchant's website.

Saudi Arabia said to weigh opening kingdom's debt markets

Banks with experience arranging Islamic bond sales may stand to benefit from the potential opening of Saudi Arabia’s debt market to foreign investors. There’ll be a lot of potential for non-Saudi banks to get involved on the advising and arranging side. Besides, they’re also some of the biggest sukuk buyers. Saudi Arabia is working on new rules aimed at promoting the local currency bond and sukuk market. The rules are expected to allow foreign investors to buy local currency bonds for the first time and could be published early next year. The new rules for the debt markets are also expected to stipulate that ratings companies will need to have a local presence to rate domestic securities. Saudi Arabia is de facto leader of OPEC and plans to remove some restrictions to lure capital to the $745 billion economy.

Kuwait Finance House tops banks locally

Kuwait Finance House (KFH) has taken the top spot among banks locally and the 161st place globally, among the list of the top 1000 banks worldwide issued by "The Banker" international magazine. It’s worth noting that KFH’s leadership and the diversity of its investments through presence in various areas of investment as well as the global expansion provides the bank with investment opportunities. KFH posted in the first half of this year a gross profit of KD 144.032 million (USD 510.887 mln), and net profit for shareholders was KD 54.568 million (USD 193.555 mln) with an increase of 10% over the same period last year. Total Assets increased by 11 % over the same period last year to reach KD 16.7 billion (USD 59.3 bln), shareholders’ equity reached KD 1.7 bln (USD 6.1 bln).

Flagship report on Arab food security to be presented at AFED seventh annual conference in Amman

The Arab Forum for Environment and Development (AFED) announced that its upcoming seventh annual conference will be held on 26-27 November 2014 at the Royal Convention Centre at Le Merdien in Amman. The theme will be food security options in Arab countries, based on a comprehensive report on the subject which AFED is preparing in cooperation with a group of experts at research and policy centers. The AFED Food Security report aims to provide an overview of the state of agricultural resources in Arab countries, and discuss the role of science and technology in enhancing water and food security. Experts are preparing case studies on vital issues such as virtual water trade in the GCC countries, marginal land productivity in the Badia of Jordan, and Morocco green plan, among many others.

Global Islamic banking assets set to exceed US$3.4 trillion by 2018

Global Islamic banking assets with commercial banks are on course to exceed US$3.4 trillion by 2018, fueled by growing economic activity in core Islamic finance markets. Across the six markets of Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey (QISMUT), the combined profits of Islamic banks broke the US$10 billion mark for the first time at the end of 2013. If the current growth rate continues, the Islamic banking profit pool across QISMUT markets is set to exceed US$25 billion by 2018. There is significant growth potential for the industry. Only a small number of Islamic banking customers have fully transitioned from a traditional to an Islamic banking relationship.

Global primary sukuk market off to a solid second quarter start as April's issuances volume exceeds US$13.4 billion

The global primary sukuk market has begun 2Q2014 on a solid footing as the month of April has produced a new issuances volume of more than USD13.4bln, making it the best performing month in 2014 year-to-date (YTD). The month saw a welcoming return of the Gulf Cooperation Council (GCC) sukuk issuers who expanded their volume with issuances totalling more than USD4bln. Issuances by GCC based obligors helped shore up the share of corporate sukuks which accounted for USD2.4bln of the total issuance volume in April, registering a 65% increase compared to March. However proportionately, the market continued to be heavily driven by the sovereign and quasi-sovereign issuers who collectively accounted for approximately 82% of the issuance volume in April

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