Sukuk takes record share in Q1

According to Fitch Ratings the total new Sukuk issuance (with a maturity of more than 18 months) in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around US$11.1 billion (RM42.9 billion) in the first quarter of 2016. Fitch said that Sukuk issuance was up 22% from Q4’15 and 21% from a year earlier, while non-Sukuk bond issuance of US$17.1 billion was down 23% quarter-on-quarter and 45% year-on-year. Sukuk represented 39.3% of total bond and Sukuk issuance in these countries during the quarter – the highest proportion in the past eight years.

Around 98% of GCC firms belong to families

According to a Saudi study, nearly 98 per cent of the companies operating in Gulf oil producers are held by families. This means that they could collapse unless they are turned into joint stock companies. The study, authored by Saleh al Sarei, a member of the trade panel at the Jeddah Chamber of Commerce and Industry, said that although some of the GCC companies were successful, they were suffering from a high degree of courtesy, which was affecting their performance.

BoA ML Report on GUlf Countries: GCC 2020: Time to shift gears

Bank of Amercia/Merrill Lynch released a report about GCC 2020 looking at the core trends of modernising infrastructure, growth and decoupling from oil and that the region should look towards higher value added sectors. "First, and most immediately, we believe heavy investment in petrochemicals will now begin to see improving returns due to their global competitive advantage. Second, we believe a shift will require an ongoing need to invest in regional infrastructure. Third, we see a social and economic need for a growing middle class, supporting the growth of consumer sectors. Our message: own Saudi petchems, own GCC builders and building materials, own Saudi and UAE consumer plays, own Saudi banks."

Foreign sukuk issuance in Malaysia likely to rise by 30%

Foreign issuance of sukuk in Malaysia is anticipated to increase by 25%-30% next year from 10%-15% currently owing to the global economic calamities and eurozone sovereign debt crisis.
Amanie Advisors Sdn Bhd director Baiza Bain noted that the sukuk issue would be US dollar and ringgit denominated issues mainly from the Gulf Cooperation Council (GCC) and Europe.
Asian Islamic Investment Management Sdn Bhd CEO and executive director Akmal Hassan has a positive outlook regarding the fact that the Government's pump priming activities would ignore impact from the tough external environment and this would augur well for the local economy and Islamic investment.

GCC corporate banking on recovery track, says The Boston Consulting Group

The latest report by the Boston Consulting Group (BCG) shows that GCC corporate banking profitability is on its way to recovering from the turmoil of the financial crisis.
Altough, as Loan Loss Provisions (LLPs) culminated in 2009 and corporate banking profitability consequently declined to levels below those of 2007, LLPs began to decrease in 2010 and have continued to decrease in the first half 2011.
Saudi Arabia has been at the center of this upward profit trend with the greatest annual increase in corporate banking profitability at 45% per year since 2009. Other GCC countries have shown a flat trend in profitability with the exception of Bahrain.

Yemen’s Islamic banks welcome GCC-brokered deal

Bankers embraced the GCC backed peace deal after nine months of sometimes viciously violent fighting in Yemen’s own take on the ‘Arab Spring’, a new government of reconciliation being sworn in to replace President Saleh’s regime in Yemen.
It’s still too early for the Islamic banks to talk about improoving full operations, but Saeed al-Qurashi, head of research at Saba stated that business is picking up as the unrest fades away and the reconstruction begins.

Islamic finance solves economic problems, says KFH-Bahrain CEO

According to Kuwait Finance House-Bahrain CEO and MD, Abdul Hakim Al-Khayyat, Islamic banking has many advantages and capabilities that are giving it permission to play an important role in solving many economic problems in the GCC.
Al-Khayyat underlined the fact that Islamic banking is not operating at full swing yet, either as a result of lack of legislations or opportunities. Furthermore, he notified that governments need to launch more Sukuk, so they can provide short-term liquidity instruments.
However, since legislations that organise the issuance of Sukuk in some countries don't exist, this significant instrument has been presented as extinct, which consumes the efforts of Islamic banks to help markets overcome their crises.

Yemen’s Islamic banks reopen

It seems that things will have a positive outlook for Yemen’s Islamic banks.
When pitched battles between pro- and anti-Saleh forces erupted in downtown Sana’a, the banking sector froze.
Tadhamon International Islamic Bank and the Islamic Bank of Yemen for Finance and Investment have still 80% of the banking sector’s activities paralyzed.
The GCC deal is centered on rebuilding the country, which has been crippled by 10 months of unrest.

GCC issues $3.2b sukuk in third quarter

A study conducted by National Commercial Bank (NCB) showes that Gulf Cooperation Council member countries launched bonds worth around $20.9 billion in the first nine months of 2011, slightly lower than their value in the same period of 2010.
It added that even though the general mood of the sukuk market has turned very positive, new mainstream primary activity (closed issuances) in the Gulf was still restricted to four corporate issuances with an aggregate value of just under $1.6 billion, not an impressive figure by historical standards but more than 10 times the total conventional issuance seen during the quarter.

KFH Research: A Critical Support Role in the Islamic Finance Industry

KFH Research Limited (KFHR) is planned to be the world's first Islamic investment research arm to be established by an Islamic bank (Kuwait Finance House).
KFHR's core strength is in its Islamic finance research and advisory works. It works closely with the Central Bank of Malaysia (BNM), IFSB, various Government linked organisations in Malaysia and the GCC; and are also exploring common research with the IMF.

Sukuk bonds still in demand

In spite of the fact that the Gulf bond market remains controlled, demand is still there, especially for sharia-compliant investments. The proof comes from an oversubscribed bond offering from a small Emirati bank.
Issuance in the GCC so far this year have been largely limited to sovereigns or sovereign-backed entities. The main reasons for this are the unrest in the Middle East.
Standard & Poor’s shows that only 6% of sukuk in the first quarter of the year were from corporate.

Oman Heralds the Dawn of a New Era with the Introduction of Islamic Financing

Majesty Sultan Qaboos approved the creation of a new Islamic bank as well as the ability of conventional banks to open branches dedicated to Islamic financing. There has been multiple desires within the Omani and international community to do business in Oman in a Shari'ah compliant way. The announcement is seen as a significant milestone in promoting interstate investment and financing by the business community of Oman and the GCC member countries.
This development is important because a series of guidelines to be released by the Central Bank of Oman (CBO), outlining the change in policy towards Islamic financing is expected. This development will enable both local and international players to tap into new business opportunities.

BLME to start Bahrain operations

Bank of London and The Middle East (BLME) has received a licence from the Central Bank of Bahrain (CBB) to open its regional office in the Kingdom.
LME provides a wide range of services and advice to businesses and individuals, with a strong focus on Europe, the Mena region, as well as the US.
The opening of the Bahrain office, BLME’s first overseas office in the Gulf region, reinforces its ambition to provide a bridge between the UK and the GCC to offer a range of investment opportunities to the global investment community.

Total provisions booked by GCC banks since start of crisis reached $11.7b

In a presentation for the performance of the GCC banking sector, KIPCO Asset Management Company (KAMCO) Research Department presents a detailed analysis for the financial statements for 58 banks with the purpose of shedding the light on the repercussions of the crisis on the financial position of the banking sector in the GCC Region which represents a key sector for any country's economy.

Moreover, total provisions booked by the GCC banking sector since the start of the financial crisis in September 2008, have reached USD 11.7 billion of which USD 4.72 billion or 40% booked by Kuwaiti banks. It is worth noting that the provisions of Gulf Bank reached USD 1.76 billion, representing 37% of the total provisions booked by Kuwaiti banks since the start of the financial crisis in Sep-08.

Total provisions booked by GCC banks since start of crisis reached $11.7b

KIPCO Asset Management Company (KAMCO) Research Department had carried out a presentation of the performance of GCC banking sector by analysing the financial statements for 58 banks with the purpose of shedding the light on the repercussions of the crisis on the financial position of the banking sector in the GCC Region which represents a key sector for any country's economy and the analysis revealed as follows:
During 2008, GCC banks have witnessed record levels of provision for doubtful loans where together recorded total provisions of USD 7.1 billion. Provisions booked during FY 2008 represent a notable 243% increase from those booked during 2007 which recorded USD 2.1 billion, while provisions that had been booked during 2006 recorded USD 1.44 billion

Islamic finance looks attractive to shipping industry

Islamic finance in the GCC is emerging as a credible alternative source of ship finance.

GCC Islamic insurance sector set to grow 25%

Ghazanfar Ali Khan reported in Arab News on 22 January that the Islamic insurance (Takaful) market will grow five fold over the next 10 years while the market for Shariah-compliant insurance will be worth USD 14 bn by 2015 being said at an Islamic insurance conference. Since 2000, Islamic insurance has been growing at more than 15 percent per annum, yet the market is still at its tip, especially in the Middle East and Southeast Asia, said a report released on the occasion.

According to the report, insurance premiums paid in Muslim nations are equal to between 0.5 percent and 5 percent of gross domestic product. That compares with between 10 percent and 15 percent in developed markets. The event has been organized by the Islamic International Foundation for Economics and Finance, an affiliate of the Muslim World League, in cooperation with the Islamic Research and Training Institute.

Swiss banks going onshore in the Middle East

Andrew White reported in Arabian Business on 11 April about Swiss banks going onshore in the Middle East.

Pasha Bakhtiar, managing director at Lombard Odier Darier Hentsch (LODH) focusses over the next 10 to 20 years to grow the presence in areas with strong wealth creation, which is the case in the Middle East. Last year the bank established a formal presence in Dubai to better offer its services to existing and new clients in the GCC. Lombard sees an advantage in being a family owned bank like the family businesses in the region.

Hans Nützi, CEO at Clariden Leu agrees that Private Banking becomes more international opposed the way clients banked 5 to 10 years ago. Clariden Leu has a local 13 people asset management team in Dubai and sees demand for structured products.


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