Regional banks are looking to capitalise on Morocco’s plans to introduce Islamic banking (also known as participation banking) services in the country. Morocco’s central bank, Bank Al Maghrib, is developing the regulatory framework for the industry to be ready by 2016.
Islamic wealth management is going to become be the “new frontier” for the global Islamic finance industry as a growing number of Islamic high-net worth individuals keeps looking for Shariah-compliant types of investment. According to Thomson Reuters’ Global Islamic Asset Management Outlook 2015, Islamic funds – which are already a $60bn industry – are forecast to grow to at least $77bn by 2019, but the latent demand for Islamic funds is projected to grow even higher to $185bn, highlighting “substantial growth opportunities” for an industry that is supposed to struggle to reach its potential in the near- to mid-term to bridge the $108bn demand-supply gap.
Reforms to takaful regulations across the Arabian Gulf are helping to improve the creditworthiness of companies in the loss-making industry, according to the ratings agency Standard & Poor’s.
Legal changes will cause short- term pain to the region’s Islamic insurers – but the rewards will be “better capital management, liquidity, internal controls, and corporate governance”, S&P said.
“We have seen more maturity in private equity in recent years with sellers better understanding the value these transactions can bring beyond just capital raising. They also view it as a preferable option to IPOs [initial public offerings].
Following the successful issuance in 2014 of a five year $1Bn Sukuk which attained an order book of $4.7Bn. The AA stable (S&P) / Aa1 stable (Moody's) / AA+ stable (Fitch) Government of the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR) will begin investor meetings on 18 May.
Analysts expect consolidation in the United Arab Emirates' takaful sector with new regulations, low margins and a highly fragmented takaful market, reported The National.
"[Takaful] companies should recognize that at the current scale of their businesses, they should merge," said an official. Reuters reported that many takaful firms have approached the U.A.E. Insurance Authority to seek approval for mergers. Mergers would "absolutely" be a boon for the ratings of the country's takaful firms, said an A.M. Best Co. Inc. official.
The United Arab Emirates is poised to take its biggest step yet in the race to tap the global Islamic finance industry. The nation plans to set up a federal Shariah board by the end of the third quarter, according to Khalid Bin Abdul Aziz Al Janahi, adviser at the Dubai Islamic Economy Development Centre. The board, comprised of scholars that pass religious decrees on whether a financial product conforms with Islamic tenets such as a ban on interest payments, will help meet the “huge need” to unify standards and contracts in the industry, he said. Malaysia, which has the biggest market for Islamic bonds in the world, established its board in 1997.
The upside for sovereign sukuk issuance in GCC countries is limited in 2015, according to Standard & Poor's (S&P) Ratings Services.
Although S&P expects lower oil prices to lead to fiscal deficits in some countries in the GCC, most governments' net asset positions will likely remain strong enough to enable their financing.
The rapid development of Islamic financial institutions and markets have enabled the penetration of mainstream finance and gaining relevance to global economic and financial flows, the National Commercial Bank said in its Saudi Economic Review for the month of January 2015.
On the Islamic equity front, the S&P 500 Shariah index ended 2014 standing at a record 1801.9, thus surging by 11.2% on a YTD basis. The USD 3-month murabahah deposit rate, the equivalent of an interbank offered rate, stood unchanged at 0.65% in 2014 compared to the 3-month LIBOR which averaged 0.23% on USD deposits in the same year.
Global sukuk issuance could be hampered this year by a slowdown in emerging markets as reduced confidence and low oil prices hit investor demand, the ratings agency Standard & Poor’s warns.
Between US$100 billion and $115bn of sukuk will be issued in 2015, S&P expects, roughly the same amount as over the past two years – confounding analyst estimates of double-digit growth for Islamic finance assets.
- Islamic Banking Operations
- Regulation and Supervision
- Capital Market Operations
- Securisation and Sukuk
- Takaful - Islamic Insurance
- Video Zone
- Events Agenda 2016
- Education and Training