Monday, 26 January 2015

Event Summary (KLCIF2015) - KL Conference on Islamic Finance 2015

KL Conference on Islamic Finance 2015

Date    : 17-18 March 2015
Venue : Grand Seasons Hotel, Kuala Lumpur - Malaysia

“An international gathering of practitioners, scholars and experts to discuss and share their knowledge, expertise and experience on the principles, instruments and issues related to Islamic finance, to be held at the world’s leading Islamic financial centre…Kuala Lumpur.”

Event site :

- Product development and Implementation of Islamic financial products
- Ensuring Shariah compliance in Islamic financial instruments
- Sukuk: development, issues and challenges
- Islamic gold account: a golden opportunity
- Islamic mutual funds (unit trusts): factors to consider in making an investment
- The rise of Islamic wealth management in Islamic finance industry
- Islamic financial planning: success in both worlds
- Takaful: innovation and solutions
- Enterprise risk management for Islamic banks
- Enterprise risk management for takaful operators
- Accounting and auditing
- Human capital development in Islamic finance industry
- Legal issues and challenges in Islamic finance
- Dispute settlement in Islamic finance: issue and solutions
Islamic ethics in financial services industry
- Corporate governance for Islamic finance industry


Speakers are selected from Islamic banks, takaful operators, academicians, legal practitioners, consultants, regulatory bodies.

Among the speakers are:

- Islamic bankers/bankers
- Takaful/insurance operators
- Regulators
- Head of governmental departments
- Financial planners/wealth advisors
- Financial consultants
- Legal practitioners (lawyers)
- Academicians (lecturers)
- Entrepreneurs (businessmen/importers/exporters etc)
- Other professionals 

Early Bird Fee: 
Registration with payment by 17 February 2015
Malaysian   :  RM1,500
International  :  USD600

Normal Fee:
Registration with payment after 17 February 2015
Malaysian  :  RM1,800
International  :  USD700
Special fee for Malaysian university lecturers :  RM1,000 (group discount not applicable)

Fee is inclusive of lunch, refreshments and seminar package only.

Group Discount:
Enjoy 20% discount for third and subsequent delegates registered from the same organisation and the same billing source.

(will be uploaded soon...for now you may request for tentative program or you will be given a tentative program when register online)

 Download the brochure




Grand Seasons Hotel, Kuala Lumpur - Malaysia


Kuala Lumpur


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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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.
( / 25 January 2014)
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Saturday, 24 January 2015

The Time is Now for Japan and Islamic Finance

Dubai, UAE, January 23, 2015 -- Camille Paldi, CEO of the Franco-American Alliance for Islamic Finance, while on a trip to Tokyo, Japan commented that Japan is an emerging Islamic finance powerhouse and East Asian hub for the billion dollar Islamic finance industry. Japan has traditionally been known as an economic powerhouse and East Asian Tiger and therefore this Islamic finance role is fitting with the image of Japan as an economic and financial giant. 

In addition, the sword exterior and chrysanthemum interior of Japan (The Sword and the Chrysanthemum) is quite conducive to the soft interior of Islamic finance, which is being played out in an extremely competitive global marketplace. The competition for investments from cash-rich Gulf and Asian investors is fierce. 

However, with Japan’s discipline and hard work ethic, Paldi is confident that Japan can become a major player in the Islamic finance industry. In addition to the Japanese government, the Japanese keiretsu, similar to the South Korean Chaebol, are interested in issuing sukuk to raise capital for Japanese businesses and to increase their competitiveness in domestic and global financial markets. 

Islamic finance is definitely on the horizon of the Land of the Rising Sun.

According to Tariqullah Khan, Japan’s interest in Islamic finance began in 2005. Khan explains that Japanese financial institutions cooperated with Islamic financial institutions in Malaysia and the UAE as a means of indirect expansion and that Islamic finance has been used as a method to attract investment from Islamic investors into Japan. 

The first sukuk was issued by Aeon Credit Services in Malaysia in 2007. Next, in 2010, Nomura Investment Company issued sukuk in US$. 

In 2012, Toyota Motor Corp. sold USD$88 Million of sukuk in two offers via its unit Toyota Capital Malaysia Sdn. due for maturity in May 2015. In 2014, Bank of Tokyo-Mitsubishi UFJ (Malaysia) Bhd, a member of the financial group that is part of Japan’s biggest lender by market value, set up a $500 million multi-currency sukuk program and is also considering the world’s first yen denominated sukuk.

In 2007, Japan amended FIEL, which is the Financial Instrument and Exchange Law and in 2008, the Banking and Insurance Business Law was amended enabling subsidiaries of Islamic IFI’s and banks to engage in Islamic financial transactions in Japan including ijarah and murabahah sukuk. In 2009, the rules were changed so that interest income would be tax free when an overseas sovereign fund invested in Japanese bonds or deposits. 

In addition, in 2011, the Asset Securitization Act was amended so that the ijarah sukuk would be considered as a special bond type beneficial interest issued by SPT or the Specified Purpose Trust. Before this reform, when a Japanese company issued sukuk to foreign investors, the distribution of profits of sukuk were subject to a 15% withholding tax while conventional bonds remained at 0% tax. 

Now, tax exemption is given to foreign investors who purchase bond type beneficial interests, which are quasi-bond beneficial interests of a specified purpose trust (SPT). The SPT was established under the Asset Securitization Law, which is the basis for the issuance of sukuk in Japan. 

Next in 2011, Japan tailored the tax system to the issuance of special bond type beneficial interest. In 2013, the Sunset Provision was enacted, creating a tax exemption for the distribution amounts of sukuk received by foreign investors and exempting registration tax on the repurchase of the real estate for the same sukuk, thereafter expired on that same day. 

In sum, Japan allowed the income of foreign investors to be tax exempt and initiated tax reform for the special bond type beneficiary interest; issuance, including exemption of income; withholding tax on profit distributions and gains on redemption, property registration, and acquisition tax. Japan has taken the necessary legislative and regulatory steps to make the East Asian Tiger Islamic finance and sukuk ready.

Japan is a member of the IFSB Islamic finance regulatory body and has agreements with the MIFC or Malaysia International Islamic Financial Centre in Malaysia and through JICA or the Japan International Cooperation Agency with the ICD or Islamic Corporation for the Development of the Private Sector to receive technical assistance in the issuance of sukuk. 

(WhaTech / 23 January 2014)
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Malaysia: Cagamas to seek new investors for first non-ringgit sukuk

KUALA LUMPUR: Malaysia's Cagamas Bhd will target new investors across the Middle East and Europe for its first foreign currency sukuk this year.
The state-backed mortgage lender set up a US$2.5bil multi-currency sukuk programme in November, after issuing conventional bonds in yuan, Hong Kong dollars and US dollars that year.
"We would have to look into new markets where we have not interacted with investors yet, for example, the Middle East, the greater part of Europe, Taiwan and Japan," chief executive officer Chung Chee Leong told Reuters in an interview.
Foreign investors may be more cautious after Malaysia cut its economic forecast and shrunk its budget for the year, to reflect lower revenues from oil and gas.
"You'll see some investors may choose to do a more stringent credit assessment before they invest in a Cagamas paper," said Chung.
"In our new issuance, we may need to engage with them more. They may have more questions, we'll be happy to answer." The company's fundamentals in terms of its capital position, asset quality and profitability were still strong, he added.
Cagamas is aiming to further diversify its investors and will seek more participation from sovereign wealth funds.
"It's important because it shows that they recognise us as a paper they can invest in. They have a more stringent criteria compared to the funds," said Chung.
Cagamas provides liquidity to primary lenders of housing loans to promote home ownership, by issuing bonds and sukuk to make those purchases.
It is Malaysia's second-largest issuer of debt instruments behind the government. The country's central bank, CIMB Group Holdings Bhd and RHB Bank own stakes in the company.
About 52% of its current portfolio is Islamic.
For its foreign currency issuance last year, the company had met investors in Asia and London to create awareness of its business model.
"What they want is diversity. The market was looking for issuers from emerging markets like Malaysia," said Chung.
The company hopes its move into foreign markets can set the price benchmarks for local bond issuers to follow suit.
"We want others to look at opportunities when it makes economic sense, for others to tap into those markets.
(The Star Online / 23 January 2015)
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Friday, 23 January 2015

Opportune time for corporates to issue sukuks in UAE

Dubai: Corporates in the UAE and the wider GCC region may prefer a bond issue as tumbling oil prices could crimp liquidity in the banking system.
Banks have been struggling to match the rates that sukuk markets provide. Senior sukuk yields are at 1.5-2 per cent currently as against bank loans that cost 2.7-3 per cent, Jaap Meijer, managing director at Arqaam Capital told Gulf News.
“It is more attractive to issue Islamic bonds than borrow from banks, given the strong investors’ interest. Already sukuks continue to be popular and banks can’t really match the rates the market provides,” said Meijer.
Sukuk issuance globally reached $116.4 billion in 2014 compared with $111.3 billion in 2013, and industry participants see more issuances this year.
The major driver would be crude oil, which fell more than 50 per cent in 2014, the biggest drop since 2008 financial crisis after the Organisation of Petroleum Exporting Countries (Opec) kept the output steady to counter US shale gas, triggering.
“The fall in oil prices could prompt governments to reduce their deposits held at the commercial banks, and this could reduce the availability of credit over time,” said Meijer.
“Though this may appear as the most liquid option for the government to tap into, it does have further reaching impact on the economy as lower deposits should translate into tighter liquidity, wider credit spreads, curbing bank lending and hence putting further pressure on GDP growth versus decreasing international reserves held elsewhere that does not have the same magnitude of an effect on the economy,” Meijer said.
A senior official at the Gulf Bonds and Sukuk Association also agreed. “If liquidity would tighten some what, that would drive more potential sukuk issuers to capital markets. I’m fairly bullish on more sukuk issuances. We may even see newer issuers coming to the market, said Micheal P. Grifferty, president of The Gulf Bonds and Sukuk Association.
Meanwhile, a Thomson Reuters survey of 44 lead arrangers and 106 investors had shown considerable confidence in the market about Sukuk issuances in 2015, with forecast figures ranging from $150-175 billion globally.
Successful reception
“Government that choose the path of sukuk issue would find it successful reception,” said Grifferty.
Saudi Arabia, and Oman budgeted a deficit for 2015 while increasing its spending, which analysts expect may give rise to more sukuk issuances from the governments.
“One of the silver lining of lower oil prices is that there could be more sukuk issuances as countries run budget deficits, they need to finance that. Also we would see tangible progress on subsidy reforms,” Mohieddine Kronfol, chief investment officer global sukuk and Mena (Middle East and North Africa) fixed income, at Franklin Templeton said on January 14.
The GCC region produces about $200 billion of debt a year, out of which $40-50 comes to capital market, said Franklin Templeton.
“So far the governments haven’t cut back spending at all in announced budgets. Only if the oil price stays this low for a prolonged period, would we see austerity measures being announced, affecting the private sector growth. We do not expect drastic fiscal austerity in GCC, despite double digit fiscal deficits in Saudi Arabia, Oman and Bahrain, though Oman and Bahrain are most vulnerable. We find that the UAE is very comfortable in terms of reserves,” said Meijer.

(Gulf News.Com / 22 January 2014)
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Tuesday, 20 January 2015

Islamic finance body IILM re-issues $860 mln sukuk

Malaysia-based International Islamic Liquidity Management Corp (IILM) has reissued $860 million worth of three-month Islamic bonds, or sukuk, the organisation said on Monday.
The auction drew 11 bids worth $1.065 billion, with the sukuk priced at a profit rate of 0.553 percent, according to a filing on the website of Malaysia's central bank.
The IILM last went to the market in November when it increased its outstanding sukuk programme, rated A-1 by Standard and Poor's, to $1.85 billion from $1.65 billion.
IILM sukuk are designed to meet a shortage of highly liquid, investment-grade financial instruments which Islamic banks can trade to manage their short-term funding needs.

Shareholders of the IILM are the central banks of Indonesia, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Turkey and the United Arab Emirates, as well as the Jeddah-based Islamic Development Bank.
(Reuters / 19 January 2014)
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