CIMB Singapore aims to approve S$100 mln Islamic loans for SMEs

KUALA LUMPUR: CIMB Bank, which started its Islamic commercial banking operations in Singapore last year, aims to approve S$100 million this year for the small and medium enterprises (SMEs) in the republic.

“We are targeting about S$100 million for SME financing this year.

“At the moment, we already have about S$30 million on our balance sheet with a healthy pipeline for the full year.

“The take-up rate of Islamic financing for SMEs has been encouraging although it is very early days for the industry in Singapore,” said Badlisyah Abdul Ghani, CIMB Group’s head of group of the  Islamic banking division.

He said the bank’s Islamic commercial banking operation has been growing in Singapore although the Muslim community makes up less than half of the population.

“It is not about whether you are Muslim or non-Muslim. It’s all about value proposition.

“When customers see there is good value in our Islamic finance products, they’ll take up these products,” he told Bernama in an interview.

The bank plans to roll out its Islamic retail offerings soon as it has put in place a new core banking system that caters to its operations.

“We are looking at bringing to the market sometime in the third quarter, our pioneering Islamic retail deposit products as well as our award-winning Islamic structured products first before looking at any retail financing products,” Badlisyah said.

In Indonesia, CIMB has rolled out close to 60 Islamic financial products over the last two years, which included products that were re-launched.

“When we first started, we have only about 11 products in CIMB Niaga Syariah.

“We have now included Islamic trade finance, Islamic commercial banking, corporate banking offerings and many more.

“As for retail offerings, we undertook a segmentisation exercise so that we can target different consumer segments.

“Our ArRahnu business launched last year has had good traction and we now have about 100 outlets across Indonesia,” he said.

Badlisyah said this year, the bank’s Islamic banking business in Indonesia would focus on building up the portfolio as it has all the relevant products in place for all types of consumers.

He also said that CIMB Niaga Syariah, the Islamic finance window under PT Bank CIMB Niaga Tbk, had staged another record year for its financial year ended Dec 31, 2011.

“The bank posted 70 per cent growth both in deposit and financing assets on year-on-year basis and is looking to do better in 2012,” he said.

CIMB Niaga Syariah is now the fifth largest Islamic financial institution and the largest of all Islamic windows, in terms of assets in Indonesia. There are 34 Islamic players in the market comprising stand-alone Islamic banks and Islamic windows. — Bernama

Tunisia Eyes Sukuk Share

TUNIS – Seeking to finance its budget deficit following last year’s uprising, Tunisia’s Islamist government is planning to issue the country’s first Islamic bonds (sukuk) this year.

“The Tunisian government is planning to issue an Islamic sovereign bond before the end of this year,” Adnan Ahmed Yousif, chief executive of Bahrain-based Al Baraka Banking Group, an Islamic banking conglomerate with operations across North Africa, told Reuters.

“They’re very serious about it and are now in talks with banks, said Yousif, who is also chairman of the Beirut-based Union of Arab Banks, an industry association.

“It will be Tunisia’s first sovereign sukuk.”

Sukuk, which conforms to Islam’s prohibition of usury, typically work as profit-sharing vehicles.

Firms that issue sukuk make payments to investors using profits from the underlying business, instead of paying interest.

The money, however, can’t be invested in alcohol, gambling, tobacco, weapons or pork.

Sukuk have often proved to be more stable than conventional bonds during the global financial crisis.

The sukuk market has reached $111.9 billion in the eight years to 2008, according to the International Islamic Financial Market.

Global sales of sukuk have reached $6.6bn in 2012, from $2bn a year earlier, according to data compiled by Bloomberg.

Islamic Hub

A sukuk issue could allow Tunisia to tap a pool of billions of dollars of Islamic investment funds in the wealthy Arab Gulf.

“I believe Tunisia has the potential to become the Islamic finance hub for Africa,” Yousif told Reuters.

“It’s working towards having all the requirements needed for that.

Tunisia’s government, led by the moderate Islamist Ennahda party, expects its budget deficit to rise to 6 percent of gross domestic product in 2012 from an estimated 4.5 percent for 2011 as it boosts spending to revitalize the economy after the ouster of president Zine Al-Abidine Ben Ali.

Before last year’s uprisings in North Africa, authoritarian governments restricted or refused to promote Islamic finance for political reasons.

In the wake of the regime changes, growth in the industry is expected to accelerate.

Egypt is reportedly preparing to raise about $2 billion through its first issue of sukuk this year.

Starting almost three decades ago, the Islamic banking industry has made substantial growth and attracted the attention of investors and bankers across the world.

A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.

Public Bank Bhd posts 3.6% increase in net profit

PETALING JAYA: Public Bank Bhd posted a 3.6% year-on-year increase in net profit to RM877mil for its fourth quarter ended Dec 31, 2011, and cited the improved performance as mainly due to higher net interest and net income from its Islamic banking business.


However, the bank told Bursa Malaysia that that this was partially offset by higher other operating expenses and higher loan impairment allowance on higher loan growth achieved.

Revenue for the quarter under review grew 11.8% year-on-year to RM3.3bil.For its full financial year (FY11), the bank recorded a 14.3% year-on-year increase in net profit to RM3.48bil.Revenue grew 15.6% year-on-year to RM12.76bil in FY11.

The bank said during FY11, it recorded improved earnings mainly due to higher net interest and net income from Islamic banking business by RM464.6mil (8.6%) and higher net fee and commission income by RM87.1mil (8.4%).This was driven by continued strong loans and customer deposits growth.

HSBC Amanah set to tap huge opportunities in the Middle Eas

Dubai: HSBC Amanah provides a full range of Islamic financial services to the retail, corporate and institutional customers in the Middle East, Asia and the UK.

It has a team of dedicated Islamic banking professionals in most major financial centres such as New York, London, Riyadh, Dubai, Hong Kong, Malaysia and Singapore. With the size of the Muslim population expected to reach 2.2 billion by 2030, or 26 per cent of the world population, HSBC Amanah expects huge growth in their target markets.

In a recent interview with Gulf News, Razi Fakih, Deputy CEO of Global HSBC Amanah, said that about 80 per cent of the world’s Muslims live in Asia and the Middle East. Given that these regions are set to grow faster than the world average, Islamic finance is thus likely to continue growing faster than conventional banking.

Gulf News: What are your expectations for the overall growth of Islamic banking, especially in the region?

Razi Fakih: The Islamic banking industry has been growing at double-digit compounded annual growth rates over the past few years. Markets such as Malaysia, Turkey and the GCC (Gulf Cooperation Council) countries in particular, have been beneficiaries of the strong growth. Growth is likely to extend beyond the traditional markets of Saudi Arabia and the UAE as more countries adopt regulations that are friendly to Islamic finance.

Looking at the recent trends, do you expect to see a long term surge in sukuk issuance?

Sukuk sales have definitely rebounded. With a healthy pipeline of mandates, we expect the number of issues HSBC Amanah manages in 2011 to beat last year’s and our record year in 2007. The market has been incredibly active. At one point in May 2011, three sukuk were launched in one week in Mena alone. HSBC Middle East’s sukuk was a landmark issue for various reasons. Besides being the first benchmark sukuk by an international bank, it uses a new structure which paves the way for other financial institutions to issue sukuk.

How do you assess HSBC Amanah’s performance in the region in recent years?

We are the leader in Islamic debt capital markets and we intend to keep this position. For GCC sukuk, we are the No 1 underwriter with a 40 per cent market share. HSBC Amanah has also witnessed significant growth in our commercial banking business in the Middle East this year. Customers are increasingly turning to Islamic finance because the proposition is now on par with conventional banking.

Our retail banking and wealth management business continues to do well after the launch of HSBC’s new international Islamic banking. HSBC Amanah’s fund management business is also doing well. With the largest range of Islamic equity funds globally, we are a leading international Islamic asset manager.

What will be the role of Islamic markets and institutions in global trade and trade finance?

HSBC’s recent Trade Forecast report sees global trade jumping 73 per cent to $49 trillion by 2025, with Malaysia, Indonesia and the UAE emerging as major trade players. Muslim countries such as Malaysia, Indonesia, the UAE, Saudi Arabia and Egypt are expected to account for 5 per cent of the world’s trade by 2025, with Egypt likely to play a larger role in Islamic trade finance.

Emerging and Islamic markets are expected to lead growth in global trade volumes over the next 15 years as non-traditional markets in Asia and the Middle East drive demand. To realise the full potential, however, key concerns raised by exporters and importers through HSBC’s Trade Confidence index need to be addressed.

What is your assessment Islamic banking in the region in the post Arab Spring?

Post the Arab Spring, countries in the Middle East will be looking to rebuild themselves. Key projects will be infrastructure and basic social facilities such as roads, hospitals, power plants and schools so that people can enjoy a minimum standard of living.

To finance these projects, governments and private sector developers should consider Islamic financing since Islamic banks have stronger balance sheets and are better able to fund these multi-billion dollar projects at a time when the liquidity pool is shrinking given tightening credit lines and higher regulatory requirements for banks.

For many Middle Eastern countries and corporates, sukuk has become a mainstream source of financing. The outlook for sukuk is strong because there is high liquidity and more importantly, it has performed really well in the after-market.