Bank Simpanan aims for 10% more GIRO-i accounts this year

Bank Simpanan Nasional (BSN) is aiming to get 10% more new accounts for its BSN GIRO-i this year, said BSN Islamic banking head Ahmad Noh Jeni.

“We are aiming for the same figure as what we achieved last year (2011).

“Currently, we have two million account holders for this BSN GIRO-i,” he said at a press conference on yesterday.

Ahmad said the bank would also make an extra payment of 2% on profits earned in 2011 to all BSN GIRO-i account holders based on average balance in 2011 starting from Feb 16, 2012.

“The payment is based on profit sharing concept called Mudharabah where it does not limit the profit payment towards our clients.

“This is the second time we are making this kind of payment after doing it in 2009 where the same percentage amount was given to our clients,” he said.

He said the bank had opened 71 Islamic branches all over the country with all the branches in Kelantan fully Islamic.

“BSN Islamic banking is not limited only to Muslim but also to non Muslims. For example, 90% of BSN Ahsan Warga Emas Investment account holders are Chinese,” he said.

He also said BSN offered many attractive prizes to its Sijil Simpanan Premium (SSP) savers for 2012 where more than 37,000 prizes valued more than RM14mil were up for grab as compared to more than 30,000 in 2011.

BSN, he said, would like to announce that SSP followed Shariah principles as approved by the Malaysia Fatwa Council on Feb 14.

BSN now has 389 branches with more than eight million customers in Malaysia and a savings amounting to RM10.8bil.

Malaysia, Abu Dhabi lead dollar sukuk rally

Kuala Lumpur: Investment-grade bonds in Malaysia and Abu Dhabi are leading a rally in dollar sukuk, driving average yields to the lowest level in six years, as rising prices of commodities shore up economic growth.

islamic banking,abu dhabi,cent,sukuk,malaysia,IDB,UAE,global stock,shariah compliant bonds


The yield on Malaysia’s 4.646 per cent note maturing in July 2021 dropped 26 basis points, or 0.26 percentage point, this month to 4.4 per cent yesterday, according to prices from Royal Bank of Scotland Group. The rate on the Abu Dhabi-backed Tourism Development & Investment Co’s 4.949 per cent debt due in October 2014 fell 21 basis points since June 30 to a 1 1/2-month low of 2.81 per cent, data compiled by Bloomberg show.

Increasing prices of crude, palm oil and soybeans are spurring gains in Sharia-compliant bonds even as the extra yield investors demand to hold emerging-market securities over US Treasuries widened this month. Investment-grade sukuk are appealing given Europe’s debt crisis and demand for safety in dollar assets, Jakarta-based PT MNC Asset Management said. Continue reading

Malaysia's Axis to list world's largest sharia REIT

KUALA LUMPUR, March 11 (Reuters) – Malaysia’s Axis REIT Management Sdn Bhd is set to list the world’s largest sharia real estate investment trust valued at over 3 billion ringgit ($988 million) to meet demand for new Islamic finance products, three sources with direct knowledge of the deal said on Friday.

Axis REIT Management, which also manages Axis REIT , is conducting preliminary book-building for the Axis Global Industrial REIT, said the sources who asked not to be identified as they are not authorised to speak to the media.

The REIT, which is expected to be listed in the second quarter of this year, would manage 33 properties located in three Asian countries including Australia and Hong Kong.

“Axis Global’s mandate is to invest in high-quality industrial and business parks outside Malaysia,” one source told Reuters.

“The size of the IPO will be larger than the listing of Capitamalls Malaysia Trust, which raised 852 million ringgit.” Continue reading

Shariah-Compliant Hedging Derivatives Start in Malaysia: Islamic Finance

Standard Chartered Plc and Bank Islam Malaysia Bhd. plan to offer Shariah-compliant derivatives in Malaysia that will allow investors to hedge against interest rates and commodity prices.Standard Chartered, the U.K. bank that earns most of its profit from emerging markets, will begin selling contracts in the first quarter that provide protection from fluctuations in the cost of items such as rice and oil, according to an e-mailed reply to questions yesterday. Bank Islam Malaysia, the country’s oldest Islamic lender, will offer swaps that allow two parties to exchange different forms of payments from an underlying asset.
Shariah-Compliant Hedging Derivatives Start in Malaysia

Shariah-Compliant Hedging Derivatives Start in Malaysia

The lack of such Shariah products is hindering industry growth, Badlisyah Abdul Ghani, chief executive officer of Kuala Lumpur-based CIMB Bank Islamic Bhd., said in an interview on Dec. 20. The market will be limited to hedging after derivatives contributed to the global financial crisis, which resulted in $1.8 trillion of credit losses and write downs.
“The industry has gone through a set of innovations over the past 10 years to offer Shariah-compliant solutions and today the industry can say we have Islamic derivatives,” Syed Alwi Mohd Sultan, director of origination at Standard Chartered Saadiq Bhd., the bank’s Kuala Lumpur-based Islamic banking unit, said in a telephone interview on Dec. 15. “A wide acceptance of the standards will bring greater convergence of the industry.”
Derivatives are contracts whose values are tied to assets including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.
Sukuk Returns
Malaysia, the Asian hub for Shariah-compliant finance, accounts for more than 50 percent of the $144 billion of outstanding Islamic bonds, or sukuk, globally, according to data compiled by Bloomberg. Total sales of the securities, which pay asset returns to comply with the religion’s ban on interest, have dropped 24 percent to $15.3 billion this year.
Shariah-compliant bonds returned 12.4 percent in 2010, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Debt in developing markets gained 11.7 percent, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows.
The difference between the average yield for sukuk and the London interbank offered rate shrank two basis points, or 0.02 percentage point, to 305 on Dec. 21, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. The spread has narrowed 163 basis points this year.
Rising Demand
The yield on Malaysia’s 3.928 percent Islamic notes due June 2015 rose two basis points to 3.10 percent today, according to prices from Royal Bank of Scotland Group Plc. The debt has returned 5.8 percent since it was issued in June.
The difference in yield between the Dubai Department of Finance’s 6.396 percent sukuk due November 2014 and Malaysia’s Islamic note was little changed at 339 basis points today, according to data compiled by Bloomberg. The gap shrank 59 basis points this month.
Demand for services complying with Shariah law is increasing by about 15 percent a year and assets will rise to $1.6 trillion by 2012, from around $1 trillion currently, according to the Kuala Lumpur-based Islamic Financial Services Board.
Bank Islam Malaysia plans to introduce new contracts that will allow an exchange of profit or return rates between two counterparties, Hizamuddin Jamalluddin, the bank’s assistant general manager, said at a seminar for Islamic derivatives on Dec. 14 in Kuala Lumpur. These will be in addition to its existing Shariah-compliant hedging contracts, he said.
Record-low borrowing costs in the U.S. may rise in 2011, providing a “timely” opportunity for banks to issue swaps- based derivatives, Hizamuddin said.“It is very critical that holders of sukuk have access to hedging solutions that would enable them to counter the challenges in a rising interest-rate environment,” he said. “Interest rates seem to have hit rock bottom.”

Short of talent, Islamic finance taps women scholars

(Reuters) – When Malaysian Aida Othman signed up for the new law programme at the Islamic university, she did not expect to become one the few women with their hands on the levers of the world’s $1 trillion (620 billion pounds) Islamic finance sector.

Rising global demand for scholars who can advise firms on compliance with Islamic legal principles called sharia is behind the quiet and almost accidental way in which women are growing into a small but powerful force in a male-dominated business.

“There are not many women involved my job,” Aida, who manages the sharia advisory practice at Malaysia’s biggest law firm, told Reuters.

“I’m glad to be able to show to young graduates and young scholars in my field if you’re interested enough there is a way into sharia advisory,” the 41-year-old, who went on to study at Cambridge and Harvard, said. Continue reading

PM asks RBI to look into Malaysian Islamic banking model

Prime Minister Manmohan Singh today said the Reserve Bank of India (RBI) should look into Islamic banking practices in Malaysia, amid pressure on the central bank to introduce such a system in India.

“There have been from time to time demands for experimenting (with) Islamic banking. I would certainly recommend to RBI, which is looking into the question, to look at what is happening in Malaysia in this regard,” he said when asked whether India would like to learn something of Islamic banking from Malaysia.

Singh, who is on a visit to Kuala Lumpur, earlier held wide-ranging talks on economic and strategic issues with his Malaysian counterpart Mohd Najib Tun Abdul Razak.

The pressure has been mounting on RBI to introduce Islamic banking, a kind of interest-free banking system, in the country. The move could fetch billions of dollars in investments from countries in the middle-east.

Currently, close to $1 trillion is being managed by about 400-500 Islamic banks worldwide and by 2020, the figure is expected to touch $4 trillion.

According to projections by global consultant McKenzie, investment surplus in the West Asian region is expected to be around $9 trillion by 2020. Currently the investment surplus is around $1.5 trillion.

Recently, Muddassir Siddqui, Partner and Head of Islamic Finance, Middle East, SNR Denton and Company urged the Indian government to open interest free banking on pilot basis.

“We held close interactions with finance ministry and RBI officials. We hope the ice is breaking. There was no time frame for setting up Islamic banking. We are hopeful permission would be granted very soon,” Siddqui had said.

The judiciary, however, is not favourably disposed towards Islamic banking institutions in India.

The Kerala high court had in April this year directed the state government and its institutions not to participate financially or otherwise in the financial company modelled on the lines of Islamic bank.

India to Learn More on Islamic Finance From Malaysia, Premier Singh Says

India’s Prime Minister Manmohan Singh said he will ask the central bank to learn more about Islamic finance from Malaysia, which has the world’s biggest market for Shariah-compliant debt, or sukuk.

There is no regulated Islamic finance market in India, where Muslims make up about 138 million, or 13 percent, of the 1 billion population, according to the government’s 2001 census. A panel headed by Raghuram Rajan, a finance professor at the University of Chicago and former chief economist at the International Monetary Fund, recommended in 2008 that India introduce Islamic banking to attract more capital.

“There have been, from time to time, demands that we should experiment with Islamic banking and I will recommend to the Reserve Bank of India to look at what’s happening in Malaysia,” Singh said in Kuala Lumpur today.

In Malaysia, 60 percent of the 28 million people are Muslim and Islamic banking assets amount to 337.6 billion ringgit ($109 billion), or 20 percent of the total, the Finance Ministry said in its 2010-2011 economic report Oct. 15.

Sukuk pay asset returns to comply with the religion’s ban on interest.

30 vie for Islamic finance award

KUALA LUMPUR: Thirty nominees from around the world are being considered for The Royal Award for Islamic Finance.

The Securities Commission (SC) and Bank Negara said in a joint statement that the nominations were being deliberated by an independent international jury chaired by Tun Musa Hitam, chairman of the World Islamic Economic Forum Foundation.

“Unlike commercial awards which are deal-based, this award focuses on an individual’s record of achievement and outstanding contribution towards the advancement of Islamic finance globally,” they said.

“These 30 nominees represent the diversity and global acceptance of Islamic finance – from across all regions of the world including the Middle East, Europe, South-East Asia, Africa and Australia. Continue reading

Maybank Launches Dedicated Islamic Banking Hub In Singapore

SINGAPORE, Sept 3 (Bernama) — Maybank Singapore on Friday launched a dedicated Islamic banking hub at its renovated branch in Geylang Serai, the most Malay-Muslim populated area in the city state.

It also paves the way for Maybank’s plan to be the leader in retail Islamic banking.

Maybank President and Chief Executive Officer Datuk Seri Abdul Wahid Omar and Singapore’s Senior Minister of State for Foreign Affairs Ministry, Zainul Abidin Rasheed, graced the occasion before the breaking of fast.

Speaking at the launch, Abdul Wahid said the branch was chosen for the dedicated hub as Maybank wants to bring Islamic finance closer to where the majority of the Malay/Muslim businesses and community reside.

He said it was also in line with the bank’s theme for its 50th anniversary celebration this year, “Close to You”, which is a way of bringing financial services closer to the people. Continue reading

Malaysia Rules in Islamic Finance

Kuala Lumpur dominates the market for Islamic bonds, called sukuk

Bonds, home mortgages, and other financial assets that comply with Islamic law, which prohibits the charging or paying of interest, have gained in popularity throughout the Muslim world. A lot of high-paying jobs and national prestige are up for grabs for the country that can position itself as the hub of global Islamic finance. Persian Gulf states such as Saudi Arabia, the United Arab Emirates, Qatar, and Bahrain have sought to build out their financial-service sectors to accommodate the expanding demand. However, the real action these days isn’t taking place in the Gulf but in Asia—especially in Malaysia’s capital city of Kuala Lumpur.

Malaysia Rules in Islamic Finance

Islamic bonds, or sukuk, pay holders a share of the issuer’s profits rather than interest. For instance, a sukuk holder might have a claim to a portion of toll revenues from a highway project. This year, international borrowers have sold $9.8 billion of Islamic bonds, with 72 percent of that being issued in Malaysia, according to data compiled by Bloomberg. In the Gulf, $2.5 billion of sukuk have been issued so far this year. That’s down 24 percent from the comparable period last year and is the slowest pace since 2005. Continue reading