Endowment fund for INCEIF
Bank Negara Malaysia initiated a US$135.3 million (RM500 million) endowment fund to support the operations of the International Center for Education in Islamic Finance (INCEIF).
RHB to launch three new funds
RHB Unit Trust Management (RHBUT) was to launch three new funds to expand its total fund size to US$541.88 million (RM2 billion) from the current US$433.5 million (RM1.6 billion). Through the newly set up RHB Multi-Funds Investment Platform, the company hoped to launch the first structured product – a global-based, Shariah compliant product with a capital guarantee for five years.
Islamic banking profits soar
The Malaysian Islamic banking sector posted a pre-tax profit before zakat of US$419.94 million (RM1.55 billion) in 2005, up 57.4% from US$267.68 million (RM988 million) the previous year. This better profitability increased the return on assets and return on equity to 1.5% and 21% from 1.1% and 15.7% respectively, despite having increased the asset size and capital funds. The net income for the sector rose 28.7% to US$864.22 million (RM3.19 billion).
During the year, the Islamic banking sector’s assets increased US$4.55 billion (RM16.8 billion) to US$30.29 billion (RM111.8 billion). More than half of this increase was due to a 16.5% growth in total financing.
OCBC to up Islamic investment products
OCBC Bank Malaysia would introduce more Islamic investment products to meet the great demand for Shariah compliant structured investment products. The bank’s Islamic banking unit registered a 61% growth to US$378 million (RM1.4 billion) in outstanding financing last year, while its no collateral cash financing-i facility grew by more than 150%.
More Sukuk from IDB
The International Institute of Islamic Finance (IIIF) has called for more Sukuk issuance by the Islamic Development Bank (IDB) for the purpose of infrastructure funding, especially for the development of poor Muslim countries.
Largest corporate takeover deal
Malaysia witnessed the nation’s largest ever corporate takeover deal when Bumiputera Commerce Holdings (BCHB) bought Southern Bank for US$1.8 billion (RM6.7 billion). Southern Bank was expected to be merged into the BCHB group by early June, creating an enlarged banking entity with assets of US$41.04 billion (RM152 billion).
DJ-Citigroup Sukuk Index launched
The Dow Jones Citigroup Sukuk index – to measure the performance of global bonds complying with Islamic investment guidelines – was launched.
The index would be a benchmark for investors seeking exposure to Shariah compliant fixed income investment, and would also serve to increase secondary market trading and facilitate cross-market relative value trading among different asset classes.
New Islamic banks ready to go
Affin Islamic Bank and EON Islamic Bank announced they were soon to start operations. Both banks were granted approval from the high court of Malaya to transfer their Islamic banking businesses to their subsidiaries.
Affin Islamic Bank, which had secured a license from the Minister of Finance, would start operations on the 3rd April, while EON Islamic Bank would get its license once all the pre-licensing conditions had been met.
Affin Islamic Bank proposed to increase its existing paid-up capital to US$43.25 million (RM160 million) by issuing new shares to Affin Bank for cash, while EON Islamic Bank’s issued and paid-up capital would be increased to US$107.52 million (RM397.8 million).
Muamalat to boost SMI lending
Bank Muamalat was set to boost its small and medium-sized industries (SMIs) lending by 40% with an additional US$54 million (RM200 million) targeted for 2006. The bank would establish five SMI dedicated centers – known as Muamalat Venture – to help meet this goal.
Financing program boosts OCBC
OCBC Bank Malaysia’s customer-focused financing program resulted in a 61% leap in its outstanding financing from US$233.76 million (RM866 million) in 2004 to US$377.9 million (RM1.4 billion) in 2005.
IDB to unveil 1440H Vision
The Islamic Development Bank (IDB) would soon launch its 1440H Vision to serve as a guide for the group to embark upon strategic initiatives and enhance its services to the 56 member countries.
To be unveiled on the 23rd March by the Malaysian Prime Minister, the 14-year blueprint would position the bank to serve the Muslim world better amidst vast changes.
Unicorn to invest in Bank Islam
Unicorn Investment Bank (UIB) was ready to raise its stake in Bank Islam Malaysia to 49% in response to the latter’s capital needs. The Bahrain-based bank was in the midst of acquiring a 20% stake in Bank Islam.
UIB, which had teamed up with Bank Muscat from Oman and was thus ready to take a larger stake in Bank Islam, expected a response from Bank Negara Malaysia for approval within a few weeks.
PB Islamic Bond Fund launched
Public Mutual launched the PB Islamic Bond Fund (PBIBF), a fund aimed at providing annual income to investors through investments in Islamic debt securities.
Khazanah in biggest Islamic debt sale
Malaysia’s largest corporate offering of Shariah compliant securities was sold by Khazanah Nasional. The state-run investment firm sold US$2.69 billion (RM10 billion) of Islamic commercial papers and long-term bonds.
StanChart’s high hopes for CMP
Standard Chartered Bank (StanChart) expected 30% of new corporate deposits and 10% of new corporate financing to come from its Islamic alternative deposit and financing product – Commodity Murabahah Programme-i.
Goldman Sachs in Islamic fund
Amanah Raya would team up with investment banking giant Goldman Sachs to launch its first offshore Islamic fund, worth US$250 million (RM929.75 million). The proposed joint venture was aimed at promoting Amanah Raya’s Islamic funds internationally.
KFH boosts sector
Kuwait Finance House (Malaysia) was opened, the first fully licensed foreign Islamic bank to operate in Malaysia. In the first phase of operations, the subsidiary of Kuwait Finance House introduced basic services.
Islamic finance cooperation
Malaysia was considering establishing a jointly owned bank with Iran, if it followed up Iranian president Dr Mahmoud Ahmadinejad’s proposal, made during his three-day visit to Malaysia.
TAKAFUL briefs
HLB Takaful to start in October
Hong Leong Bank (HLB) announced plans to start its Takaful operations in October, initially offering at least two products.
HLB, together with its partners, was fine-tuning the business model for the yet-to-be unveiled joint venture company. HLB would have a 55% shareholding in the company, while the Singapore-based insurer Millea Asia and HLB’s subsidiary, Hong Leong Assurance, held 35% and 10% respectively.
First Investment-linked Takaful products
Malaysian Assurance Alliance (MAA) hoped to launch its first Takaful investment-linked products in 2007 for the domestic and West Asian markets through collaboration with its joint venture partner, Bahrain-based Solidarity. The company would begin operations in June 2006.
TM wants slice of brokerage mart
Syarikat Takaful Malaysia (TM) aimed to capture 10% of the total brokerage market by 2010. Its director and chief executive officer Md Azmi Abu Bakar acknowledged that the brokerage sector contributed substantially to the growth of the company, which currently has 35 Takaful brokers.
What the Takaful industry needs
Repeated calls were made for a regulatory framework for the Takaful industry at the 2nd Seminar on the Regulation of Takaful in Langkawi.
In his keynote address Dr Bassel Hindawi, vice-chairman and director general of the Insurance Commission of Jordan, stated that a Supreme Shariah Judicial Authority, a legislative framework, good governance, capital adequacy and the nurturing of re-Takaful were all vital requirements for the Takaful industry.
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