Local media reports explain that banks in Indonesia are drawing up plans to spin off their respective Shariah-compliant business units (UUS) into independent Shariah Business Entities (BUS). With the deadline set at no later than 2023, banks are realising that they need to get started with the necessary steps if they are to stay on track.  According to media reports, arguments for the postponement of this deadline are twofold. First, the performance of existing BUS appears to be lagging than that of the UUS. Second, majority of the UUS, especially those con...

Tunisia Islamic finance: Overview and future prospectsGharar, Islamic banking, Murabaha, Shariah, Shariah compliant, Sukuk, Takaful, Zakat

Fitch Ratings has assigned a final long-term rating of ‘BBB-’ to Saudi Arabia’s Arab National Bank (ANB)’s USD 750 million subordinated Tier 2 Sukuk, issued via ANB’s special purpose vehicle, ANB Sukuk Ltd (ASL). The final rating remained the same as the expected rating that was assigned earlier in October 2020, following receipt of the final documentation confirming the information already provided.  According to Fitch, the USD-denominated Sukuk has a ten-year tenure that is set to mature on the 28th of October 2030 and will rank&n...

Bahrain Islamic Bank (BisB)’s integration with National Bank of Bahrain (NBB) is proceeding smoothly, according to Dr Esam Abdulla Fakhro, Chairman of BisB.  Speaking at a BisB annual tech-driven event on the 6th of December 2020, Fakhro stated that the two Bahrain-based banks would provide a unified force, which would further lead to more robust economic growth in the country.  In January 2020, NBB acquired a 78.8% controlling stake in BisB, after previously owning 29.06%, according to media reports...

Banks in ASEAN are making progress on sustainable finance; 32 of 38 banks have an announced strategy The adopted sustainable finance strategies can inform implementation but they remain just a starting point without other actions to address governance, measurement and disclosureBanks need to continually invest to keep pace with rapidly changing market expectations from regulators, customers and shareholders The World Wide Fund (WWF) has released its latest annual Sustainable Banking Assessment (SUSBA) covering ASEAN, South Korea and Japan. The SUSBA report provides indi...

The Government of Indonesia has raised IDR 6.14 trillion from a biweekly auction of State Shariah Securities (SBSN), also referred to as State Sukuk. The auction was conducted via Bank Indonesia acting as the SBSN Auction Agent on the 8th of December 2020 and raised slightly more than the targeted amount of IDR 6 trillion.   According to a statement issued by the Directorate General of Budget Financing and Risk Management (DJPPR), Ministry of Finance, the total incoming bids received from the State Sukuk auction for the five series offered wa...

Brunei’s overall Consumer Price Index (CPI) increased 1.5% year-on-year (YoY) in September 2020, reaching 100.8 from 99.3 in September 2019, according to the latest statistical figures released on the 7th of December 2020 by the country’s Department of Economic Planning and Statistics (DEPS) at the Ministry of Finance and Economy.  According to DEPS, the key sectors that contributed to the increase in CPI in September 2020 included Miscellaneous Goods and Services (which accounted for 52.2% of the total overall YoY CPI) with a 10.5% YoY increase, Food and Non-Alcoholic...

Speaking at the PowerTalk Webinar organised by the World Islamic Economic Forum and the Securities Industry Development Corporation, Bursa Malaysia Chairman, Tan Sri Abdul Wahid Omar, stressed the importance of maintaining low-interest rates across Malaysia.  Despite the likely negative impact of reduced interest rates on banks’ net interest margin, Omar believes that lowering the interest rate will ease the finical burden for both businesses and households, as well as stimulate investment and consumption i...

Indonesia’s commercial banks are being urged to lower their lending rates and increase credit disbursements whilst better managing responses towards risk, according to Bank Indonesia (BI).  Data from BI revealed that bank lending declined 0.47% year-on-year (YoY) in October 2020, shrinking for the first time in at least twenty years. This was largely attributed to the banks’ unwillingness to lend and customers were being reluctant to obtain loans as business activities start to cool down.&nb...

Reflecting a modest economic recovery in 2021, Fitch Ratings (Fitch) expects Islamic banks across the Gulf Cooperation Council (GCC) region to maintain adequate capital buffers and stable liquidity to manage risks. However, Fitch anticipates the pressure on asset quality and earnings to continue.  Fitch maintains a Stable Outlook on all rated Islamic banks within the GCC (with the exception of Saudi Arabia) based on the sovereign’s ability to provide support to the domestic Islamic banks when required.  Saudi Arabia is the only G...