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Islamic Banking

Malaysia expected to ride Islamic finance boom

Sukuk issuance amongst banks may grow as much as 13% in 2018.
3 years ago

Malaysia expected to ride Islamic finance boom

Sukuk issuance amongst banks may grow as much as 13% in 2018.
3 years ago

These initiatives could help Malaysia remain a regional Islamic banking hub

New human capital development programmes will complement existing ones.
3 years ago

Asian Islamic banks seek synergies amidst sea change in fintech, regulations

Islamic banks are grappling with digitalisation which has taken conventional banks by storm.
3 years ago

Competition amongst smaller Islamic banks set to intensify

That is if the Malaysia Building Society-Asian Finance merger will push through.
4 years ago

Sharia-compliant investment accounts at Malaysian banks hit US$16.7b in February

Growth will remain strong over the next 3-5 years. An emerging trend among Malaysian banks is the strong growth of Sharia-compliant investment accounts, report Moody's. This began in July 2015 following the implementation of the Islamic Financial Services Act 2013, and has since taken off. Sharia-compliant investment accounts (“investment accounts”) are defined in the Act as accounts under which money is paid and accepted for investment in accordance with Sharia principles and on terms that state there is no express or implied obligation to repay the money in full. By February 2017, investment accounts had grown to MYR74.2 billion (US$16.7b), or 13% of total Islamic banking system liabilities. Here's more from Moody's:We expect growth in investment accounts in Malaysia to remain strong over the next 3-5 years as a result of the active promotion by the regulator and banks. Malaysian banks have strong incentives to promote investment account growth because it provides capital benefits and an additional source of funding to grow their assets. Concerns over untested loss-sharing mechanisms in investment accounts. Banks could suffer deterioration in their credit profiles if the loss-sharing mechanism in these investment account products turn out to be less robust than currently assumed. At the present development stage of Malaysia’s investment accounts, a key issue is whether, and to what extent, the loss-sharing mechanism between banks and investors will be honored in case of actual losses. Similar products in other regions have led banks to bear the entirety of the asset risks. Our concern is underpinned by our observation that Islamic banks in other Islamic jurisdictions, notably some Gulf Cooperation Council (GCC) countries, in practice do not exercise the contractual loss-absorbing nature of investment accounts, and as a result, bear much, or all, of asset risk on behalf of investment account holders. This is perhaps because of customer expectations and out of fear of reputational damage. Safeguards are present to protect banks. A mitigating feature for Malaysia is that regulators have put in safeguards to protect banks. In Malaysia, the regulatory framework
(1) identifies and differentiates the risk profile of investment accounts from traditional principal-guaranteed deposits; (2) emphasizes the disclosure of the risk-sharing mechanism in investment account products to investors; and (3) obliges the investment account holders to share risks with the banks.
4 years ago

GCC banks' funding pressures to ease in 2017

Omani and Qatari banks will benefit the most from easing funding conditions.
4 years ago

GCC Islamic banks beat conventional peers for the second consecutive year

After trailing for five years, GCC banks are now more profitable than their counterparts.
4 years ago

Bank BJB's Sharia NPL issues to persist

BJB’s total FY16 Sharia NPL soared back to 17.9%.
4 years ago

Bank BJB's profit up 19% to US$123m in FY16

Thanks to a 110bps increase in NIM.
4 years ago

Islamic banks turn to digital to serve underbanked Asian markets

Check out what OCBC NISP, Bank Dhofar, and CIMB Islamic have to say.
4 years ago

Global Islamic banking assets reached US$924b in 2015

Guess which country has the largest market share.
4 years ago

Malaysian Islamic banks outperform Indonesian counterparts

Malaysian Islamic banks have more established franchises and deeper market penetration.
5 years ago