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set to continue.” The report noted that the Clean Energy Business Council of the Mid- dle East and North Africa along with the Gulf Bond and Sukuk Association have launched a Green Sukuk Working Group with a view to better aligning the climate change and capital market development agendas in the region. In Saudi Arabia, the largest Arab economy, Sukuk issuance is expected to continue to grow markedly this year. Among the recurrent issuers, SABIC in December gained CMA approval for a Sukuk issuance of up to USD5bn, it said. In the UAE, the sec- ond largest Arab economy, Abu Dhabi’s Al Hilal bank is issuing a $500mn Sukuk this year, NCB said, noting that the unlisted bank is fully owned by the Abu Dhabi Investment Council.
State-run Qatar Petroleum is understood to be considering a corporate Sukuk this year in a pioneering move by a regional national oil company, it said. This could potentially trigger issuance by other government-relat- ed entities, eg Industries Qatar, as a way of diversifying funding sources, it added. “As much GCC Sukuk issuance has rebounded impressively in recent months, Malaysia re- mains the undisputed leader in the sector, typically accounting for more than 70 per cent of the global total,” the report said.
“This state of affairs has persisted in spite of the fact that, more generally, the GCC coun- tries have generally established themselves as the second major global hub for Shariah- compliant financial solutions. Moreover, in purely GDP terms, Malaysia lags far behind the Gulf: just under $200mn as opposed to some $one trn for the Gulf countries taken together.”
According to NCB, Malaysia’s population reached 28mn in 2011, whereas the GCC’s total is around 40mn. The discrepancy is particularly “striking” in view of the fact that the GCC economies are among the leading global spenders on infrastructure, which should in principle open important new op- portunities for Shariah-compliant capital market development.
“Nonetheless, GCC Sukuk issuance in 2011 totalled $19bn as opposed to $58.7bn in Malaysia. The corresponding figures in 1Q12 were around $30.7bn for Malaysia and nearly $ 8.6bn for the GCC.” Turning to bonds, the report said that after a bumper quarter closed an exceptionally volatile year in 2011, the first quarter of 2012 marked relative normalization for the GCC conven- tional bond markets with overall primary market activity roughly halving in value from 4Q11. Its figures showed total issuance in Q1 reached $5.9bn and involved eight cor- porate issuers and a total of 14 different is- sues. This compares to aggregate issuance
10 Global Islamic Finance May 2012
of $11.9bn in 4Q11 (issues with tenors in excess of a year) and $9.4bn a year earlier in 1Q11, the report showed.”These figures were broadly consistent with the continued strength of emerging bond markets globally where overall issuance reached $464bn in the course of 2011 and $10bn in the first quarter of this year.”
NCB said it expected growing refinancing re- quirements would likely to be a key driver of market activity during the year.”In particular, regional banks are likely to remain active in the bond markets during the year,” it said, adding that Commercial Bank of Qatar is meeting with investors having established a $5bn issuance programme in August.
A number of Omani banks have, similarly, in- dicated interest in tapping the bond markets while in Saudi Arabia, Kingdom Holding is planning a maiden bond issue. The company currently has bank loans of some SR1.5bn. Among the regional utilities, Dubai’s Dewa has ruled out a near-term bond issue, al- though the company has Dh1.2bn syndica- tion due this year, NCB said.
Barwa Bank net profit up 882% to QR244mn It has been reported that Barwa Bank’s total assets increased by 143% to reach QR19bn in 2011, which was driven by a 354% growth in the financing portfolio (from QR2bn to 9bn). Customer deposits trebled from QR3bn to QR9bn in 2011. The Group undertook a number of consoli- dation initiatives designed to drive efficiency across its support and administrative func- tions, a contributor to effective cost-con- tainment. Earnings-per-share increased to QR1.30 in 2011 from Dh15 the year before.
Barwa Bank completed a “successful” capi- tal increase at the end of 2011, which it said is a “vote of confidence” from shareholders. The offering comprised 109,130,900 new shares for subscription and was intended to raise QR1.7bn. The overall value of shares subscribed reached QR1.9bn, an over sub- scription of QR233mn with coverage of 113%. Book value per share increased to QR16.4 compared with QR15.2 in Decem- ber 2010.
This capital increase will enhance the Group’s position in the Qatari market and ensure that it can deliver on the commit- ment to development of the country’s econ- omy. Barwa Group was among the first to benefit from the QCB ruling regarding the closure of the Islamic windows of conven- tional banks and announced the acquisition of IBQ’s Al Yusr Islamic retail banking opera- tions in August, a move that added to the bank’s customer base and branch network and allowed Barwa Bank to close the year
with a network of six branches, having start- ed 2011 with only one. The transaction was later awarded ‘Qatar Deal of the Year’ by Is- lamic Finance News. During the year, Barwa Bank launched ‘Prestige Banking’, aimed at its more affluent customers to provide them with a tailored suite of services that reflect their requirements and lifestyle as well as a Private Banking proposition, targeted at high net worth individuals. Barwa Bank’s 2011 financial results were announced yesterday following a meeting of its Board of directors.
Malaysia Launches RM2 Billion Islamic Funds for SME It has been reported that Deputy Prime Minister Tan Sri Muhyiddin Yassin launched a RM2 billion Shariah compliant financing fund for small and medium enterprises (SMEs). Muhyiddin said the loan scheme, an- nounced by Prime Minister Datuk Seri Najib Tun Razak in the 2012 Budget, reflects the private sector’s seriousness in supporting the federal government’s efforts to promote economic growth.
The scheme will be managed by 13 Islamic banking institutions with the federal govern- ment providing a two per cent rebate of the bank’s profits, he said when launching the scheme at Sekolah Menengah Kebangsaan Datuk Perdana. Also present were Interna- tional Trade and Industry Minister Datuk Seri Mustapa Mohamed, Deputy Finance Minister Datuk Dr Awang Adek Hussin, SME Corporation chairman Datuk Dr Mohamed Al Amin Abdul Majid and the president of the Association of Islamic Banking Institutions of Malaysia (AIBIM).
Over 15,000 people attended the event and Muhyiddin said Malaysia’s complete Islam- ic finance system, comprising takaful and Shariah-compliant stocks at Bursa Malaysia besides the international finance market in Labuan, plays an important role in the inter- national money market.
“All this we can achieve under the Barisan Nasional (BN) administration which has successfully introduced policies and a com- plete system to encourage and regulate the development of Islamic banking that many countries want to emulate,” he said. The federal government has also not neglected businesses in Kelantan as it has raised the competitiveness of their products and serv- ices by reducing the cost of doing business, he said.“The Malaysian Investment Develop- ment Authority (Mida) has approved incen- tives for three SME projects in Kelantan, with total domestic investment of RM6.2 million, that will create 116 jobs in the tex- tile sector in Kelantan,” he said. He added that SME Corporation, under the Malaysian Industrial Development Finance Bhd, has
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