Stakeholders from Malaysia and the UK convened in London to discuss opportunities and challenges in promoting green investments via Islamic finance solutions. 

The MIFC-UK Business Forum - which brought together more than 140 participants, including government officials, regulators, fund managers, global market investors, and others - aims to strengthen Malaysia-UK partnership in fostering cross-border investments, particularly in the green sector.

The collaboration holds the potential to reinforce the financial landscape of both countries, leveraging Malaysia as a gateway for Islamic finance opportunities for Asia and the Organisation of Islamic Cooperation (OIC) markets, and the UK as a global financial centre. 

Malaysia’s funding requirement for green investment is expected to reach approximately 1.2 trillion to 1.3 trillion Malaysian ringgits by 2050 to build a sustainable economic landscape. 

Participants advocated for collaboration to maximise the potential for innovative Islamic finance instruments in supporting green transition as well as fostering partnership in capacity building, research and knowledge exchange. 

Bank Negara Malaysia governor Abdul Rasheed Ghaffour said, “Malaysia is taking decisive steps towards achieving our Net Zero target in 2050 guided by strategic frameworks such as the National Energy Transition Roadmap, the Hydrogen Economy and Technology Roadmap, and the New Industrial Master Plan. With its underlying intrinsic values, Islamic finance is poised to address the funding needs and support our vision of economic growth that is balanced, sustainable and inclusive.”

Here's a roundup of key developments across the Islamic finance ecosystem during the month of October.

Editor's note: Muzn Islamic Banking has launched a Shariah-compliant product to facilitate ethical financing for medical treatments both in Oman and abroad. Meanwhile, a UAE-based JV has launched a pilot program for what it calls the world's first real-world Mudarabah smart contract.

Company News

United Kingdom

Sonali Bangladesh UK boosts Shariah-compliant services with Finastra

Sonali Bangladesh UK (SBUK), a London-based financial institution focused on trade finance for Bangladesh, has partnered with Finastra to enhance its banking operations.

The lender will faciliate transactions through the Finastra Essence core banking solution hosted on Microsoft Azure Cloud.

The new system will cater to both Shariah-compliant and conventional banking needs. Its CEO Masum Billah emphasized the need for a flexible platform to meet evolving demands. (IBS Intelligence)

Indonesia

HAQQ partners with KNEKS, BUMR to enhance Shariah-compliant financial services 

HAQQ Association has teamed up with the National Committee for Sharia Economy and Finance (KNEKS) and PT BUMR Industri Terhubung Indonesia to advance Indonesia's Shariah economy through technology and innovation.

The partnership aims to leverage blockchain and Shariah-compliant financial services to create new opportunities for businesses, investors, and communities. (The Jakarta Post)

Oman

Muzn launches Shariah-compliant medical finance solution

Muzn Islamic Banking has launched a Shariah-compliant medical finance product to provide flexible and ethical financing for medical treatments both in Oman and abroad.

Muzn is National Bank of Oman's Islamic banking window. Salima Obaid Issa Al-Marzoqi, Chief Islamic Banking Officer at NBO emphasized the importance of healthcare and the alignment of the product with Shariah principles, ensuring access to quality medical care for customers. (Zawya)

UAE

Firoza Finance announces launch of $2m pilot for world’s first real-world Mudarabah smart contract

Firoza Finance, a UAE-based joint venture between Liberty Finance and HAQQ Network, has launched a pilot program for what it claims is the world’s first real-world Mudarabah smart contract.

The initiative, which has a budget of $2 million, aims to revolutionize Islamic finance by integrating technology with traditional financial principles.

The move highlights Firoza Finance's commitment to innovation in the financial sector. (Arabian Business)

Investment

Cameroon

BDEAC approves Islamic finance window to boost project funding 

Shareholders of the Central African States Development Bank (BDEAC) approved the establishment of an Islamic finance window.

This new initiative is designed to diversify and enhance the bank's resources while complementing its conventional financing.

The Islamic finance window aims to attract and allocate funds to states and businesses in accordance with Islamic law, expanding BDEAC's financial capabilities. (Business In Cameroon)

Saudi real estate developer Roshn Group has secured a credit facility worth 9 billion Saudi riyals ($2.4 billion) from a consortium of banks. 

The unsecured facility will be for a duration of five years to support the developer’s expansion and growth plans, it said in a statement. 

The loan was secured from a group of banks - Saudi National Bank, Arab National Bank, Riyad Bank, Bank Al Bilad, Alinma Bank & Saudi Awwal Bank. 

“Roshn will draw on these funds over the coming years to push forward with our development strategy,” said Avinash Pangarkar, chief financial officer. 

Roshn is developing projects in three Saudi regions, including its flagship Riyadh development Sedra. 

It plans to construct a new 45,000-seat stadium southwest of Riyadh and will partner with Saudi Aramco to build a 47,000-seat stadium in Khobar. Both venues are expected to be potential match locations for the FIFA World Cup 2034. 

In March, it announced its first integrated community in Makkah, located at the western gate of the holy city. 

DMCC, a Dubai-based free zone, has signed a preliminary agreement with Palestine Islamic Bank (PIB) to address rising demand for Islamic finance solutions in Palestine. 

The partnership will facilitate Shariah-compliant transactions through the DMCC Tradeflow platform, addressing financing needs of businesses and individuals. 

Established in 1995, Palestine Islamic Bank maintains a Islamic banking network consisting of 43 branches and over 100 ATMs in Palestine. 

Ahmed Bin Sulayem, executive chairman and CEO of DMCC, said that the partnership with Palestine Islamic Bank marks another major step in their efforts to advance and support Islamic finance in the region. 

“With over 164,000 Islamic transactions recorded last year through DMCC’s Tradeflow platform holding an underlying value of AED1.91 trillion, we remain committed to delivering secure Shariah-compliant trade finance solutions that empower businesses, drive sustainable growth and boost financial inclusion.” 

Dr. Imad Al Sadi, general manager of Palestine Islamic Bank added that despite difficult circumstances in Palestine, the bank remains unwavering in executing its strategic vision. 

DMCC’s platform offers a range of online services designed to facilitate collateral financing, jewellery financing, and in the case of PIB, provide enhanced Islamic finance solutions. It also offers Murabaha transactions in physical commodities.
 

Here's a roundup of key developments across the Islamic finance ecosystem during the month of September

Editor's note: Saudi Arabia is leading GCC sukuk issuances, with global volumes expected to surpass $200 billion in 2024. Meanwhile, Egypt is exploring green bonds and local sukuk to bring about economic stability across the country. Its Al Baraka Capital also launched the country's first Shariah-compliant investment fund to finance small industries businesses. 

Investment

Egypt
Egypt explores green bonds, sukuk to ease debt
Egypt is actively pursuing economic reforms to stabilize its economy and reduce debt burdens.

The country's finance minister Ahmed Kouchouk discussed plans to issue green bonds and local sukuk with Hani Salem Sonbol, CEO of the Islamic Trade Finance Corporation, to boost investor confidence and economic growth, especially in food security and energy sectors.

The government is also planning tax reforms to simplify procedures for SMEs and freelancers. (State Information Service, Egypt)
 

Bahrain
CBB Sukuk Al-Salam securities oversubscribed
The latest Sukuk Al-Salam securities issued by the Central Bank of Bahrain (CBB) were oversubscribed by 185%, with subscriptions amounting to 79.572 million Bahraini dinar for a 43 million Bahraini dinar issue.

The securities have a maturity of 91 days, with an expected return of 6.13%, and are part of the ongoing short-term Sukuk Al-Salam series issued by the CBB. (Zawya)
 

Oman
Oman’s Islamic banking sector records substantial growth
Oman’s Islamic banking sector reached 7.8 billion Omani riyals in total assets as of June 2024, representing 18.1% of the country’s total banking assets.

The sector contributed 6.4 billion Omani riyals in total financing and saw a 33% increase in deposits. Despite a slight rise in impaired financing, the sector remains stable with a capital adequacy ratio of 15.8% and an 8.7% increase in profits in 2023. (Oman Observer)

Afghanistan
Agricultural Development Fund offers Mudarabah and Musharakah
Afghanistan's Agricultural Development Fund introduced Mudarabah and Musharakah to support farmers, distributing over 1.3 billion Afghanis last year and projecting 2 billion this year.

The initiative is part of ongoing projects to boost agricultural development, energy, water, and infrastructure projects in the country. (Ariana News)
 

Saudi Arabia
Saudi Arabia leads GCC as global sukuk issuances set to surpass 2023
Saudi Arabia is leading GCC sukuk issuances, with global volumes expected to surpass $200 billion in 2024, according to Moody’s.

The first half of 2024 saw GCC sukuk issuance surge by 138%, with Saudi Arabia accounting for 37% of the total. ESG sukuk volumes also hit record levels and are expected to continue rising. (Zawya)

Operational Development

Kazakhstan
Kazakhstan strengthens partnership with Islamic Development Bank, OPEC Fund, and Arab Coordination Group
Kazakhstan’s President Tokayev met with IsDB President Muhammad Sulaiman Al Jasser to highlight the bank’s role in the country's sustainable development, with over 70 joint projects worth $2 billion.

Tokayev also discussed infrastructure funding with OPEC Fund Director-General Abdulhamid Alkhalifa and praised ties with Gulf countries to attract $150 billion in foreign direct investment by 2029. (The Astana Times)
 

Bangladesh
Eastern Bank launches Islamic banking services
Eastern Bank PLC (EBL) has introduced Shariah-compliant Islamic banking services across 20 branches in Bangladesh, offering a range of products for its retail, SME, corporate, and trade clients.

The bank’s commitment to Shariah principles includes the launch of a unique product, "Continuous Musharakah Finance," designed to meet capital financing needs. (The Daily Star)
 

Egypt
AUB completes conversion of its Egypt operations from conventional to Islamic banking
Ahli United Bank (AUB) has successfully converted its operations in Egypt to Islamic banking, positioning the bank as a leading provider of Shariah-compliant financial solutions in the country.

The conversion is a key milestone in expanding the bank's Islamic finance footprint. (The Daily Tribune)
 

Kazakhstan
IsDBI completes pilot implementation of Islamic Finance Strategic Mapping Framework in Kazakhstan
The Islamic Development Bank Institute (IsDBI), in partnership with the Astana International Financial Centre (AIFC), has completed its Islamic Finance Strategic Mapping Framework (IF-MAP) in Kazakhstan.

The Kazakhstan Islamic Finance Country Report 2024, launched during the Astana Finance Days, offers key insights for investors and policymakers to drive the growth of the sector. (Zawya)
 

Company News

Bangladesh
Prime Bank launches Islamic Payroll Banking services
Prime Bank introduced Islamic Payroll Banking services to cater to businesses seeking Shariah-compliant solutions. The service offers employees benefits like zero balance accounts, no minimum balance, and daily profit on savings.

The bank aims to foster financial inclusion and ethical banking across 146 branches nationwide. (New Age)
 

Egypt
Al Baraka Capital, INVIA launch Sharia-compliant fund for small firms
Al Baraka Capital, in partnership with INVIA, launched Egypt’s first Sharia-compliant investment fund to finance small industrial businesses. The fund will initially provide 200 million Egyptian pounds in financing and is expected to grow to 1 billion Egyptian pounds by 2025.

Future plans include the issuance of green sukuk and additional Sharia-compliant funds. (Zawya)

Education

Global
IsDBI and INCEIF launch journal bridging Islamic finance and sustainable development
The Islamic Development Bank Institute (IsDBI) and INCEIF University launched the “International Journal of Islamic Finance and Sustainable Development” (IJIFSD), expanding the journal's scope to cover green finance, impact investing, and financial inclusion.

The journal aims to promote innovative research to address economic, social, and environmental challenges globally. (Africa Business Communities)

Lesha Bank, a Shariah-compliant bank in Qatar, has received permission to buy Bereke Bank. 

The Qatar stock exchange-listed company will purchase the entity from Kazakhstan government-backed Baiterek Holding, according to a statement issued by the agency of the republic of Kazakhstan for regulation and development of financial market. 

Lesha Bank reported a net profit of 54.1 million Qatari riyals for the first half of 2024, increasing 21% on an annual basis. 

Total income for H1 reached 117.1 million Qatari riyals, growing 28.6% compared to the previous year. Its total assets under management (AUM) reached 6.7 billion Qatari riyals, increasing 12% compared to an year-earlier period. 
 

More consolidation is likely to occur among smaller and midsize Islamic insurers in the GCC as they continue to report relatively weak earnings, a new report has revealed. 

S&P Global Ratings predicts that mergers, mainly in Saudi Arabia, the UAE and Kuwait, will continue as several Islamic insurers still fail to meet the requirement solvency capital requirements. 

Consolidation is particularly prevalent among smaller and midsize players in Saudi Arabia and the UAE. 

One in five Islamic insurers in Saudi Arabia and about one-third in the UAE merged in recent years, with the number of listed Saudi insurers declining 20% - from 34 to 27 - over the past half decade.

Takaful is a type of Islamic insurance wherein members contribute money into a pool system to guarantee each other against loss or damage. 

"While we expect overall credit conditions for Islamic insurers will remain stable over the next 6-12 months, consolidation will likely remain a hot topic among smaller and midsize players," Emir Mujkic, a credit analyst at S&P Global Ratings, said. 

Net profits in 2023 had already reached a record of almost $1 billion mainly due to rate adjustments in previously underperforming lines and higher investment returns. The year 2024 set to be another profitable year for the sector, too, the ratings agency said in a report. 

“We expect competition will pick up in some markets. This - together with anticipated interest rate cuts starting from September and potentially more volatile capital markets - could lead to a sharp decline in earnings in 2025 if Islamic insurers fail to maintain their underwriting discipline,” it added. 

S&P Global predicts that the Islamic insurance sector in the GCC region will expand by about 15%-20% in 2024, with revenues exceeding $20 billion. 

Saudi Arabia remains the largest Islamic insurance market, owning 91% of gross written premiums. The agency predicts the kingdom to be the main driver of topline growth in the GCC region. 

Outside of the kingdom, revenues of Islamic insurers in the GCC cumulatively declined by almost 3% in 2023, primarily due to a decline in premium income in the UAE, the region's second-largest Takaful market, primarily due to consolidation in the industry and rate pressure affecting motor and other lines.

“We expect the Takaful sector in the UAE will expand by 15%-20% in 2024 as motor rates increased substantially over the past 12 months, particularly following this year's major floods in Dubai and other parts of the UAE,” the agency added. 

Islamic Arab Insurance Company, the UAE’s largest Takaful solutions provider, has reported a net profit of AED 20.53 million, compared to AED 12.26 million during the same period in 2023. 

Takaful players in Bahrain, Kuwait, Oman, and Qatar will report more moderate growth rates of about 5%-