Islamic International Rating Agency (IIRA) has upgrade the long term foreign currency Sovereign rating agency of the republic of turkey from ‘BB+’ to ‘BBB-‘. The long term local Currency sovereign rating has also been upgrade from ‘BBB-‘ to ‘BBB’. The short term credit rating on both foreign and local currency scale has been maintained at ‘A-3’. On the national scale, rating have been reaffirmed at ‘AAA/A-1+(tr). Outlook on the rating is stable.
The upgrade reflect turkey’s improved economic fundamentals, with the country having achieved domestic demand driven in 2010 and having posted GDP growth of 9% after the contraction of 4.8% in 2009. In the backup of fiscal and monetary measures, growth rate has exhibited a quarter-by-quarter decline in 2011, though full year GDP growth is still likely to be high at around 7.5%. moderation in GDP growth rate may be expected in the coming year additional monetary tightening may also be expected in the face of rising inflation, which is around 10% for full year 2011
Turkey has undergone major changes in fiscal structure over the last decade. It has succeeded in reducing fiscal deficit as a percentage of GDP from 11.0% in 2001 to 1.8% in 2008. The ratio increased in 2009 to 5.5% , however, with the GDP growth in 2010, this again at tax restructuring scheme announced by the government, which is temporary phenomenon and more long term, sustainable measure would be required to achieve the planned reduction in fiscal deficit in relation to GDP

more...

Pulse of the OIC (Organization of Islamic Conference) Islamic capital markets 2010

BACKGROUND

From London, Luxembourg, to Singapore – Islamic Capital is increasingly part of the global financial platforms. At the same time, within its core markets of 57 OIC (*Organization of Islamic Conference) member countries –Islamic capital markets are still in their infancy.

• Many challenges exist in this industry--envisioned to serve a core Islamic market of 1.6 billion people to mobilize Islamic capital and service capital needs globally. Besides external macro-economic challenges--internal challenges are currently limiting the industry’s true potential. These include:
   

  • A confusion caused by recent defaults and questions about the authenticity of the spirit of Islamic Finance

  • A corporate culture which has primarily relied on raising capital via Bank loans as opposed to turning to the capital markets.

  • Legal, regulatory systems have not been able to resolve and blend variances in Islamic law interpretations.

  • Inability to mobilize consumer finance, which on aggregate, limits access to investment opportunities.

  • Prioritization in business models to address various glaring, outstanding social and developmental infrastructure needs (e.g. job creation, food, water, education, SMEs and healthcare.)

• It is with the above context, that we present this Research Brief on the Pulse of the OIC Islamic Capital Markets. The objective is to summarize the current state of Islamic capital flow within its core OIC markets. This report should provide investors, finance managers, and investment managers with a broad overview of areas of opportunities for them.

• This Research Brief covers three key representative sectors: 1) the Stock Markets of the OIC countries, 2) the flagship industry segment of Sukuks (Islamic Bonds) and, 3) the Islamic Funds market. This brief does not cover the state of Shari’ah governance, M&A or IPO activity or other related segments of commodity markets, foreign exchange markets, Private Equity, commercial and retail banking.

more...

IIRA Reaffirmed Sovereign Rating on Bahrain

During 2008 and early part of 2009, Bahrain’s economy continued to expand. GDP at 2001 prices grew by 6.6% down from 8.2% in 2007. The decline in growth is reflective of the global crisis situation impacting most of the economies of the world. This was further aggravated in 2009 because of regional crisis emanating from the default of a leading business group Al Gousaibi and Saad and the collapse of real estate sector in neighboring Dubai which caused a spillover in Bahrain real estate market. During 2009 the kingdom is expected to register a nominal real growth if not a negative growth.

The overall conservative approach of the government and Central Bank of Bahrain (CBB) during the economic boom time coupled with stringent regulatory framework preventing banking sectors from reckless lending has however helped the Kingdom to avoid the steep downturn and negative sentiments as witnessed in the neighboring Dubai.

more...

IIRA's Rating Report on Jordan Islamic Bank (JIB)

JIslamic International Rating Agency (IIRA) has assigned national scale entity credit rating of A for long term and A-1 for short term for Jordan Islamic Bank (JIB) with a stable outlook. On the international scale, IIRA has assigned BBB for long term local currency and BBB- for long term foreign currency while for short term A3 rating has been assigned both for local currency and foreign currency. The outlook is stable.

The rating is supported by the 30- year history of the bank, presence of a strategic shareholder, a strong brand being the leading Islamic bank in the country, excellent liquidity position, good asset quality diversified deposit base, improvement in profitability and control over operating cost.

more...

IIRA's Shari’a Quality Rating Report on Jordan Islamic Bank (JIB)

Jordan Islamic Bank (JIB) for Finance and Investment was established in 1978, as a public shareholding limited company to carry out banking, financing and investment business operations in compliance with the holy Shari’a. The bank started with a paid up capital of 2 million Jordanian Dinars (JD) out of an authorized capital of 4 million JD. By the year 2008 the paid up capital reached 81.25 million JD compared to 38.5 million in the year 2000; and shareholders equity reached 161 million by the year 2008 compared to 54.5 million in the year 2000.

more...

IIRA's Shari’a Quality Rating Report on Dawood Islamic Bank Limited

Pakistan's sixth Islamic commercial bank, Dawood Islamic Bank Limited (DIBL), officially commenced operations on Friday, April 24, 2007. The Bank is the result of an initiative of the First Dawood Group who joined with the Islamic Corporation for the Development of the Private Sector (ICD) Jeddah, which is a wholly owned subsidiary of Islamic Development Bank –Jeddah, Unicorn Investment Bank - Bahrain, which is a full fledged Shari’ah compliant Investment Bank Al Sufat Investment Company - Kuwait, Gargash Enterprises (LLC) - Dubai, Mr. Azam Essof Kolia - a Singapore based entrepreneur and Shaikh Abdullah Mohammad Al-Romaizan, an entrepreneur from the Kingdom of Saudi Arabia.

more...

IIRA's Reasearch Report on Liquidity Assessment of Islamic Banks

Liquidity Assessment of Islamic Banks

The sub-prime mortgage crisis resulted in a loss of confidence among banks. As a consequence, many banks declined to participate in interbank markets. The result was diminished liquidity in the banking system at a crucial time. Lack of liquidity means loss of depositor’s confidence and the resulting systemic risk which has caused runs on a number of banks. Since the origins of the crisis rest in the diminution of asset values, especially asset backed securities; the nature of Islamic banking with its prohibition on interest has served to protect Islamic banks to some extent. That is not to suggest they are entirely immune from the impact of declining real estate values and restricted real estate lending. However, Islamic banks are less likely than conventional institutions to suffer negative outcomes beyond their capacity to sustain core profitability and capital. In particular, IIRA has evaluated the liquidity of Islamic Banks. We have selected a sample of key Islamic Commercial Banks based in a number of Islamic markets. The banks selected for this study are Al Baraka Islamic Bank Bahrain (Albaraka), Al Salam Islamic Bank Bahrain (Al Salam), Bahrain Islamic Bank (BIsB), Dubai Islamic Bank (DIB), Jordan Islamic Bank (JIB), Khaleeji Commercial Bank (KCB), Kuwait Finance House Bahrain (KFH) and Meezan Bank Pakistan Limited (MB).

more...

IIRA's Rating Report on Republic of Turkey

Turkey has achieved extraordinary progress in the last seven years largely as result of sound economic and financial management leading to completion of IMF led structural reforms program, significant lowering of the debt burden relative to GDP, shifting much of the government’s external debt to a domestic basis, gaining control of inflation, and broadening the export base. Although oil prices are a severe challenge, petroleum import volumes were down toward the end of 2007.

Although real GDP growth dropped to about 4.6% in 2007, the average during the 2005-2007 period was a healthy 6.6% per annum due to improvements in productivity, increasing consumer income, and the effects of larger foreign direct investment. Monetary and fiscal discipline contributed to controlling inflation in a formal process requiring cooperation between the treasury and the central bank. The banking system is significantly privatized (foreign capital controls 40% of bank assets) with further privatizations scheduled. The continuing privatization of state-owned enterprises has contributed to a reduction in debt.

more...

IIRA's Rating Report on Kuwait Turkish Participation Bank

Kuwait Turkish Participation Bank was established in 1989 to operate under the interest free banking principles set forth in Islamic Shari’a. The bank is a 62.2% subsidiary of Kuwait Finance House (KFH) with the General Directorate of Associations Turkey holding 18%. KFH is a strong majority shareholder with a high probability of financial and technical support from the parent. Reliable ownership and management structure are among the factors supporting KTPB ratings.

Other positive factors are the improving profitability with an increased contribution from core banking activities, substantial increases in fee based income and management’s plan for further expansion. The rating is constrained by size of the bank with very low market share and average profitability. There are no formal guarantees by the parent. Despite improvement in asset quality in recent years, it is still a concern.

more...

more...

more...

more...