Is Islamic finance beneficial for non-Muslims?

Reviewing a little bit of the backlog of articles I have that I passed over in the past few weeks, I found two that I think get at an important but difficult topic with Islamic finance: how open Islamic finance is to non-Muslims.  The first article was one from Rushdi Siddiqui discussing somewhat controversial comments from Badlisyah Abdul Ghani, CEO of CIMB Islamic, that conventional banks should not be allowed to issue sukuk (except for multilateral development banks). 

Rushdi counters with a number of good articles about why scholars have allowed conventional banks to issue sukuk and for Islamic banks to use conventional banks as counterparties for their commodity murabaha. Another article comes from Faizy Syed, who focuses his article on India, with reference to other countries where Muslims are in the minority, is more concerned with the role Islamic finance can play within non-Muslim majority countries. 

I have a slightly different view from either, but that does not mean it is necessarily contradictory of their perspectives.  Islamic finance is in fact present in many countries whose Muslim minorities may be too small to support an indigenous Islamic finance industry, and in many of these countries the Islamic finance industry is not focused on the local market.  For example, Ireland and Luxembourg, are often held up as Western nations trying to attract Islamic finance.  However, they are no more interested in attracting Islamic finance for a domestic purpose except to bolster their status as offshore locations to facilitate international finance. 

These countries all see Islamic finance as no threat, and really no different in purpose in the economy from conventional finance and see the potential to expand their market share compared to the Cayman Islands, Guernsey or Bermuda as low-tax-rate countries that are also used to faciliate international transactions.  Both Ireland and Luxembourg are viewed as attractive because of their experience serving as domiciles for UCITS directive compliant funds offered across the European Union. 

While in that sense, Islamic finance has integrated itself in the international financial market, which is good for its development (something that Rushdi mentioned as well).  However, the other idea that is often expressed is that Islamic banks because they are guided by Islamic principles are therefore beneficial for all people, including non-Muslims.  I think the connection is more tenuous there.  Most Islamic (retail) banks operate to provide Muslims with Shari'ah-complaint financial services, which is good on its own by promoting greater financial market integration for Muslims. 

There are also widely cited examples, such as the high penetration of Islamic banks in the non-Muslim population in Malaysia.  In many cases this has arisen because Islamic banks can offer cost-competitive products and may also include some provisions (such as non-recourse mortgages in some countries) that conventional banks choose not to.  This is the best way I think for Islamic banks to expand their take-up by non-Muslims. 

One of the least effective, in my opinion, is to say that Islamic banks were insulated from the financial crisis by virtue of their inherent 'better-ness', or by repeating claims that Islamic banks are just 'better' than conventional banks (even while the Islamic banks are replicating the conventional banks' business models with higher fees).  There are many intriguing possibilities for Islamic finance that are appealing to many non-Muslims (like me), but they are based on specific cases, not broad generalizations. 

One of the things that allowed the financial sector to take over the American (and to some degree global) economy before the financial crisis (as measured by the share of total profits generated by financial institutions compared to the economy as a whole) was that it believed it was (to borrow from Goldman Sachs' CEO Lloyd Blank phrase) "doing God's work".  That it was inherently productive to the economy as a whole.  Instead, the correct description is that finance has a purpose which is productive for society as a whole (allocating capital to productive enterprises).  When it strays from this role (for example, by encouraging subprime mortgage lending to fill securitizations and re-securitizations, or by contributing to a real estate bubble topped off with newly created islands shaped like palm trees), it is not acting productively.

There is nothing inherently better about Islamic finance than conventional finance, and asserting its superiority compared to conventional finance as if the two could be compared each as a single monolith, is a fruitless discussion (and one that is unlikely to expand its appeal for non-Muslims who may not really understand what Islamic finance even means).  There are good products and bad products and the former can offer something to everyone that will help finance return to its productive roots and perhaps also improve it.  The latter, however, are not any better than the bad conventional products, or really any worse.  It is just that the conventional financial industry has a much greater reach so the bad products in conventional finance spread faster and more widely and thus have a much greater impact on the global economy. 

Instead, the path forward, if creating finance that is good and beneficial for all, is to ask "can Islamic finance offer a product that is cost competitive with conventional finance, and which offers something of value to consumers that conventional finance does not?".  If so, let's proceed post-haste.  If not, there may still be value (e.g. integrating Muslims into the financial system), but just recognize that the potential for the product to get widespread appeal among non-Muslims.  It is not necessarily a bad thing to develop a product that may only appeal to Muslims, if it can bring them into the financial system in a way that benefits them.  But this is a far cry from the idea that Islamic finance in its entirety is inherently better than conventional finance and therefore should appeal to all people. 

Islamic finance complexity (Part I)

I have been pulled away from blogging, mostly because I was finishing a chapter I am contributing (for a book which is coming out next year) on Islamic microfinance.  Hopefully, I'll be able to address some of the topics I was researching for the chapter in future blog posts (and newsletters).  However, first I thought it would be useful to revisit one conclusion from my last blog post on whether Islamic finance can "return to basics".  I wrote:

"The underlying reason I think that this complexity has arisen is because the Islamic finance industry has focused on creating financial products in a way that they are Shari'ah-compliant, rather than starting from 'first principles' of finance (i.e. what need are they addressing) and looking at how Islamic finance can meet these needs."

Given that the Islamic finance industry has branched into so many different areas, it is difficult to succinctly define the "financial needs" that Islamic finance is supposed to serve.  In some ways, the financial needs are not any different from the "financial needs" that conventional finance, which can lead to (somewhat deserved) cynicism about how the industry works now and whether there is anything that can usefully be accomplished within the Islamic finance industry as it is constructed now. 

But to start the thought process (this blog post and future ones on the topic are almost as much exercises for me to think through the issues as it is intended to share the thoughts with readers) every financial institution should serve two sides as an intermediary, matching the excess funds on the one side with the need for funds on the other.

• Islamic (retail) banks: 
• Hold Excess Funds: Depositors, Investors
• Need Funds: Individuals, Companies

• Islamic (investment banks) banks: 
• Hold Excess Funds: Investors
• Need Funds: Companies, Governments

• Islamic investments: 
• Hold Excess Funds: Investors
• Need Funds: Companies

• Takaful: 
• Hold Excess Funds: Individuals, Companies
• Need Funds: Individuals, Companies (when need arises in the future)

In some ways these different functions (drop any general categories I have missed in the comments) are all inter-linked.  Investment companies will invest in equity (and debt) of the Islamic banks and takaful companies.  Takaful companies will invest the premiums (donations) from policyholders in the Islamic investments.  Islamic banks will provide financing to companies that also receive investments from other Islamic financial institutions. 

These financial needs are not unique to Muslims, and the institutions should not be viewed as specifically targeted towards Muslims, nor should they necessarily be viewed as mirror images of conventional financial institutions.  My goal (if time permits) is to go through the different institutional types and look at how they are set up today both conventionally and as Islamic financial institutions and critique areas where the Islamic financial institutions have moved too far towards excess complexity at the expense of simply providing a service to meet a basic financial need. 

See the index of other posts: http://investhalal.blogspot.com/2011/11/islamic-finance-complexity.html

Central Bank of Qatar directive coming into effect as IBQ sells Islamic banking unit to Barwa Bank

The International Bank of Qatar is the first bank to sell its Islamic banking portfolio to a fully Shari'ah-compliant institution (Barwa Bank) to fulfill the requirements of the Central Bank of Qatar (CBQ).  The sale of its Al Yusr retail banking portfolio and branches (along with the employees at the branches)--although not the private or corporate banking portfolios--provides hints that the CBQ will not ease up on its requirements for conventional banks to dispose of their Islamic portfolios.

However, still uncertain is whether IBQ believes that the it will ultimately be allowed to keep its Islamic private and corporate banking units, or whether Barwa Bank was only interested in the retail portion of the Islamic window.  It is doubtful that the CBQ directive was only focused on retail banking because at issue was the potential for commingling of funds between Islamic and conventional banking segments.  If that is the primary issue, then allowing private and corporate banking, but not retail banking would seem illogical.

The only reason that I can see for why the directive might (and there are no definitive signs yet that this is the case) only include retail banking is if the CBQ wanted to strengthen domestic Islamic retail bank.  However, this is probably unlikely because it would allow conventional (including foreign) banks to retain the areas of banking that are probably more profitable, which does little to help the domestic Islamic banks that are expected to benefit from the directive. 

As the end-of-year deadline for compliance with the CBQ directive approaches, there should be more clarity about the full scope of the directive, as well as if there is any exclusions from the requirement for conventional banks to divest their Islamic banking portfolios.  At this point (as opposed to my initial assumptions), I think it is more likely that full divestment will be required, although the deadline may be extended (given the lack of announced developments so far).  If there is any major change by the CBQ, it will probably be limited to allowing banks to hold onto their existing Islamic banking portfolios until they naturally decay, while prohibiting them from taking any new business.

Islamic Bank of Britain raises GBP20 million; sukuk markets send mixed signals

There are a number of articles on the Islamic Bank of Britain's raise of GBP20 million at 1 pence per share. The most detailed is from Ovum. There are a couple other articles. Mushtak Parker wonders whether the capital raise "addresses the bank's fundamental shortcomings". At the end of 2009, the bank had 546 million shares issued and outstanding so the 2 billion shares issued in the offering represent significant dilution for existing shareholders and will require approval of the bank's existing shareholders. From a cursory look at the annual report, the increase in the loss in 2009 compared with 2008 was due to a sharp decline in the profits on the bank's assets, despite an increase in the bank's deposits. As the company describes it: "In addition, those customer deposits that have not been used to fund asset growth produced lower returns due to declining yields in the Islamic inter-bank markets affecting the Company's margin."

In short, the balance sheet expanded with the deposit base increasing although those extra deposits were largely placed with other banks in commodity murabaha and wakala agreements (many of whom are based outside of the UK). This is the wrong direction for a bank, particularly an Islamic bank that is supposed to be focused primarily on pure intermediation: mobilizing profit-sharing deposits to finance businesses. Instead, the bank has been able to attract the deposits but has not found enough demand for those funds (or was constrained by capital requirements that would have required more capital based on their risk weighting on the asset side of the balance sheet). There was growth in home purchase plans (Islamic mortgages) from GBP7 million to 33 million, which does provide one good sign for the bank, but as described below, the reliance on Islamic inter-bank markets as a destination for the bank's assets remains high.

If the bank is focused on attracting deposits (GBP186 million in 2009 compared with 153 million in 2008) that it cannot use in a way that attracts a higher rate of return, it is not working the way it needs to be a profitable institution. As the deposits grew, the commodity murabaha and wakala with other banks increased from GBP152 million to 156 million out of total assets that were GBP207 million in 2009 compared to 181 million in 2008. This is a retail bank where around three-quarters of the assets are lent to other banks. I agree with Mushtak Parker; this is a temporary solution to the bank's needs to offset losses and it remains to be seen whether the bank can address its limited ability to find credit-worthy borrowers to finance. [NOTE: As described in the disclaimer on this blog, nothing contained here should be considered investment advice or an offer to buy or sell any security mentioned]

Sukuk yield premiums in the GCC are widening as conventional yields are falling. Another article points to the best month for sukuk since March with yields on some sukuk falling. The discrepancy is probably due to the selection of sukuk; the latter article primarily focusing on Asian sukuk like the Malaysian sovereign and Petronas sukuk. The planned $1 billion sukuk that was reported to be part of a joint venture financing between Saudi Aramco and Total has been abandoned because of market conditions. A Bloomberg article has another take on the Saudi sukuk market, pointing to the likelihood that issuance of sukuk from the kingdom will double in 2010 compared to 2009 and lead the GCC region. Taking these four articles together suggests that investors remain hesitant to invest in GCC-based sukuk after the Dubai debt crisis despite significantly different economic conditions across the countries of the GCC. At the same time, Malaysian sukuk remain attractive to investors.

Other News

• AAOIFI released two new accounting standards. One which covers sukuk, shares and similar instruments breaks down the accounting treatment based on whether it more closely resembles debt or equity. The other standard provides institutions adopting AAOIFI standards for the first time with a starting point.
  
• Sameer Abdi of Ernst & Young was on CNBC talking about the E&Y report on Islamic fund management. I posted a few links when the report was released in May.
  
• Arab News provides a short article on the IIFM report on a potential Islamic repurchase agreements (repos).
  

Is the US unfriendly towards Islamic finance?

In general I try to ignore the fringe groups that believe all Islamic finance is terrorist finance, but an editorial in Investors Business Daily (not the first such article in that paper) makes such a specious argument it demonstrates (through hyperbole) why the US (in particular, Wall Street) lags in Islamic finance. The hyperbole comes when the article claims that lobbyists meeting in a Caribou Coffee (owned by Arcapita) are having "tea with terrorists" (as the article's title implies).

The refutation of Islamic finance offering anything more than conventional finance with a different structure to avoid prohibited activities including interest is easy. Zaid Ibrahim & Co covered the misconception that Islamic finance is "terrorist financing" in a short book (available online as a PDF). However, the hostility towards Islamic finance in the US that this type of article demonstrates is hurting the US financial industry's ability to compete in Islamic finance with other countries that are being more supportive: the UK, Singapore, Japan, South Korea, Australia, and France.

The US should be attractive to Islamic finance because of its deep capital markets and Islamic finance should be attractive to the US financial markets because it brings a small but rapidly growing source of capital and investment opportunities that can replace revenue sources lost when the shadow banking system collapsed. One of the differences between the US and other countries listed above is that the governments have come out and indicated their support publicly for attracting Islamic finance by leveling the regulatory playing field (usually with a desire to be a Western 'hub' for the industry).

Despite the hostility towards Islamic finance demonstrated in this article, there are many US financial institutions that are involved in Islamic finance, but they are doing so largely outside of the United States. This is disappointing because the world's financial system is becoming more interconnected and the growing links between countries increases the supply of capital that could be used to finance investment in the US. Ignorant articles that do nothing but make the US seem unfriendly to one source of capital, particularly one which is growing in importance globally is incredibly shortsighted.

Other News

• Indonesia is considering changing the way it issues sukuk, possibly switching from an auction to a book-building structure because of several failed auctions. The auctions failed primarily because investors asked for yields higher than the government was willing to accept to compensate for the illiquidity of the sukuk.
  
• A joint venture between Alcoa and the Saudi Arabian Mining Company are raising financing, in part through Islamic debt, to finance an aluminum smelter.
  
• Bahrain Islamic Bank is raising its capital by 75% following a loss caused by it taking provisions against its investment portfolio.
  
• A bank in Morocco, Attijariwafa Bank, launched an Islamic banking subsidiary, Dar Assafaa.
  

Islamic finance in the U.K. and the planned sukuk, AAOFI board issues guidance on ijara sukuk

Mixed signals are coming out of the U.K. regarding the potential issue of the first sovereign sukuk from a G8 country. The last year has seen a number of moves to make the U.K.'s regulatory environment more conducive to Islamic finance as the country sees great potential in the industry. However, recent news about the sukuk issue suggest that the government believes there are further regulatory changes needed to make the idea a reality. Although the sukuk issue may be delayed, Shari'ah-compliant home finance is growing rapidly. Other areas of Islamic finance are also growing rapidly in the U.K., which is seen as a gateway into Europe for many Islamic banks.

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the standards-setting body based in Bahrain released its much anticipated clarification of guidelines on sukuk (available as a PDF from AAOIFI). Sheikh Taqi Usmani, the chairman of the Shari'ah board at AAOIFI made headlines in November 2007 when he made comments that up to 85% of GCC-based ijara sukuk might not be Shari'ah-compliant because they contained repurchase agreements that set a fixed repurchase price for the assets on which the sukuk were based. The AAOIFI release as expected said that the use of repurchase agreements with fixed repurchase price were not permissible except when the fixed price is set for a lessee who is not an investment partner. Instead of using a fixed price repurchase agreement, the AAOIFI Shari'ah board allowed repurchase agreements where the price was determined by the fair market value of the underlying asset at the time of repurchase. This was largely expected and should not cause too much disruption because most of the ijara structure was upheld. The article on the AAOIFI release from Bloomberg contains reactions from Islamic financial industry participants.

DePaul University, a university in Chicago, Illinois has begun offering classes on Islamic finance making it one of few in the United States where classes are taught on the subject. The NY Times also highlights University Islamic Finance Corporation as one of the banking companies catering to minority needs in the U.S.

Kenya changed its regulations of the banking industry to allow Islamic finance and began granting license to retail and commercial Islamic banks in early 2007, the growth has not yet been realized as the banks are just beginning to open.

Lawyers with experience in Islamic finance are added to the list of professionals in short supply as the Islamic finance industry sees growth in demand outstrip the supply of capable professionals.

The Guardian profiles 'sharia technician', Humayon Dar, currently with BMB Islamic, a Shari'ah advisory firm owned by the BMB Group. There are few details about the BMB Group, although it is thought to be based in Brunei. Another Shari'ah-compliant consulting organization, Yasaar Ltd, based in the U.K., is focusing some of its attention on achieving standardization of Shari'ah standards across the different schools of fiqh.

Second meeting of U.K. Islamic Finance Expert Group

The U.K. Islamic Finance Expert Group (IFEG) chaired by Economic Minister Kitty Ussher had its second meeting where the focus was on enabling the Islamic retail market within the country. The IFEG release included the following statement:

"But there is also an important domestic market which we want to be accessible and open. There are nearly two million Muslims living in the UK and, thanks in part to legislative changes introduced by this Government, the Islamic mortgage market is now worth over £500 million. Going forward, the Government and industry want to continue to do all we can to see the retail market flourish and ensure that everyone - regardless of faith - has equal access to competitive financial products."

In addition to the focus on the retail market, the IFEG, which was set up largely to work on the feasibility of a U.K. government sukuk, the group is also working on how to support the wholesale Islamic finance market.

Qatar Islamic Bank eyes U.K., U.S.

Qatar Islamic Bank expects to receive a U.K. banking license "within weeks" and is reportedly beginning talks with the U.S. Federal Reserve about expanding into the U.S. as well, according to AMEinfo.

Islamic finance research fuelling growth, sukuk & a seminar on Islamic banking in Malta

Dr. Nazim Ali, director of the Islamic Finance Project at Harvard University, discusses the growth of the Islamic finance industry, in particular the role that researchers play in its development.

Expect details later this year on the developments which may lead to a U.K. sovereign sukuk.

The Malta Institute of Management will hold the first seminar in Malta on Islamic banking later this month.

Kuwait Finance House Malaysia Bhd, the Malaysian arm of the Middle Eastern Islamic bank may be interested in purchasing conventional assets of RHB Bank in addition to the bank's Islamic banking assets. The bank will then convert these branches, which it believes are in better strategic locations, to Islamic banks.

Sukuk issuance in Pakistan is growing strongly despite only being five years past the first locally issued sukuk.

Last week's news

Apologies for the delay in posting since last week, but I have been furiously working on our 501(c)(3) application. I will hopefully resume regular blogging by later this week. --Blake

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In response to the credit crunch, Dubai Ports World is planning an IPO to avoid the higher yield promised to the sukuk holders of the $3.5 billion convertible sukuk if a share floatation was cancelled. The sukuk was issued to fund the purchase of Peninsular & Oriental Steam Navigation, a U.K. ports group.

Rs. 55 billion ($906 million) in direct investments, mostly from GCC investors has flowed to the Pakistani Islamic banking industry this year as of the end of September.

Sukuk continue to be issued at a furious pace.

GCC-Asian links in Islamic finance grow as the Central Bank of Bahrain licensed the Islamic Bank of Asia to open an office in the country. The Islamic Bank of Asia became the first Islamic bank to receive a license in Singapore earlier this year.

The International Finance Corporation, the private lending arm of the World Bank, will finance investors setting up Islamic banks in Kenya.

Islamic home financing takes another leap forward in the U.K.

Shari'ah Capital will work with the Dubai Multi Commondities Centre to develop Shari'ah-compliant investment products "based on hard assets such as commodities and precious metals".

A letter in the Financial Times last week addressed the potential for soverign wealth funds particularly in the GCC region to move their assets towards Islamic finance.

Islamic banking in the West

The Islamic Bank of Britain today announced a halal business loan program in Bolton. While the loans will all be halal, they will be available to entrepreneurs of all faiths. The £25,000 ($50,365) will be available for business interested in halal financing and those that do not engage in haram activities like selling alcohol or tobacco.

A research professor at the University of Toronto's Wycliffe College provides an interesting insight into the historical prohibition on interest in non-Muslim faiths. Professor Stackhouse also provides a historical warning about the tendency for some to subvert the rules against charging interest through various unnecessary transactions. It is an important reminder that when there is a rule prohibiting something, some people may try to subvert the rule while appearing to be in compliance.

Canadian Islamic banking applications

Two unidentified companies have applied to the Canadian banking regulators asking to be allowed to open Islamic banks in the country and four more groups may be contemplating applications. Some critics are worried that the difference in product type may be difficult for regulators and may pose increasing risk, particularly if they are not able to become members of the Canada Deposit Insurance Corporation, the Canadian equivalent of the FDIC in the U.S.

Islamic finance is becoming more widespread in Pakistan and West and South Asia.
An interesting comment from M.A. Mannan, deputy CEO of Dubai Islamic Bank, was that "80% of Pakistanis would prefer Islamic products if all things are equal". This sets a high bar for Islamic banking given that over 95% of Pakistani's are Muslims and that Shari'ah-compliant products are costlier than their conventional equivalents.

Standard & Poors, the credit rating company, will begin issuing stability ratings for Islamic banks that have profit-sharing investment accounts.

UK needs to do more to bring Islamic finance into the market on equal footing with conventional financial institutions, says Lloyd's TSB product manager Aktar Ahmed. Lloyd's TSB, which last week made a public commitment to expand Islamic finance in the U.K.

Sukuk and Kenyan Islamic banking

Standard & Poor's estimates that there is $80 billion in sukuk outstanding worldwide as of June 30, 2007.

As the banking and finance industry grows in Kenya, so does the Islamic banking industry.

Islamic banks in Indonesia

Although Indonesia has the largest number of Muslims of any country in the world, the Islamic finance industry is very underdeveloped, representing less than 5 percent of total deposits. The Wall Street Journal has a story about the advertising techniques of different Islamic banks with an interesting conclusion: most Islamic banks in Indonesia focus on their competitiveness with conventional financial institutions and market themselves to both Muslims and non-Muslims. Many Islamic banks have about a 50-50 split between Muslim and non-Muslim customers.

Islamic hedge funds, Malaysia & newspaper supplements in China

An interesting take on the possibility of Islamic hedge funds. One issue though is to determine whether hedge funds attaching the 'Islamic' label are "using markets wisely" and not "speculate, play passing the parcel as long as it's someone else" and deal with the fact that many of the interpretations used by many of the Malaysian firms are not accepted widely outside of Malaysia.

Malaysia is "losing a lot of experts in Islamic banking and finance" to other countries, says PM Badawi

Malaysia will cease to issue Islamic banking licenses to foreign investors. New foreign entrants will need to partner with local firms.

Indian Banks Association waiting on Reserve Bank of India to decide on the "regulatory framework for introducing sharia- compliant products"

A supplement in today's China Post promoting Malaysia as a center of Islamic finance.

Islamic banking in India

Standard Chartered Bank approached the Reserve Bank of India, India's central bank, to get approval to open an Islamic bank.

Total sukuk issuance year to date is now $82.2 billion as of the end of July 2007.

Islamic banking, sukuk tax changes hailed, IF education scholarship fund

A good article by the Assistant Editor of CFR.org, the website of the Council of Foreign Relations about the growth of Islamic banking.

The British organization the Tax Incentivised Saving Association (TISA) is supportive of moves by the British government to change tax rules to put sukuk on equal footing with conventional bonds.

EONCAP Islamic Bank makes the first contribution to the INCEIF scholarship fund, the "Fisabilillah Trust Fund". The contribution is for RM400,000 (US$114,669).

Islamic banking flagging in Egypt, India could be the source of future growth

The lack of demand for Islamic banking in Egypt provides a stark warning for other countries' Islamic finance industry about enforcing adequate supervision & regulation. In the 1980s, many Islamic banks folded, taking the savings of many Egyptians with them. This produces a skepticism of Islamic banks generally among the population. In order to avoid a similar fate, other countries with Islamic banks need to take the utmost care to ensure that their country's Islamic banks are not taking excessive risk which could threaten their survival. One banking analyst in Cairo described the failure of many Islamic banks as "a social crisis," adding that "the image of Islamic banks still is not great"

Islamic banking has an additional challenge: fighting against perceived (and assumed) connections with terrorism through lengthy court battles.

Overlooked until now, India could be the next growth center of Islamic finance.

The Financial Times provides its take on the rapid growth of the sukuk market.

Africa and India on Islamic banks' sites, Turkish IPO & IFIS sukuk report

Standard Chartered, an emerging markets bank based in the U.K., plans to expand its Islamic finance offerings, particularly in India and Africa, two regions underserved by Islamic banks. The article describes the current activities of the bank in the Shari'ah-compliant market as:

"The bank offers current accounts and other shariah-compliant products in five markets and has just launched credit cards in UAE, Pakistan and Bangladesh. In its wholesale bank, it is active in sukuks (asset-based Islamic bonds) and in the first half was the lead arranger for four out of the five local currency sukuk bond issues in Pakistan."

Kuveyt Turk, the third-largest Islamic bank in Turkey 62 percent owned by Kuwait Finance House is planning an initial public offering of roughly 20 percent of tis shares later this year.

According to an Islamic Financial Information Service (IFIS) report, Malaysian bank CIMB Islamic Bank Bhd is the largest bookrunner of sukuk while sukuk issuance in the UAE is driving the market.

Islamic banking in Malaysia, home finance in New Zealand, Bloomberg TV on Islamic finance

Islamic banking has over 12% of the banking market and takaful has 6% of the insurance market in Malaysia.

"The [Islamic banking] industry has reached a point where, in some product areas, it can provide a credible alternative to traditional banking products" according to a report by Financial Insights.

Bloomberg television will have a show with a focus on Islamic finance this weekend.

Islamic home finance becoming possible in New Zealand.