In Brief

19 May, 2012

Fitch Ratings has affirmed Dubai Islamic Bank's (DIB) Long-term Issuer Default Rating (IDR) at 'A' and Viability Rating (VR) at 'bb'. The outlook on the Long-term IDR is stable. DIB's Long- and Short-term IDRs reflect Fitch's view that there would be an extremely high probability of support from the UAE authorities in case of need. The bank's VR reflects its high exposure to real estate, weaker asset quality, high loan concentrations, and, in this context, its relatively tight capitalisation position. It also reflects its strong franchise, healthy profitability and comfortable liquidity.

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Oman’s two new Islamic banks, Bank Nizwa and Al Izz International Bank, will issue an initial public offering for 40% of their shares by the middle of 2011. Both banks received their licenses in 2011 following the Sultanate’s decision to permit Islamic banking and were still in the process of formation at the time of going to press.

It is also reported that BankMuscat has allocated RO150 million (approximately $400 million US) of capital to finance its Islamic banking window operation, Meethaq, subject to the necessary regulatory approvals. If market conditions prove favourable, the bank has indicated that capital amount could increase.

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The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank Group (IDB), has signed a framework agreement for cooperation with the Government of the Arab Republic of Egypt. This agreement aims to finance the Egyptian General Petroleum Corporation (EGPC) and the General Authority of Supply Commodities (GASC) with an amount of US$ 400 million annually for three years. The allocated amount will be used to finance the import of petroleum and petroleum products, in addition to the import of strategic commodities namely wheat and foodstuffs.

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Al Baraka reported 2011 full year group results showing that while total operating income was up 51% and assets by nearly 19%, net income was down almost 60%. This was attributed to the full consolidation of Al Baraka’s operations in Pakistan and Bahrain for the first time. Mr. Adnan Ahmed Yousif, Vice Chairman of Al Baraka Islamic Bank and President & Chief Executive of Al Baraka Banking Group, commented, ‘The conversion of the Bank's branches in Pakistan to an independent Islamic commercial bank following the merger with Emirates Global Islamic Bank in Pakistan and our hard work to turnaround these branches to profitability had an evident positive effect on the operations of the Bank. We also continued our ambitious work in Bahrain to launch new services and products, open new branches, and enhance capital, technical and human resources of the Bank.’