Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Bahrain: Tighter times  Join our daily free Newsletter

MENAFN - Oxford Business Group - 01/09/2009

No. of Ratings : 0
Add to Mixx!


(MENAFN - Oxford Business Group) Widely considered to be the best regulated Islamic finance market in the world, even Bahrain's sharia-compliant banks have not been able to fully avoid the knock-on effects of the global economic downturn.

Bahrain has long been a leader in the provision of Islamic finance services, being the first country to fully approve the carrying out of sharia-compliant banking activities and incorporate the sector within the wider banking industry.

One significant advantage that Bahrain enjoys, apart from its greater experience in the market, is that it has a solid regulatory framework in place to ensure proper oversight of its burgeoning Islamic finance industry. As the agency charged with regulating all segments of the Kingdom's financial sector, the Central Bank of Bahrain (CBB) has put in place regulations specific to Islamic banking. These have been refined since their introduction in 2001, and in 2005 the bank issued the first-ever comprehensive regulatory framework specific to takaful and retakaful companies.

Currently, there are some 30 Islamic banks, 15 Islamic insurance companies and one retakaful company operating in the Kingdom, while many conventional banks have also deployed Islamic finance units to complement their more traditional activities, having recognised the growing potential in the segment.

Though this potential remains, it appears to be slightly dimmed in the short term, with banks taking a cautious approach during the economic slowdown, building up deposits and liquidity but holding back on investments.

August has seen most of Bahrain's Islamic banks tabling second-quarter and first-half results, which paint a mixed picture. In mid-August, Al Salam Bank Bahrain announced a net profit of 7.3m for the quarter, down 65% on the same period last year, while ABC Islamic Bank posted a first-half net profit of 6.6m, though only 1m of this came in the second quarter of the year. Meanwhile, Khaleeji Commercial Bank's profits slipped from 36m for the second three-month term of 2008 and 69m for the first half of last year to 7.9m and 18m for the same periods in 2009. Newly established Capinnova Investment Bank opened its doors only at the beginning of the year, with considerable outlays in start-up and initial operating costs. This, alongside a tougher economic climate, played a large part in its 2.4m loss for the half. Meanwhile, the high-profile Gulf Finance House (GFH) turned in a 54m net loss for the second quarter, to add to its 38m worth of red ink in the first three months of the year.

By contrast, the Al Baraka Banking Group, Bahrain's largest Islamic bank by market value, posted a net profit of 49m, a 14% increase for the second quarter over the first. Though the strong result took the bank's profits for the first half of the year to 92m, this was still down by 14.8% for the same six months of 2008.

Al Baraka's deputy chairman, Abdulla Ammar Al Saudi, said the results were pleasing, given the impact of the financial crisis and the prevailing conditions in the regional and international financial markets.

"We are pleased that the plans we put in place to deal with this situation and exploit the opportunities that may arise under the current circumstances have achieved the results that we hoped for," he said on August 10.

Amidst the flurry of first-half results, financial ratings agency Moody's issued its latest outlook for the Bahraini banking system, warning that the fundamental credit outlook on the sector was negative. The report reflected the company's expectation that difficult credit and business conditions will continue over the next few months.

"This expectation is driven by the ongoing economic slowdown within the Gulf Cooperation Council (GCC) region, which although less severe than in other parts of the world is exerting pressure on asset prices and business volumes," according to George Chrysaphinis, a vice-president and senior analyst at Moody's. "The negative outlook is also driven by the more challenging wholesale funding conditions in the GCC within the context of the global financial crisis and consequent risk repricing."

While the Moody's report focused on Bahrain's retail and wholesale banking segments, rather than on the country's Islamic financial sector, some parts of the message were applicable across the board, and reflected the views of some senior officials with the Kingdom's Islamic banks.

According to Esam Janahi, the chairman of GFH, the continuing caution in the investment community has put a brake on activity.

"Unsurprisingly, given prevailing global economic conditions, raising funds for any financial institution has remained extremely challenging in recent months," he said on August 11.

For Mohammed Alabbar, the chairman of Al Salam Bank Bahrain, caution was also the watchword.

"The current difficult market conditions were not favourable for expansion of credit or for exit of investments, hence the bank has chosen to preserve its liquidity, awaiting markets to improve," Alabbar told local media on August 13. "Considering the prevailing market conditions, the bank is pursuing an extremely cautious approach to building assets."

There could be a downside to this careful approach, warns Anouar Hassoune, a Moody's vice-president and senior credit officer analyst, as Islamic financial institutions (IFIs) have traditionally demonstrated low leverage for religious reasons, but also because of their very profitable assets, cheap deposits and high levels of core capital.

"IFIs benefit from abundant liquidity, which is a very positive factor in an economic downturn. However, if such excessive liquidity is left underutilised, the lack of an innovative range of assets could slow growth during an economic boom," he said in mid-August.

The challenge for Bahrain's Islamic lenders is to time their return to the market and best take advantage of improving conditions, while at the same time developing more medium- to long-term funding instruments. Having led the sector for so long, it is likely that they will make the most of the opportunities when they arise.


  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Georgian Justice Minister Leaves Doha ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - HE Minister of Justice of Georgia Tia Tsulukiana left Doha on Thursday morning wrapping up a two-day official visit to the country. An agreement on ...

Apr 24 2014Egyptian Premier Off to Chad ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egyptian Prime Minister Ibrahim Mehlib left cairo on Thursday for Chad the first leg of a three-day two-state trip that will also take him to Tanzania ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014President Salva Kiir Relieves his Chief of the General Staff ,Qatar News Agency
(MENAFN - Qatar News Agency) Juba April 24 -South Sudanese President Salva Kiir relieved Chief of the General Staff of south sudan army James Hoth Mai. This came in a presidential decree aired ...

Apr 24 2014Omani non-oil exports to enter African markets ,MENAFN
(MENAFN) A senior official at the Oman Chamber of Commerce and Industry (OCCI) said that the Sultanate is seeking expansion in new African markets, in a time it is looking forward to reduce its ...

Apr 24 2014Australian Federal Parliament Deputy Speaker Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Canberra April 24 - Australian Federal Parliament Deputy Speaker Bruce Scott met here Thursday with HE Qatar's Ambassador to Australia Yousef bin Ali Al ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014US Secretary of State Meets Egyptian Intelligence Chief ,Qatar News Agency
(MENAFN - Qatar News Agency) shington April 24 - US Secretary of State John Kerry has met with the Egyptian Intelligence Chief Major General Mohammed Ahmed Fareed al-Tohami who is currently ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

Apr 24 2014Egypt's Interim President Receives Phone Call from South African President ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egypt's Interim President Adly Mansour has received a telephone call from President of the Republic of South Africa Jacob Zuma in which they discussed ...

Apr 24 2014Sharjah Ladies Club organizes "Sharjah Ladies run" at the University City ,MENAFN Press
(MENAFN Press) Sharjah Ladies Club gears up to launch "Sharjah Ladies run" at the Sharjah University City. With over 250 participants, the activity aims to encourage women and enable them to ...


Live Currency Rates



Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help