Bank Indonesia (BI) held the Seven-Day Reverse Repo Rate (BI-7DRR) at 4.50%, the Deposit Facility at 3.75% and the Lending Facility at 5.25%, in order to help exchange rate stability in the face of global financial market volatility, according to Perry Warjiyo, the Governor of BI. However, with lower inflationary pressure and the need to encourage economic growth, the Governor expects these rates to fall. Warjiyo added that BI will also take necessary policy steps in coordination with the relevant authorities to maintain macroeconomic stability as...

The use of electronic money (e-money) has been approved as a Shariah-compliant payment instrument by the Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM), as announced at a special meeting held by BNM in the last week of January 2020. The SAC made this ruling; subject to the e-money being structured based on suitable Shariah contracts in order to ensure the rights and obligations of the contracting parties involved. Accordingly, one of the appropriate Shariah contracts for the use of e-money is Wakalah (the agency c...

According to Muazzam Mohamed, Chief Executive Officer of Bank Islam Malaysia (BIM), Islamic social finance enables financial institutions (FI), such as BIM to offer funding opportunities to micro small medium enterprises (MSMEs) in a more viable way.   Speaking at a webinar recently, Muazzam explained in the context of BIM how social finance will enable MSMEs, which typically are perceived to be a high credit risk with traditional FIs, to have access to banking services beyond traditional means. Muazzam stated that traditional FIs’ risk managem...

Capital Intelligence (CI) has affirmed Qatar Islamic Bank’s (QIB) long-term foreign currency and short-term foreign currency ratings at ‘A+’ and ‘A1’ respectively, with a Stable Outlook. According to CI, the affirmed ratings were supported by financial factors including robust asset quality, strong operating and net profitability, as well as solid capitalisation. In addition, QIB’s strong franchise and market position as the leading Islamic bank in Qatar (second largest bank in Qatar&rsq...

Malaysian Rating Corporation (MARC) has affirmed its AAis rating of Kimanis Power’s (KP) MYR 1.16 billion Sukuk Programme with a Stable Outlook. KP owns and operates a 285-megawatt combined-cycle gas-fired power plant in Kimanis Bay, Sabah. The affirmed rating reflects the favourable terms of KP’s 21-year power purchase agreement (PPA) with the off-taker Sabah Electricity (SE), an 83.0%-owned subsidiary of Tenaga Nasional Berhad (AAA/Stable), which absorbs the demand risk, according to MARC. MARC no...

RAM Ratings (RAM) has reaffirmed Public Islamic Bank’s (PIB) financial institution ratings as AAA/P1 with a Stable Outlook. In addition, PIB’s senior and subordinated Sukuk under its MYR 5 billion Sukuk Murabahah Programme (2014/2044) have been reaffirmed as AAA/Stable and AA1/Stable, respectively by RAM. RAM stated that the ratings reflect PIB’s strategic role as the Islamic banking arm of its parent, Public Bank Group (Group, rated AAA/Stable/P1), and as such, support is expected from the Group if...

The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank (IsDB) Group, has published a new report indicating its approval of USD 5.8 billion in funding for Organisation of Islamic Co-operation (OIC) member countries in 2019, out of which USD 5 billion has been released. The report stated that the agreed financing in 2019 was 12% higher than that provided in 2018 and the largest volume approved so far, bringing the entire funding volume of the ITFC for OIC countries to USD 51 billion from the conception of the body. Approximately 8...

According to a newly released report by Fitch Ratings (Fitch), Islamic banks in Saudi Arabia remain well positioned in the banking industry, despite slight weakening of financial metrics in 2019. The Islamic banks were supported by larger retail franchises, which required a lower cost of funding, with better asset quality. According to Fitch, Islamic banks enjoyed higher profitability metrics than conventional banks in 2019 as a result of higher margins, attributed to greater retail financing and lower costs of funding. Islamic banks in Saudi Arabia account for 79% o...

Indonesia’s Ministry of Finance (MoF) has projected that the Government of Indonesia will post its largest fiscal deficit in over three decades in 2020, as a result of plummeting state revenues following cuts to corporate income tax and the Government’s stimulus plans to revive the economy, as it copes with the COVID-19 pandemic. According to the Finance Minister, Sri Mulyani Indrawati, the deficit in government revenue is expected to reach IDR 1,028.5 trillion (USD 69 billion), estimated at 6.27% of Indonesia&...

Indonesia’s imports continued to fall for the tenth month in a row in April 2020, as manufacturing companies reduced production due to falling consumer demand caused by COVID-19. Indonesia recorded imports of IDR 12.54 billion in April 2020, down 18.58% year-over-year (YoY). According to Statistics Indonesia (SI), imports of consumer goods, raw material and capital goods declined by 16.6%, 19.1% and 17.1%, respectively, YoY in April 2020. This compares against a 7.02% YoY decline in Indonesia’s exports data from SI showed. ...