* BI says sharia units can become sharia banks in one month
* Revised law on VAT encouraging banks to set up sharia units
* Paper reports U.S. insurer looking at buying sharia bank
JAKARTA - Five Indonesian banks including Bank Central Asia (BBCA.JK), the No. 3 lender, expect to launch standalone sharia units next year, boosting the sharia market in the world's most populous Muslim nation, officials said.
Industry officials said the revised law on value added tax, which removed double taxation in the Islamic market, would encourage more banks to set up Islamic banking subsidiaries. The double taxation had made Islamic transactions more expensive than comparable conventional deals.
"We hope that it would be easier for us to expand business and seek strategic partners. We also hope to grow faster and attract investors from Middle East," said Barno Sudarwanto, head of planning and development at the sharia unit of Bank Negara Indonesia (BBNI.JK), the No. 4 bank, which will be spun off.
Others due to set up separate sharia banking units include mid-sized lenders Bank Panin (PNBN.JK), Bank Victoria (BVIC.JK) and unlisted Bank Jabar Banten.
Investor Daily newspaper on Friday reported that a U.S. insurance firm had met with central bank officials this week to discuss the possibility of buying an Islamic-compliant lender in Indonesia, without giving details.
Conventional banks typically set up their Islamic subsidiaries by first setting up Islamic banking departments and later on converting them into separate Islamic banks. Others, including BCA, may acquire smaller conventional banks and turn them into Islamic subsidiaries.
"I expect to see more banks spinning off their sharia units as the new VAT law which scraps double taxation from sharia transactions will take effect next year," said Adiwarman Karim, chief of Karim Business Consulting.
The firm offers consultancy services on the Islamic market, including the establishment of Islamic banks.
Indonesia currently has five sharia banks and 24 commercial banks with sharia units as of August 2009, out of around 130 commercial banks operating in Southeast Asia's biggest economy.
ACQUISITIONS
BCA vice president director Jahja Setiaatmadja told Reuters the bank was in the final stage of setting up such a unit, adding that operations may start in January. He declined to give further details.
BCA, with a stock market value of $12 billion, acquired Bank UIB in October 2008 and planned to convert the small lender into a sharia bank.
Ramzi A. Zuhdi, director in charge of Islamic banking at the Indonesian central bank, said it took about a month for banks to obtain approvals to convert their Islamic banking units into Islamic banks if all the administrative requirements were met
In neighbouring Malaysia, seen as the Islamic financial hub in Asia, domestic banks can immediately convert their Islamic units operating under the parent companies into separate entities, said Vaseehar Hassan Abdul Razack, chairman of Unicorn International Islamic Bank Malaysia.
Riawan Amin, the chairman of Indonesia's association of Islamic banks (Asbisindo), said it often took longer than initially expected to launch Islamic banks in the country due partly to administrative reasons such as in recruiting employees.
October 23th 2009 By Reuters.
Showing posts with label Islamic Banking. Show all posts
Showing posts with label Islamic Banking. Show all posts
Friday, October 23, 2009
Friday, June 12, 2009
Indonesia's BRI Syariah sees doubling in assets
JAKARTA -
Indonesian Islamic lender PT Bank Rakyat Indonesia Syariah (BRI Syariah) expects its assets to double to 3 trillion rupiah ($297.6 million) by the end of the year, the bank's top official told to reporters.
Indonesia is seen as a prime market for Islamic finance with around 85 percent of its population of 226 million people following Islam, although growth has been slow.
The central bank in January forecast that sharia banks would account for 3 percent of total banking industry assets this year, compared to just over 2 percent of the national banking assets in 2008, far lower than its neighbour Malaysia and Singapore.
"Our assets are at about 1.5 trillion rupiah and we hope they will increase to 3 trillion rupiah by the end of the year," chief director Ventje Raharjo said late on Thursday.
The world's largest populated Muslim country has been lagging in developing sharia banking, due to factors such as tax regulations and a lack of expertise.
The bank had also secured an additional 500 billion rupiah of funds to double its working capital to 1 trillion rupiah.
"It will be used for investment, strengthening the infrastructure and expanding business," Raharjo said.
He added the bank would focus more on low- and middle-income segments, in line with its parent company, PT Bank Rakyat Indonesia Tbk (BBRI.JK).
Most Islamic-based banks and sharia banking divisions in the country have provided financing for small- and medium- sized enterprises, focusing on agriculture, manufacturing, and trading sectors as well as business services.
Indonesia has five sharia banks and 25 commercial banks with sharia units, as of April 2009, central bank data showed. From Reuters, 12th June 2009
Indonesian Islamic lender PT Bank Rakyat Indonesia Syariah (BRI Syariah) expects its assets to double to 3 trillion rupiah ($297.6 million) by the end of the year, the bank's top official told to reporters.
Indonesia is seen as a prime market for Islamic finance with around 85 percent of its population of 226 million people following Islam, although growth has been slow.
The central bank in January forecast that sharia banks would account for 3 percent of total banking industry assets this year, compared to just over 2 percent of the national banking assets in 2008, far lower than its neighbour Malaysia and Singapore.
"Our assets are at about 1.5 trillion rupiah and we hope they will increase to 3 trillion rupiah by the end of the year," chief director Ventje Raharjo said late on Thursday.
The world's largest populated Muslim country has been lagging in developing sharia banking, due to factors such as tax regulations and a lack of expertise.
The bank had also secured an additional 500 billion rupiah of funds to double its working capital to 1 trillion rupiah.
"It will be used for investment, strengthening the infrastructure and expanding business," Raharjo said.
He added the bank would focus more on low- and middle-income segments, in line with its parent company, PT Bank Rakyat Indonesia Tbk (BBRI.JK).
Most Islamic-based banks and sharia banking divisions in the country have provided financing for small- and medium- sized enterprises, focusing on agriculture, manufacturing, and trading sectors as well as business services.
Indonesia has five sharia banks and 25 commercial banks with sharia units, as of April 2009, central bank data showed. From Reuters, 12th June 2009
Friday, April 3, 2009
Bank Syariah Mandiri posts strong growth in net profit
Jakarta –
Indonesian Islamic bank PT Bank Syariah Mandiri (BSM) reported a 70.12 per cent surge in net profit to Rp194.42 billion (US$17.6 million) last year from Rp115.45 billion in the previous year.
BSM management said a strong growth in financing was the main contributor to the rise in net profit last year. Its outstanding financing rose 28.59 per cent to Rp13.28 trillion from Rp10.33 trillion, the bank said in a statement yesterday.
Significant growth was also recorded in its fee-based income rising to Rp300.99 billion from Rp209.96 billion.
Indonesian Islamic bank PT Bank Syariah Mandiri (BSM) reported a 70.12 per cent surge in net profit to Rp194.42 billion (US$17.6 million) last year from Rp115.45 billion in the previous year.
BSM management said a strong growth in financing was the main contributor to the rise in net profit last year. Its outstanding financing rose 28.59 per cent to Rp13.28 trillion from Rp10.33 trillion, the bank said in a statement yesterday.
Significant growth was also recorded in its fee-based income rising to Rp300.99 billion from Rp209.96 billion.
Monday, February 9, 2009
Indonesia BNI aims to spin off sharia unit in first half
JAKARTA - Indonesia's fourth-largest lender, PT Bank Negara Indonesia Tbk (BBNI.JK), said on Monday it expects to spin off its Islamic banking unit in the first half of 2009 in a bid to tap growing demand for Islamic financial products.
As the world's most-populous Muslim country, Indonesia has been developing its Islamic financial market, with various sharia-compliant investment products.
The daily newspaper Kompas reported on Monday that banks will have to allocate a minimum of 500 billion rupiah ($43 million), or half the amount currently required, in paid-up capital if they spin off their sharia banking units as separate entities.
Bank Indonesia, the central bank, is expected to issue the new ruling in March, Kompas reported, citing Ramzi A Zuhdi, a central bank director in charge of sharia banking.
Central bank officials could not be reached for comment.
"With the expected new ruling, there is a possibility to accelerate" the spin-off of the sharia unit, Ismi Kushartanto, head of BNI's sharia unit, told Reuters.
Under sharia or Islamic law, interest is banned and income must be derived from a fundamental economic transaction such as trade in goods and services, direct investment in a business, or renting out property.
Last month, Bank Indonesia predicted that sharia banks would account for 3 percent of total banking industry assets in 2009, compared with 47 trillion rupiah in 2008, or 2.1 percent of total banking assests.
Indonesia had five sharia banks and 28 commercial banks with sharia units at the end of 2008, according to central bank data. 9th February 2009 (Reuters)
As the world's most-populous Muslim country, Indonesia has been developing its Islamic financial market, with various sharia-compliant investment products.
The daily newspaper Kompas reported on Monday that banks will have to allocate a minimum of 500 billion rupiah ($43 million), or half the amount currently required, in paid-up capital if they spin off their sharia banking units as separate entities.
Bank Indonesia, the central bank, is expected to issue the new ruling in March, Kompas reported, citing Ramzi A Zuhdi, a central bank director in charge of sharia banking.
Central bank officials could not be reached for comment.
"With the expected new ruling, there is a possibility to accelerate" the spin-off of the sharia unit, Ismi Kushartanto, head of BNI's sharia unit, told Reuters.
Under sharia or Islamic law, interest is banned and income must be derived from a fundamental economic transaction such as trade in goods and services, direct investment in a business, or renting out property.
Last month, Bank Indonesia predicted that sharia banks would account for 3 percent of total banking industry assets in 2009, compared with 47 trillion rupiah in 2008, or 2.1 percent of total banking assests.
Indonesia had five sharia banks and 28 commercial banks with sharia units at the end of 2008, according to central bank data. 9th February 2009 (Reuters)
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