HSBC seeks big growth, sukuk pickup in 2010

DUBAI (Reuters) - HSBC expects double-digit revenue growth this year in its Amanah Islamic banking division and more sukuk mandates than in 2009, Razi Fakih, deputy chief executive of Amanah told Reuters...Continue Reading

HSBC Bank Malaysia Records Best Ever Financial Results

KUALA LUMPUR-HSBC Bank Malaysia Bhd recorded its best ever results in financial year ended Dec 31, 2007, with an 8.7 percent jump in pre-tax profit to RM1.032 billion from RM949 million previously.

Deputy chairman and chief executive officer, Irene M. Dorner, said the rise in profit arose from strong growth in a broad spectrum of income streams as the bank continued to invest in its business.

Speaking at a media briefing here today, Dorner said 2007 was a year of investing in the bank's organic operations for long-term growth.

"Going forward, we intend to extend our brand into the young and smart market. We want to grow and deepen our relationship with the small and medium enterprises base," she said.

In financial year 2007, the bank's revenue surged to RM3.22 billion from RM2.831 billion the year before.

Its total assets grew by RM7.1 billion or 17.4 percent to RM48.1 billion as at Dec 31, 2007, funded by a 13.1 percent increase in customer deposits, due to ample market liquidity, and RM1 billion of subordinated bonds issued in June and November last year.

Commenting on HSBC Bank Malaysia's Islamic operations, Dorner said its Islamic banking subsidiary was on target for official launching in the second half of this year.

According to her, the move is in line with the HSBC group's initiative of making Malaysia the regional hub for HSBC Amanah.

"By building HSBC Amanah, we will be launching new products and leading the industry to become a centre of excellence for Islamic finance in Asia," she said.

She also said that the bank was set to establish an international currency business unit within its existing Islamic banking operations and a similar unit will also be set up within the Islamic subsidiary, allowing the bank to expand its access to Malaysia's Islamic finance industry.

On plans for new branches, Dorner said the bank was always delighted to open new branches and it will have an opportunity with the Islamic subsidiary.

"A significant proportion of the income and business of HSBC Malaysia will come from Islamic banking over time. Currently, it is around 12 percent," she said when asked about targets for the Islamic banking business.

Income from the group's Islamic banking operation jumped 29.4 percent to RM231 million last year from RM179 million in 2006 due to increased lending in personal instalment loans and hire purchase.

On segments that will drive the bank's growth this year, Dorner said it was expecting growth across all of its business lines, including premier customer base and commercial banking business.

"There is plenty of growth in commercial banking business, like corporate banking, especially in the small and medium enterprises range. Corporate banking, for example in construction, to support the economic corridors across Malaysia and we believe there is ample space to grow," she said.

"In addition to that, across the Islamic banking, we believe significant growth because with the licence granted, we can offer a full range of products. Not just vehicle finance but possibility of asset management as well."

In financial year 2007, other operating income rose by RM107 million or 14.1 percent to RM869 million from RM762 million previously, mainly due to higher fee income and net gains from dealings in foreign exchange as more corporate customers hedged their risks.

HSBC incorporates its Islamic banking unit

PETALING JAYA: HSBC Bank Malaysia Bhd has announced the incorporation of its Islamic banking subsidiary, HSBC Amanah Malaysia Bhd, in line with its efforts to provide comprehensive Islamic financial services to the Malaysian market. The new entity would now be a full-fledged Islamic bank, it said in a statement.

HSBC Bank deputy chairman and chief executive officer Irene M. Dorner said the new entity would provide the opportunity for HSBC to increase its role in Malaysia's Islamic finance industry.

"We hope to be able to launch our Islamic bank in the second half of this year," she said in the statement.

The bank said HSBC Amanah would complement HSBC Bank's banking and financing solutions by providing a full suite of innovative products and services to retail and corporate clients when it opens its first branch.

With the establishment of the Islamic banking subsidiary, HSBC Amanah would become a distinct, local and legal entity with a universal banking license, it added.

HSBC Amanah plans new Islamic funds

DOHA: HSBC Amanah, the global Islamic financial services arm of the HSBC Group, is developing new funds, including Islamic structured notes in view of the growing needs for Islamic investments.

The GCC region, which holds a promising investment outlook, is all set to see new instruments like exchange traded funds and new asset classes, especially the Halal industry, according to experts who spoke at the recently held seminar on Wealth Management, organised by HSBC Amanah, which has assets worth more than $6bn.

“There is a growing need for Islamic investment products in our core markets. We are developing HSBC Amanah structured notes,â€‌ its Regional Head of Wealth Management Ishrat Kiyani said.

He said HSBC Amanah was currently developing new funds such as HSBC Global Emerging Market Fund and HSBC Amanah Hangseng Index Fund for capturing the growth in emerging markets and Asia Pacific.

“Out goal is to offer our clients attractive investment opportunities and the assurance of Shariah authenticity,â€‌ he said.
On the investment outlook for the GCC, Shuaa Asset Management Chief Investment Officer Amin El-Kholy said it was promising.

“The recent strong growth has been structural and sustainable due mainly to increased consumer spending, economy diversification, structural reforms and sustained high oil prices,â€‌ he said.

The stock market price/earnings multiple for GCC was more attractive for investors compared with the expected GDP growth, he said.

“Equally interesting, GCC equity market is uncorrelated with S&P 500, which provides investors with unique diversification benefits and protects them from global downturns,â€‌ he added.

Rushdi Siddiqui, Global Director of Dow Jones Islamic Market Index Group said new instruments such as Islamic exchange traded funds were gaining grounds, allowing investors to diversify investment opportunities and benefit from an interim alternative for short-term Islamic liquidity.

The trend in Islamic finance is towards new asset classes and going forward, I see the Halal industry, including food, finance, medicine and cosmetics as very promising asset class for investors,â€‌ he said.

Mohamed Ali Elgari, a Professor at King Abdul Aziz University in Riyadh and a member of HSBC Amanah Shariah Committee, said wealth creation was at the heart of Islam’s economic philosophy.

Growing one's wealth in line with the tenets of Islam is not only permissible but desirableâ€‌, he said, adding Islam has a much wider vision for investments.

Maturing Islamic finance lures millionaires: HSBC

GENEVA - Muslim millionaires are slowly warming to Islamic investing, a senior HSBC banker said, taking their cue from retail clients already keen on sharia-compliant banking.

A wider appeal for the rapidly growing number of Middle East millionaires would bode well for the nascent Islamic finance industry, where some 300 banks vie for the favours of Muslim investors, up from almost none 30 years ago.

"It started with retail banks, but now it is also invading the private banking business," said Pierre Pissaloux, who heads the Middle East unit of HSBC Private Bank (Suisse).

Boosted by petrodollars, the number of people in the Middle East with at least $1 million to invest grew by 12 percent in 2006, and the total cash they held stood at $1.4 trillion.

Growth rates are forecast to stay close to 10 percent in the period up to 2011, according to a study.

The spread of Islamic finance products into the upper reaches of private banking had in the past been modest, but a product range including hedge funds was now suited even for demanding multi-millionaire clients, Pissaloux said.

"I have some strong goals to fill our product offering with suitable (Islamic) products. We can now do our work as asset managers with a suitable Islamic product offer," Geneva-based Pissaloux told Reuters in an interview.

Some 8 to 10 percent of clients put their money into Islamic finance in his unit, Pissaloux said, well below a number of up to 20 percent often mentioned by other banks who offer Islamic finance to an audience of less wealthy clients.

Overall, HSBC's Swiss private bank holds some 200 billion Swiss francs ($182.5 billion) in client assets.

"One perceives a gradual development towards Islamic finance. Still, I believe that it is more noticeable among mass affluent and retail clients. Demand is stronger in the smaller accounts segment," Pissaloux said.

HSBC defines mass affluent clients as anyone with free investible assets below 1 million francs. Clients need at least 10 million francs to bank with HSBC's private bank.

The British bank is one of the largest providers of Islamic finance products among Western banks, which the service offers through its HSBC Amanah unit.

HSBC Amanah expects 60% revenue growth

HSBC's global Islamic financial services arm said on Monday it expects revenue to grow by at least 60% over the next few years, led by business in Saudi Arabia and Malaysia.

"We have been growing at 60, 70% plus, CAGR (compound annual growth rate), over the last three years, and we fundamentally don't see that slowing anytime soon," Asif Mumtaz, Middle East head of HSBC Amanah, told newswire Reuters in Dubai.

Nearly all new consumer finance business at Amanah's Saudi affiliate, SABB, is Sharia-compliant, he added.

"In three to five years, it may be not too far away for the rest of the Gulf Cooperation Council as well," Mumtaz said. Saudi Arabia, where it owns 40% of SABB, is HSBC's largest Islamic finance market, he added.

In Malaysia, where about 55% of the country's 27 million people are Muslim, HSBC wants to use its license to expand its Islamic financial services, especially for individuals, Mumtaz said.

"The Islamic finance industry is going to be huge in the next five to 10 years," he said.

Islamic insurance services, or takaful, will grow particularly quickly as the industry is underdeveloped, Mumtaz said.

Revenue from institutional business, such as arranging the sale of Islamic bonds, or sukuk, is also growing, he added.

HSBC Amanah said on Tuesday it has been named Best International Islamic Bank at an awards ceremony for the Islamic finance industry.......Continue

HSBC sees Saudi driving Islamic finance revenue

By James Cordahi

DUBAI - HSBC Holdings Plc (HSBA.L: Quote, Profile, Research) (0005.HK: Quote, Profile, Research) expects revenue at its Islamic unit to grow at least 60 percent a year for the foreseeable future, led by its business in Saudi Arabia, the Gulf and Malaysia.

"We have been growing at 60, 70 percent plus, CAGR, over the last three years, and we fundamentally don't see that slowing anytime soon," Asif Mumtaz, Middle East head of HSBC Amanah, told the Reuters Islamic Finance Summit in Dubai. He declined to be more specific.

Almost all new consumer finance business at its Saudi affiliate, SABB 1060.SE, is sharia-compliant, Mumtaz said. "In three to five years, it may be not too far away for the rest of the GCC (Gulf Cooperation Council) as well," Mumtaz said.

The GCC clubs Saudi Arabia, the United Arab Emirates and four other Gulf oil producers into a loose economic and political bloc.

Saudi Arabia, where it owns 40 percent of SABB, is HSBC's largest Islamic finance market, Mumtaz said.

In Malaysia, where about 55 percent of the country's 27 million people are Muslim, HSBC plans to use its license to expand its Islamic financial services, especially for individuals, Mumtaz said.

"The Islamic finance industry is going to be huge in the next five to 10 years," he said.

Islamic insurance services, or takaful, will grow particularly quickly as the industry is underdeveloped, he said. Revenue from institutional business, such as arranging the sale of Islamic bonds, is also growing, Mumtaz said.