Moody's backs Islamic banks to emerge stronger

ArabianBusiness:Although the Islamic finance industry has been hit by the fall in oil prices, accumulated capital will help insulate it from the turmoil in financial markets, and the sector will emerge stronger once markets rebound, Moody’s said on Thursday.

“There is still a vital link between oil prices and Islamic banks as most of the latter operate in hydrocarbon-exporting economies. As they face increasingly limited funding sources, Islamic banks will find it more difficult to grow going forward,” said Anouar Hassoune, co-author of the report...Read More

Moody's is voted Best Rating Agency for Islamic Finance

ZAWYA:Moody's Investors Service has been voted "Best Islamic Rating Agency" -- that is, best rating agency for Islamic finance ratings by the readers of Islamic Finance News in the publication's annual 2008 Awards poll. The award recognises Moody's superior ratings coverage of Islamic financial institutions and Sukuk transactions during 2008.

Indeed, Moody's rates and publishes in-depth research on most of the banks that were voted "Best Islamic Bank" in their respective country by the readers of Islamic Finance News. "Moody's is pleased to receive recognition for its credit analyses of Shari'ah-compliant banks and its close surveillance of Islamic capital markets," said Anouar Hassoune, Vice President -- Senior Credit Officer who has spearheaded Moody's research on Islamic Financial Institutions. "Moody's maintains its view that the Islamic finance industry has a bright future," added Mr Hassoune.

Moreover, in terms of Islamic securitisations, Moody's rated high-profile deals in 2008, such as the Tamweel Sukuk, which was voted "Sukuk of the year", as well as the Sorouh/Sun Finance deal, which was voted "Structured Finance Deal of the Year" by the readers of Islamic Finance News. "The Sorouh/Sun Finance securitisation was a landmark in Sukuk markets, which are increasingly interested in 'true' asset-backed financings. Moody's applied its extensive analytical, legal and risk expertise for the benefit of investors," said Khalid Howladar, Moody's Vice President -- Senior Credit Officer for Asset-Backed and Sukuk Finance.

The award of "Best Islamic Rating Agency" not only confirms Moody's expertise in Islamic Finance, but also its high-profile role in enhancing global market awareness and understanding of Islamic finance through its prolific research on trends and developments in Islamic Finance (please refer to the selection of reports listed at the end of this release). In addition, Moody's analysts are regularly invited to share their insights at numerous public forums and educational workshops on Islamic finance.

"Moody's is delighted to receive this accolade, which represents a well-deserved recognition of the expertise and efforts of Moody's global Islamic finance team that is spread across its offices in Dubai, Limassol, Paris and Singapore," said Jehad el-Nakla, General Manager of Moody's Middle East based in the DIFC in Dubai. "The award testifies to Moody's ongoing commitment to Islamic finance, especially in the Middle East, where this segment is becoming increasingly important and where our key clients can be served from our sizable and growing Moody's Dubai office."

Anouar Hassoune, Khalid Howladar and Jehad el-Nakla, who will receive the award, will be available for face-to-face media interviews on the day of the awards ceremony to be held by Islamic Finance News at the Grand Hyatt Hotel in Dubai on 3 March 2009...Continue Reading

Moody's sees slower Islamic banking growth

GulfNews: Gulf-based Islamic banks, which have displayed resilience amid the current global financial turmoil, will see a slowdown in asset growth next year, ratings agency Moody's said in a report.

Globally, the Islamic banking sector grew about 27 per cent in 2007 and this year's growth rates are expected to be 20-30 per cent.

The report noted that early signals of financial performance and liquidity in the fourth quarter of 2008 so far portend a slowdown.

However, 2009 is likely be a tough year for Islamic banks. Moody's said it expects that the growth rate of their combined assets "will decelerate, probably in the range of 10 per cent to 15 per cent".

Most Islamic financial institutions have seen their reputation benefit from the current financial crisis, reflecting their conservative approach to business, a proximity to their domestic and regional deposit franchises, balanced and ordered appetite for growth and focus on basics of banking as opposed to innovation.

"All these factors, which used to be perceived as weaknesses before the credit crisis began, are now being used as shields against the potential damages of imported stress," Moody's said.

It said "one obvious reason" for their ability to weather the storm is embedded within the core principles of Islamic banking that prohibit both speculation and interest rates.

Islamic banks steered clear of toxic repackaged credit instruments in which many conventional banks dealt and suffered in the wake of the US sub-prime mortgage meltdown.

But Islamic finance institutions will also be affected by the global financial crisis as they "do not operate in isolation from their local, regional and even international environments".

The report said as the financial crisis turns into a real economic downturn, asset quality will deteriorate and Islamic banks' high exposures to the property sector could turn out to become "a curse rather than a blessing".