Islamic banks slowly embrace green finance
ISLAMIC banks are gradually embracing socially responsible finance, from renewable energy to microfinance efforts, helping unlock new funding sources for environmentally-friendly projects, an industry survey shows.
The two sectors have developed separately from each other, but green projects could benefit from tapping Islamic banks in countries like the United Arab Emirates and Malaysia, where they now hold a quarter of total banking assets.
Around two-thirds of financing in Saudi Arabia follows Islamic principles, which forbid investing in gambling, tobacco and alcohol. This resembles the screening methodology used by ethical funds in Western markets.
Commonalities could help converge two fast-growing bond markets: Moody’s Investors Service estimates issuance of Islamic bonds, or sukuk, will reach US$70 billion this year, compared to over US$80 billion for green bonds.
Green finance is increasingly important for Islamic banks seeking to differentiate themselves from their conventional peers, the Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI) said in a report.
Islamic banks want to improve their contribution to local economies with job creation, infrastructure and SME financing as top priorities, a survey conducted by CIBAFI between May and August shows.
The survey drew input from 86 Islamic finance institutions across 29 countries mainly from the Middle East and Southeast Asia, as well as Africa.
Around a third of small Islamic banks cited a moderate exposure to the green and renewable energy sectors, compared to 15.5 per cent for large Islamic banks.
In Malaysia a local lender has introduced green mortgages to facilitate installation of solar systems, while an Islamic bank in Jordan is developing alternatives to medium-term loans to fund energy efficient and renewable energy projects. — Reuters
UEM Edgenta yesterday received the green light from its shareholders for the proposed acquisition and expects to compete the deal by the middle of this month.
“The acquisition will contribute an additional RM310 million to the current contribution of RM350 million from the healthcare sector.
“This will total RM660 million, representing 20 per cent, of total group revenue.
“This will be reflected in 2017 and upon the successful conclusion of the acquisition on Dec 15, 2016,” UEM Edgenta managing director/chief executive officer Azmir Merican told reporters after the company’s extraordinary general meeting yesterday.
He said the healthcare segment is fundamental to the company’s core business, besides transportation, hence the transaction is important.
UEM Edgenta, the fourth core division of UEM Group Bhd, is one of the total asset solutions players in the region, providing services to various segments such as asset consultancy, healthcare, infrastructure, facilities, property and energy.
Meanwhile, Singapore-based AIFS is the holding company of UEMS Pte Ltd, a facilities management provider with a track record of over 25 years currently servicing over 90 hospitals and healthcare institutions in the republic, Taiwan and Malaysia, with a total of 26,000 beds.
Azmir said over the next five years, UEMS’ growth strategy included expansion into other Southeast Asian countries such as Indonesia and Cambodia.
In Malaysia, UEMS services the private healthcare and hospital segments such as Prince Court Medical Centre, Pantai Hospital Kuala Lumpur, Gleneagles Penang and Assunta Hospital.
In Taiwan, it manages hospital facilities for public and private hospitals such as Saint Paul’s Hospital, National Taiwan University Hospital, Pingtung Christian Hospital and Yuan’s General Hospital.
As for Singapore, it provides housekeeping and patient management services for clients including Changi General Hospital, St Luke’s Hospital, Tan Tock Seng Hospital, as well as Sengkang Health@Alexandra Hospital. — Bernama
The acquisition will contribute an additional RM310 million to the current contribution of RM350 million from the healthcare sector. Azmir Merican, UEM Edgenta managing director/chief executive officer