The industry has also come together in demonstrating their commitment to businesses, in particular halal businesses and enhancing protection for halal businesses to venture into emerging markets. A dedicated RM20.0 billion yearly fund has been allocated by Islamic banks under AIBIM for SMEs including halal businesses. I urge eligible entrepreneurs to take this opportunity to empower their businesses and leverage on this platform in maximising business’ potentials. There is now growing awareness of the concept of halalan-toyyiban – which calls for Shariah compliance to be assessed throughout the entire supply chain of the products including distribution, marketing, and financing. Currently, only 54.1 percent of halal businesses are bankfinanced, and less than a quarter of the financing (21.9 percent) is in the form of Islamic solutions3. Islamic finance offers a variety of solutions through use of wide-range Islamic finance concepts such as sales based, leasing, profit sharing or partnership and many more that enables better fit for businesses’ need. For example, businesses who wish to acquire equipment or commercial vehicles can explore Ijarah contract, which allows businesses to lease equipment or commercial vehicles from an Islamic bank on rental for the usage of equipment during the lease period. The total leased rental, which is fixed throughout the tenure provides businesses with a hedge against future rates movement and provides businesses with an avenue to improve and better manage cash flow. Currently, Islamic finance institutions are rigorously exploring more customised solutions and improving customer experience and journey.
The net banking income of the three leading groups using IFRS grew by only 3.8 per cent in 2007, after rising by 18 per cent in 2006. However, the aggregate net profit under French accounting standards for the French banking system in 2007 reached nearly € billion, making it possible to generate income that is used in part to strengthen the institutions’ financial foundations, thereby contributing to the financial stability of the Paris market. The diversification of French banking groups’ activities has proven to be a strength. Several business lines are showing positive trends, with further gains in retail banking, which posted growth of 9.1 per cent (particularly in foreign operations, with an increase of 22 per cent compared to 2006), and project financing. Retail banking is still a core business for French banks and it played a critical role in stabilising income sources since the beginning of the financial crisis. Origination of new loans for non-financial agents remained high. Proper pricing of risks according to the credit quality of borrowers is therefore a key issue in France’s highly competitive lending market. By contrast, corporate and investment banking activities had a broadly negative impact on earnings, due to the combined effects of asset impairment and falling profits. Losses from asset management vary more significantly from one institution to another. What can we learn from the major banks’ first quarter earnings in 2008?