SIB provides first Islamic financial facility for Turkiye Wealth Fund

Sharjah Islamic Bank (SIB) and the Turkiye Wealth Fund (TWF) announced the signing of a unique agreement to provide a Shariah-compliant Murabaha facility worth $100 million, for a period of 3 years.

This agreement, facilitated by Dogan Investment Bank, marks the first time the Turkish Sovereign Wealth fund has launched financing from an international source in a form compliant with Islamic Shariah law.

The agreement was signed by Mohamed Abdalla, CEO of Sharjah Islamic Bank, and Arda Ermut, CEO and Board Member of the Turkiye Wealth Fund.

Launching new paths for sustainable commercial growth between the two parties In this context, Mohamed Abdalla, CEO of Sharjah Islamic Bank, expressed the SIB’s keenness to expand partnerships, diversify business sectors, and introduce innovative products according to the bank’s five-year strategy for 2024 – 2028. This agreement with the (TWF) falls within the SIB’s strategic plan to diversify its asset base.

Mohamed Abdalla stated: “Turkey is a fundamental part of our SIB’s strategy to diversify its investments and financial services, by offering the first-ever Islamic financial facility in partnership and cooperation with one of the world’s largest sovereign wealth funds, the Turkiye Wealth Fund. This confirms our strong confidence in the anticipated economic recovery in Turkey and the return of business activities and economic activities in it to a path of growth and escalation once again.”

The CEO of the Sharjah Islamic Bank highlighted the strong economic and investment relations between the United Arab Emirates and the Republic of Turkey, which are witnessing the launch of new paths for sustainable commercial growth between the two parties, through the comprehensive economic partnership agreement signed between the two countries. He added that the agreement of SIB with the TWF, being the primary owner of strategic assets, will help increase the depth of Islamic financing facilities in Turkey. In return, it will enhance the SIB’s commitment to the responsibility of ensuring its operations comply with the rules and principles of Islamic Sharia, achieving the interests of customers, and contributing positively to the effective financial ecosystem on the local, regional, and global levels.

From his part, Arda Ermut, CEO and Board Member of TWF commented on the transaction, stating, “Through this transaction, conducted for the first time on behalf of TWF, we highlight our mission to support improvement and deepening in financial markets, as well as our vision for sustainable development. As TWF, we continue our efforts for our country to become a significant player in Islamic finance, diversifying instruments in this field, and build a prosperous cycle. We sincerely thank all stakeholders involved in this process.” The Turkiye Wealth Fund (TWF) is the entity responsible for the sovereign ownership of strategic and high-importance assets in Turkey, including like Turkish Airlines, Ziraat Bank, HalkBank, Vakıfbank, Borsa Istanbul, Turkcell, Turk Telecom, Istanbul Financial centre etc.

The Sharjah Islamic Bank has registered robust growth, achieving a 31 per cent surge in net profits to Dhs841.5 million in 2023, compared to Dhs650.9 million in 2022.

Operating profits also witnessed a 23 per cent rise, reaching Dhs2 billion for 2023, up from Dhs1.6 billion in the previous year.

The net income resulting from financing and investment products witnessed a significant increase of 20 per cent to reach Dhs1.5 billion, an increase of Dhs239.6 million compared to the same period of the previous year in 2022, when it reached Dhs1.2 billion.

Similarly, there was a commendable growth of 23 per cent in net fees, commissions, and other income, reaching Dhs275.5 million for the fiscal year 2023, in contrast to the Dhs224.2 million reported for the same period in 2022.

Meanwhile, general and administrative expenses registered a 12 per cent increase, totaling Dhs684.1 million for the year ended 2023, compared to Dhs610.8 million for the preceding year. Noteworthy, however, is the enhancement of cost efficiency ratios through strategic policy measures, resulting in a notable improvement from 38 per cent in the previous year to the current 35 per cent. This highlights the Bank’s commitment to prudent cost management practices.

In terms of SIB’s risk management approach, the Bank has fortified its provisions, resulting in a reported impairment provision of Dhs439.0 million with an increase of 26.4 per cent, compared to the previous year’s provision of Dhs347.4 million.

The SIB’s statement of financial position indicates a notable 11 per cent increase in total assets, reaching Dhs65.9 billion as of 31st December 2023, compared to Dhs59.1 billion on 31st December 2022.

Maintaining a robust liquidity position is a strategic priority for the Sharjah Islamic Bank, evident in the liquidity ratio standing at 21 per cent of total assets or Dhs13.7 billion.

WAM