JEDDAH: Fitch Ratings says in a new report that a tougher operating environment is continuing to challenge Saudi Islamic banks.
Sustained low oil prices have taken their toll on economic growth and government spending, which is affecting certain sectors, especially those dependent on government spending, such as contracting.
Asset-quality metrics are therefore likely to deteriorate from their current strong position, especially in light of slowing Islamic financing growth, and their high exposure to cyclical sectors, such as contracting and retail, which seasons more quickly.
Liquidity has now stabilized with the recent government injection of liquidity and slower demand for financing. However, profitability is likely to come under pressure due to slower financing growth.
Islamic finance is a mature and developed industry in Saudi Arabia, representing about two-thirds of total bank financing at end-1H16.
Islamic banks accounted for about 43 percent of the sector at the end of first half of this year, up from 36.6 percent in the first half of 2015 and 42 percent at end-2015 and the Islamic windows of conventional banks were 24 percent, up from 18.6 percent in the first half of 2015 but unchanged from 2015.
There are 12 licensed commercial banks in Saudi Arabia. Four are fully Shariah-compliant, with the rest providing a mix of Shariah-compliant and conventional banking products and services.
Al-Rajhi Bank is the largest Islamic bank in the world, with assets of SR331.4 billion ($88 billion) at the end of first half of 2016.
National Commercial Bank (NCB) is aiming to convert to full Shariah compliance following its initial public offering in 2014.
NCB’s financing book is already majority Shariah-compliant and once the bank is fully compliant it could replace Al-Rajhi Bank as the world’s largest Islamic bank.
Fitch: Saudi Islamic banks’ liquidity stable
Fitch: Saudi Islamic banks’ liquidity stable
‘The future is renewables,’ Indian energy minister tells World Economic Forum
- ‘In India, I can very confidently say, affordability (of renewables) is better than fossil fuel energy,’ says Pralhad Venkatesh Joshi during panel discussion
- Renewables are an increasingly important part of the energy mix and the technology is evolving rapidly, another expert says at session titled ‘Unstoppable March of Renewables?’
BEIRUT: “The future is renewables,” India’s minister of new and renewable energy told the World Economic Forum in Davos on Wednesday.
“In India, I can very confidently say, affordability (of renewables) is better than fossil fuel energy,” Pralhad Venkatesh Joshi said during a panel discussion titled “Unstoppable March of Renewables?”
The cost of solar power has has fallen steeply in recent years compared with fossil fuels, Joshi said, adding: “The unstoppable march of renewables is perfectly right, and the future is renewables.”
Indian authorities have launched a major initiative to install rooftop solar panels on 10 million homes, he said. As a result, people are not only saving money on their electricity bills, “they are also selling (electricity) and earning money.”
He said that this represents a “success story” in India in terms of affordability and “that is what we planned.”
He acknowledged that more work needs to be done to improve reliability and consistency of supplies, and plans were being made to address this, including improved storage.
The other panelists in the discussion, which was moderated by Godfrey Mutizwa, the chief editor of CNBC Africa, included Marco Arcelli, CEO of ACWA Power; Catherine MacGregor, CEO of electricity company ENGIE Group; and Pan Jian, co-chair of lithium-ion battery manufacturer Contemporary Amperex Technology.
Asked by the moderator whether she believes “renewables are unstoppable,” MacGregor said: “Yes. I think some of the numbers that we are now facing are just proof points in terms of their magnitude.
“In 2024, I think it was 600 gigawatts that were installed across the globe … in Europe, close to 50 percent of the energy was produced from renewables in 2024. That has tripled since 2004.”
Renewables are an increasingly important and prominent part of the energy mix, she added, and the technology is evolving rapidly.
“It’s not small projects; it’s the magnitude of projects that strikes me the most, the scale-up that we are able to deliver,” MacGregor said.
“We are just starting construction in the UAE, for example. In terms of solar size it’s 1.5 gigawatts, just pure solar technology. So when I see in the Middle East a round-the-clock project with just solar and battery, it’s coming within reach.
“The technology advance, the cost, the competitiveness, the size, the R&D, the technology behind it and the pace is very impressive, which makes me, indeed, really say (renewables) is real. It plays a key role in, obviously, the energy demand that we see growing in most of the countries.
“You know, we talk a lot about energy transition, but for a lot of regions now it is more about energy additions. And renewables are indeed the fastest to come to market, and also in terms of scale are really impressive.”
Mutizwa asked Pan: “Are we there yet, in terms of beginning to declare mission accomplished? Are renewables here to stay?”
“I think we are on the road but (its is) very promising,” Pan replied. There is “great potential for future growth,” he added, and “the technology is ready, despite the fact that there are still a lot of challenges to overcome … it is all engineering questions. And from our perspective, we have been putting in a lot of resources and we are confident all these engineering challenges will be tackled along the way.”
Responding to the same question, Arcelli said: “Yes, I think we are beyond there on power, but on other sectors we are way behind … I would argue today that the technology you install by default is renewables.
“Is it a universal truth nowadays that renewables are the cheapest?” asked Mutizwa.
“It’s the cheapest everywhere,” Arcelli said.
