Dubai-based Noor Bank has paid out 116.5% (11% pa) of initial capital with a tranche of a capital-protected structured deposit linked to the price of gold after 18 months.
Omar Anwar, acting head of treasury at the UAE Islamic bank, told SRP that the product was launched in mid-2012 with the aim of allowing customers to hedge against a drop in the gold price while protecting their capital.
“We are delighted to offer an annualised profit rate of 11%, which is among the best in the industry. These products have been very well received by our clients over the last couple of years,” he said. “Noor believes it is this combination of profitability and capital protection that has ensured our structured deposits have been well received by investors, particularly the 18-month capital-protected gold notes.”
Anwar added that these capital-protected investments are part of the bank’s Islamic structured products platform that offers capital protection and higher returns than normal deposits.
“As the deposit rates prevailing in the market are generally on the lower side, clients are quite comfortable investing in these products since the opportunity loss is minimal,” added Anwar.
According to Anwar, with maturities from six months to three years, treasury products can be customised to deliver a definite set of investment objectives. Anwar also told SRP that while the bank offers a variety of Islamic structured deposits, it has not offered any structured notes yet.
Anwar said that individual product sales within Noor Bank’s range depend on the funds gathered through the bank’s distribution channels and can vary from AED500,000 ($136,000) to AED 10m ($2.7m).
Noor Bank’s current portfolio of capital-protected structured deposits includes the commodity Pick and Drop Investment, a three-year investment paying a guaranteed coupon plus the performance of a commodity basket at maturity; and the GCC Railway Investment, a two year investment linked to six International equities involved in the construction of a $150bn Gulf railway project.
Noor Bank is also currently offering the Gold Investment, a six-month structure paying a high coupon as long as the gold price remains within a pre-agreed range.
Name change
Noor Bank, formerly known as Noor Islamic Bank, was renamed in early January in a strategic move aimed at underlining its local and international growth ambitions and broadening the appeal of its products and services to all communities in the UAE.
The bank said that the new simplified name does not detract from the fact that the bank is a values-driven and principles-based financial institution with Shariah compliance at the heart of its business decisions. “Adherence to Shariah values and principles is in our DNA and they will continue to be the bedrock of our business decisions,” said Hussain AlQemzi, chief executive at Noor Bank.