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D S Slides For Toronto Final
- 1. Sajjad Chowdhry Associate Editor, DinarStandard Islamic Finance Strategy Forum Toronto – May 25, 2007 Islamic Finance – A Global Appraisal
- 2. Agenda Industry Definition Origins and Ideals A Breakdown of the Industry Who are the key players, where are they, what do they do? What’s Happening A focus on innovation and current trends Industry Outlook
- 3. Agenda Industry Definition Origins and Ideals A Breakdown of the Industry Who are the key players, where are they, what do they do? What’s Happening A focus on innovation and current trends Industry Outlook
- 4. History of Islamic Finance Over 1400 years of development Commerce flourished under Islamic commercial law during Classical period Development languished under impact of Colonial regimes Theoretical revival began in 1960s Practical revival began in 1970s Today - increasing rapid growth and sophistication; affirmed as a viable industry
- 5. What makes Islamic Finance different? Revelational basis - God’s commands and the Prophet’s (s) example Prohibition of Riba Regulation of Gharar Risk Sharing Encouragement of cooperation The Just Profit Motive Ideals in earning the pleasure of Allah and the ability to earn a profit while mobilizing resources for economic development
- 6. Agenda Industry Definition Origins and Ideals A Breakdown of the Industry Who are the key players, where are they, what do they do? What’s Happening A focus on innovation and current trends Industry Outlook
- 7. Global IF Market Size Source: Bank for International Settlements, International Islamic Finance Forum Total Global Bank Assets - $27 trillion Islamic Finance Assets - $265 billion Growth of Islamic Finance per annum – 10-15% Total Number of Islamic Finance Institutions – over 270
- 8. Islamic Finance ‘Clusters’ … of Opportunities? Muslim Population in each country/ region (millions) 150+ 100-150 50-100 10-50 5-10 . . . . . . . . . . . . GDP Per capita (Color code) High Med Low . . . Pakistan India Bangladesh Iran Turkey Europe US South America Kazakhstan Egypt Copyright: DinarStandard 2006 Source: World Bank
- 9. Islamic Finance ‘Clusters’ … of Opportunities? *Malaysia: $30 billion in Assets (largest market); 11.3% of total banking system; leads standardization Singapore : Global Center of Finance Indonesia : Largest Islamic Country but only 1.2% of total assets Islamic * GCC: 40 Institutions with $50 billion in assets; Avg. 15% of total banking system – Potential to 50% of total banking system; Largest market Saudi Arabia just establishing Riyadh Financial Center Source: GCC Islamic Financial Institution Report, AT Kearny IF Report, Bank Negara Malaysia Annual report
- 10. The industry’s comprehensive product offering Investment Banking Capital Markets Project Finance Corporate and Structured Finance Underwriting Advisory Syndication Personal Financial Services Home Finance Auto Finance Current and Saving Accounts Debit and Charge Cards Investment products Corporate Treasury and Markets Liquidity Management Yield Management Structured Solutions Commercial Banking Import/Export Finance Asset Finance Treasury Source: HSBC Amanah
- 11. Global IF Leaders - Commercial Banks Source: IFIS May 9, 2007 2,081,092 UAE Sharjah Islamic Bank 10 3,035,489 Qatar Qatar Islamic Bank 9 3,812,690 Malaysia Bank Muamalat Malaysia 8 3,969,483 Malaysia Bank Islam Malaysia 7 4,094,447 Saudi Arabia Bank Al Jazira 6 7,638,998 Bahrain AlBaraka Banking Group 5 17,547,846 UAE Dubai Islamic Bank 4 21,952,613 Kuwait Kuwait Finance House 3 22,440,691 Bahrain ABC Islamic Bank 2 28,056,937 Saudi Arabia Al Rajhi Bank 1 Total Assets Country Commercial Islamic Banks Islamic Banks Financials (Total Assets) USD$ '000
- 12. Global IF Leaders – Investment Banks Source: IFIS May 9, 2007 293,300 Bahrain Unicorn Investment Bank 7 329,912 Kuwait Gulf Investment House 6 376,804 Kuwait The International Investor 5 1,261,109 Malaysia CIMB Islamic 4 1,500,884 Bahrain Gulf Finance House 3 2,707,707 Bahrain Arcapita 2 3,657,859 Kuwait Investment Dar 1 Total Assets Country Islamic Investment Banks Islamic Banks Financials (Total Assets) USD$ '000
- 13. IF Activity in Europe Will the Financial Services Authority (FSA) UK experience in UK provide a framework for other European markets and beyond? Banks with Capital Markets Focus Banks with Retail IF Operations
- 14. IF Activity in North America Guidance Shape LaRiba Devon University Islamic UM Financial Ittihad Amana Mutual Funds Salam Financial Ansar Group Focus on Retail IF Operations
- 15. IF Activity in the GCC Retail Islamic Finance Dubai Islamic Bank, Al Rajhi, ABC Islamic Rise of Specialty Finance in the UAE Tamweel, Amlak ENSeC Growth of Investment Banking – Calyon, Morgan Stanley, Deutsche Bank Regulatory Infrastructure – DIFC and DME Drivers – Customer demand, petro dollars, real estate development and infrastructure projects
- 16. IF Activity in Pakistan In 2001, the industry comprised of just two players In 2006, the industry comprised of 6 Full fledged Islamic Banks and 12 Banks with IBDs Source: Standard Chartered Year 2001 Meezan Bank Al Baraka Meezan Bank Al Baraka MCB Alfalah SCB Bank AlHabib Habib AG Zur. Metropolitan Bank of Khyber Soneri Bank 2002 2003 Meezan Bank Al Baraka MCB Meezan Bank Al Baraka MCB Alfalah 2 10 2005 Meezan Bank Al Baraka MCB Alfalah SCB Bank AlHabib Habib AG Zur. Metropolitan Bank of Khyber Soneri Bank HBL -Bank Islami DIB Emirates Int’l First Dawood NBP ABN AMRO Askari PICCIC 2004 11 4 3
- 17. IF Activity in Malaysia Source: Bank Negara Malaysia, Financial Times Islamic Finance assets close to 13% of the total asset base $36 billion Islamic Corporate Bond market Close to 48% of the total market About 70% of Islamic Finance customers are non-Muslim $34 billion $29.5 billion $24.9 billion Assets 2006 2005 2004
- 18. Agenda Industry Definition Origins and Ideals A Breakdown of the Industry Who are the key players, where are they, what do they do? What’s Happening A focus on innovation and current trends Industry Outlook
- 19. Sukuk – Islamic “Bonds” Conventional bonds are Riba , and are forbidden But a transaction structured on an asset base is permitted A series of payments arising from an asset-based transaction may be traded at a market price This type of arrangement is referred to as Sukuk , sometimes called “Islamic bonds.”
- 20. Sukuk – Selected Issuance Source: Liquidity Management Centre
- 21. Sukuk – Issuance Growth Source: Islamic Finance Information Service
- 22. Human Resources Increasing sophistication of Shari’ah scholars Yet there remains a dearth of scholars in the industry Lack of Professional Accreditation and Training Emergence of Product Consultancies Dar Al-Istithmar Yasaar SHAPE
- 23. Major Training Institutions Distance Learning International Islamic University, Malaysia Loughborough University, UK IBF Netversity, India Institute of Islamic Banking and Insurance, UK Dedicated In House Programs Islamic Research & Training Institute, Islamic Development Bank Bahrain Institute of Banking and Finance Emirates Institute of Banking and Financial Studies Center for Islamic Economics Islamic Banking and Finance Inst. Of Malaysia Institute of Islamic Banking and Insurance, UK Research and Academic Programs
- 24. Agenda Industry Definition Origins and Ideals A Breakdown of the Industry Who are the key players, where are they, what do they do? What’s Happening A focus on innovation and current trends Industry Outlook
- 25. Current Trends to Watch Opportunities Cross border cooperation Innovation Smart marketing Securitization Challenges Need for Recognized Accreditation Programs Standardization
- 26. Thank You Dinar Standard Business Strategies for the Muslim World 206 Bloomfield Street, Suite 6 Hoboken, NJ 07030 [email_address]