world islamic banking competitiveness report 2012 13 - ernst & young
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A critical reference source for decision makers in the global Islamic finance industry, providing strategic insights from Ernst & Young
Dear Banking & Finance Leader,
It is with great pleasure that we present to you the 9th annual edition of the World Islamic Banking Competitiveness Report 2012/13, developed in collaboration with leading global professional services and advisory firm Ernst & Young, and exclusively launched onsite at the 19th Annual World Islamic Banking Conference (WIBC 2012) during a specially convened WIBC plenary session held on the 10th of December 2012 in the Kingdom of Bahrain. More than 1,200 industry leaders from over 50 countries attended WIBC 2012 to chart new directions for the global Islamic finance industry, continuing WIBC’s longstanding tradition of shaping the future of Islamic finance.
Despite the challenging global economic environment, leading Islamic financial institutions have been able to sustain their growth ambitions. The industry, with its increasingly international footprint, continues to demonstrate its resilience and competitiveness, while the range of Shari’ah-compliant products and services available globally has significantly widened and deepened. The rapid growth and the intensification of the industry’s internationalisation highlight the dynamic nature of the industry and underscore the increasing efforts of Islamic financial institutions to meet the growing demands of a global economy. However, in order to sustain growth over the long term, there is a need to put in place prudent legal and regulatory policies together with sound and efficient business frameworks that will further boost the resilience and success of the Islamic financial sector.
We would like to express our sincere gratitude to Ernst & Young and their world renowned Islamic Financial Services Team for investing their considerable talent and resources in developing the World Islamic Banking Competitiveness Report 2012/13. The Report, titled “Growing Beyond: DNA of Successful Transformation”, analyzes key strategies that leading Islamic financial institutions must adopt in order to ensure continued stability and success amidst the challenges of slowing growth and declining profitability.
Established as a critical reference resource for key industry players, thought leaders and policy makers in the global Islamic banking and finance industry, we hope that the analysis in this year’s Report will provide practical, constructive and valuable insights which will be useful in your own strategic planning activities and will assist your organization in its quest for success as the Islamic banking and finance industry seeks to ‘adapt to the new dynamics of global finance’. To find out more on how your organization can play a part in this important research initiative in the future, please e-mail sophie@megaevents.net
Yours sincerely,
David McLeanChief ExecutiveThe World Islamic Banking ConferenceA MEGA Brand
A MEGA Brand: Shaping the Future of the Global Islamic Finance Industry Since 1993P.O. Box 72045, Dubai, UAE | t. +9714 343 1200 | f+971 4 343 6003 MEGA Brands. MEGA Clients. Market Leaders. www.megaevents.net
19th Annual
World Islamic Banking Competitiveness Report 2012-2013 Growing Beyond DNA of Successful Transformation
December 2012
World Islamic Banking Competitiveness Report 2012-2013 Growing Beyond DNA of Successful Transformation
December 2012
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-20132
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
3COMPETITIVENESS REPORT 2012-2013
Executive brief
Ashar Nazim Partner, Islamic Banking Excellence Center Ernst & Young , MENA
Gordon Bennie Partner, Financial Services Leader Ernst & Young , MENA
Islamic banking assets with commercial banks globally grew to $1.3 trillion in 2011, suggesting an average annual growth of 19% over past four years (2011: 24%). The top four markets account for 84% of industry assets. The Islamic banking growth story continues to be positive, growing 50% faster than the overall banking sector. High potential international markets – each in different stages of development and therefore requiring different penetration strategies - include Saudi Arabia, Malaysia, Qatar, Turkey and Indonesia. This year, we launch the EY Islamic Banking Universe that tracks industry performance across core Islamic finance markets with a combined GDP of $5 trillion in 2011. Islamic banking assets are forecast to grow beyond the milestone of $2 trillion by 2014. It is however a different story when it comes to profitability. The industry’s average ROE was 12% compared to 15% for conventional in 2011. Islamic banks continue to grapple with multiple challenges relating to sub-scale operation, asset quality, negative operating income from core activities and a weak risk culture. The severity of performance challenge has prompted several institutions to initiate wide-ranging transformation programs. We call it the new 3 R’s for the industry:
► Regulatory transformation – involving compliance risk, capital optimization, integrated balance sheet management and liquidity management
► Risk transformation – around Shari’a governance, single data management framework, segment specific risk models and fund transfer pricing capabilities
► Retail banking transformation – strengthening customer centric operating model, channel integration and technology enablement The turnaround could take 2-3 years and shareholders and management need to be making commitments now to capitalize on the positive outlook. Successful transformation around 3 R’s could potentially increase the profit pool of Islamic banks by 25% by 2015. Beyond numbers, Shari’a governance and responsible innovation require urgent attention, and sukuk is developing to be an effective instrument for capital management and growth. The industry is still in transitory stage and a lot more needs to be done to demonstrate the impact of Shari’a compliant system on businesses and economies. The coming up of populous and diverse markets like Indonesia, Egypt and Pakistan would help and regulatory authorities and multilateral institutions will need to play a more central role to facilitate this transition.
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-20134
Executive brief
Ashar Nazim Partner, Islamic Banking Excellence Center Ernst & Young , MENA
Gordon Bennie Partner, Financial Services Leader Ernst & Young , MENA
Islamic banking assets with commercial banks globally grew to $1.3 trillion in 2011, suggesting an average annual growth of 19% over past four years (2011: 24%). The top four markets account for 84% of industry assets. The Islamic banking growth story continues to be positive, growing 50% faster than the overall banking sector. High potential international markets – each in different stages of development and therefore requiring different penetration strategies - include Saudi Arabia, Malaysia, Qatar, Turkey and Indonesia. This year, we launch the EY Islamic Banking Universe that tracks industry performance across core Islamic finance markets with a combined GDP of $5 trillion in 2011. Islamic banking assets are forecast to grow beyond the milestone of $2 trillion by 2014. It is however a different story when it comes to profitability. The industry’s average ROE was 12% compared to 15% for conventional in 2011. Islamic banks continue to grapple with multiple challenges relating to sub-scale operation, asset quality, negative operating income from core activities and a weak risk culture. The severity of performance challenge has prompted several institutions to initiate wide-ranging transformation programs. We call it the new 3 R’s for the industry:
► Regulatory transformation – involving compliance risk, capital optimization, integrated balance sheet management and liquidity management
► Risk transformation – around Shari’a governance, single data management framework, segment specific risk models and fund transfer pricing capabilities
► Retail banking transformation – strengthening customer centric operating model, channel integration and technology enablement The turnaround could take 2-3 years and shareholders and management need to be making commitments now to capitalize on the positive outlook. Successful transformation around 3 R’s could potentially increase the profit pool of Islamic banks by 25% by 2015. Beyond numbers, Shari’a governance and responsible innovation require urgent attention, and sukuk is developing to be an effective instrument for capital management and growth. The industry is still in transitory stage and a lot more needs to be done to demonstrate the impact of Shari’a compliant system on businesses and economies. The coming up of populous and diverse markets like Indonesia, Egypt and Pakistan would help and regulatory authorities and multilateral institutions will need to play a more central role to facilitate this transition.
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
5COMPETITIVENESS REPORT 2012-2013
One potential scenario shows global Islamic banking assets with commercial banks to reach $1.8 trillion in 2013 (2011: $1.3 trillion), representing average annual growth of 17%
Islamic banking asset growth (US$b)
Global Islamic Banking Assets
2011
Rest of the World
GCC South East Asia
Global Islamic Banking Assets
2013e
1,334
257
131 89
1,811
Source: IMF, The Banker, Central Bank Reports, EY Universe
Islamic banking growth outlook continues to be positive, growing 50% faster than overall banking sector in several core markets. In Saudi Arabia, market share of Islamic banking assets is now over 50%
Source: Central Bank Reports, Ernst & Young Analysis
0%
10%
20%
30%
40%
50%
60%
30% 80% 130% 180% 230%
Bangladesh
Banking asset penetration (% of Nominal GDP, 2011)
Isla
mic
ban
king
sha
re o
f tot
al a
sset
s (2
011)
Banking asset penetration (% of Nominal GDP) and Islamic banking market share of total assets (%) in 2011
Size of circles denote the relative size of Islamic banking assets in 2011
Saudi Arabia
Kuwait
Bahrain
Malaysia UAE
Qatar
Jordan
Egypt
Turkey Pakistan
Indonesia
COMPETITIVENESS REPORT 2012-20136
One potential scenario shows global Islamic banking assets with commercial banks to reach $1.8 trillion in 2013 (2011: $1.3 trillion), representing average annual growth of 17%
Islamic banking asset growth (US$b)
Global Islamic Banking Assets
2011
Rest of the World
GCC South East Asia
Global Islamic Banking Assets
2013e
1,334
257
131 89
1,811
Source: IMF, The Banker, Central Bank Reports, EY Universe
Islamic banking growth outlook continues to be positive, growing 50% faster than overall banking sector in several core markets. In Saudi Arabia, market share of Islamic banking assets is now over 50%
Source: Central Bank Reports, Ernst & Young Analysis
0%
10%
20%
30%
40%
50%
60%
30% 80% 130% 180% 230%
Bangladesh
Banking asset penetration (% of Nominal GDP, 2011)
Isla
mic
ban
king
sha
re o
f tot
al a
sset
s (2
011)
Banking asset penetration (% of Nominal GDP) and Islamic banking market share of total assets (%) in 2011
Size of circles denote the relative size of Islamic banking assets in 2011
Saudi Arabia
Kuwait
Bahrain
Malaysia UAE
Qatar
Jordan
Egypt
Turkey Pakistan
Indonesia
7COMPETITIVENESS REPORT 2012-2013
14.5%
-11.7% 7.7%
2.4% 3.6%
10.5% 13.7%
19.2% 0.7%
3.2% 16.2%
18.3% 16.2%
15.2% 11.5%
10.6% 13.1%
12.1% 8.9%
23.1%
6 7 7 7 8
9 10 10 10 11 11
14 15
16 17
20 22
24 48
60
Top 20 Islamic banks make up 55% of the total Islamic banking assets and are concentrated in 7 countries, including GCC, Malaysia and Turkey
Source: Company Reports, EY Universe (Note: analysis excludes Iran assets & institutions)
Qatar Bahrain Malaysia
Saudi Arabia United Arab Emirates
Kuwait Turkey
Malaysia Saudi Arabia Saudi Arabia
Malaysia Malaysia
Qatar Qatar
Bahrain United Arab Emirates
Malaysia United Arab Emirates
Kuwait Saudi Arabia
Total Assets 2011 (US$b) Average ROE (2008 – 2011)
US$ 17b
US$ 65b
11.6%
15.3%
Leading Islamic Average
Comparable Conventional Average 13.9%
16.2 %
Growth (3Y CAGR)
Bank’s Home Market 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
UAE
Kuwait
Kuwait
Malaysia
Turkey
Saudi Arabia
Kuwait
UAE
Turkey
Saudi Arabia
Malaysia
Qatar
Bahrain
Qatar
UAE
UAE
Qatar
Saudi Arabia
Kuwait
Saudi Arabia
13 Islamic banks have an equity base of more than $1 billion. Building regional institutions and participating in larger transactions requires the industry to scale up
0 4,000 8,000 12,000
Saudi Arabia Indonesia
Saudi Arabia Malaysia
Turkey Jordan
Indonesia UAE
Malaysia Indonesia
Turkey UAE UAE
Saudi Arabia Saudi Arabia
Kuwait UAE
Saudi Arabia Malaysia
Qatar
Conventional Banks
Equity US$ m
Equity US$ m
3 4
7
13
Source: Company Reports, Ernst & Young Analysis, EY Universe
Bank
’s H
ome
Mar
ket
COMPETITIVENESS REPORT 2012-20138
14.5%
-11.7% 7.7%
2.4% 3.6%
10.5% 13.7%
19.2% 0.7%
3.2% 16.2%
18.3% 16.2%
15.2% 11.5%
10.6% 13.1%
12.1% 8.9%
23.1%
6 7 7 7 8
9 10 10 10 11 11
14 15
16 17
20 22
24 48
60
Top 20 Islamic banks make up 55% of the total Islamic banking assets and are concentrated in 7 countries, including GCC, Malaysia and Turkey
Source: Company Reports, EY Universe (Note: analysis excludes Iran assets & institutions)
Qatar Bahrain Malaysia
Saudi Arabia United Arab Emirates
Kuwait Turkey
Malaysia Saudi Arabia Saudi Arabia
Malaysia Malaysia
Qatar Qatar
Bahrain United Arab Emirates
Malaysia United Arab Emirates
Kuwait Saudi Arabia
Total Assets 2011 (US$b) Average ROE (2008 – 2011)
US$ 17b
US$ 65b
11.6%
15.3%
Leading Islamic Average
Comparable Conventional Average 13.9%
16.2 %
Growth (3Y CAGR)
Bank’s Home Market 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
UAE
Kuwait
Kuwait
Malaysia
Turkey
Saudi Arabia
Kuwait
UAE
Turkey
Saudi Arabia
Malaysia
Qatar
Bahrain
Qatar
UAE
UAE
Qatar
Saudi Arabia
Kuwait
Saudi Arabia
13 Islamic banks have an equity base of more than $1 billion. Building regional institutions and participating in larger transactions requires the industry to scale up
0 4,000 8,000 12,000
Saudi Arabia Indonesia
Saudi Arabia Malaysia
Turkey Jordan
Indonesia UAE
Malaysia Indonesia
Turkey UAE UAE
Saudi Arabia Saudi Arabia
Kuwait UAE
Saudi Arabia Malaysia
Qatar
Conventional Banks
Equity US$ m
Equity US$ m
3 4
7
13
Source: Company Reports, Ernst & Young Analysis, EY Universe
Bank
’s H
ome
Mar
ket
9COMPETITIVENESS REPORT 2012-2013
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Indonesia
Qatar Turkey
Saudi Arabia
UAE
Malaysia
Pakistan
Egypt
Kuwait Jordan
Bahrain
Bangladesh
Qatar
Malaysia
UAE
Egypt
Jordan
Pakistan
Bahrain
Kuwait
Turkey Saudi Arabia
Indonesia
Conventional Islamic
Aver
age
RO
E (2
008 –
2011
)
Equity US$ m (2011)
Equity vs. ROE
Source: Company Reports, Ernst & Young Analysis, EY Universe
Many Islamic banks still face legacy startup issues with higher fixed operating costs as a proportion of their overall income, lower leverage and are behind the curve in technology enablement
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Qatar
Saudi Arabia
Turkey
Brunei
Jordan
Indonesia
Bangladesh
Egypt
Pakistan
Bahrain
Kuwait
Malaysia
Pakistan
Kuwait
Turkey Saudi Arabia
UAE
Bahrain
Egypt
Qatar Indonesia
Malaysia
UAE
Jordan
Assets vs. ROA
Source: Company Reports, Ernst & Young Analysis, EY Universe
Aver
age
RO
A (2
008 –
2011
)
Assets US$ m (2011)
Conventional Islamic
Performance challenge is further exacerbated due to small size, high proportion of non yielding assets and rather basic risk culture at stand-alone Islamic banks
COMPETITIVENESS REPORT 2012-201310
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Indonesia
Qatar Turkey
Saudi Arabia
UAE
Malaysia
Pakistan
Egypt
Kuwait Jordan
Bahrain
Bangladesh
Qatar
Malaysia
UAE
Egypt
Jordan
Pakistan
Bahrain
Kuwait
Turkey Saudi Arabia
Indonesia
Conventional Islamic
Aver
age
RO
E (2
008 –
2011
)
Equity US$ m (2011)
Equity vs. ROE
Source: Company Reports, Ernst & Young Analysis, EY Universe
Many Islamic banks still face legacy startup issues with higher fixed operating costs as a proportion of their overall income, lower leverage and are behind the curve in technology enablement
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Qatar
Saudi Arabia
Turkey
Brunei
Jordan
Indonesia
Bangladesh
Egypt
Pakistan
Bahrain
Kuwait
Malaysia
Pakistan
Kuwait
Turkey Saudi Arabia
UAE
Bahrain
Egypt
Qatar Indonesia
Malaysia
UAE
Jordan
Assets vs. ROA
Source: Company Reports, Ernst & Young Analysis, EY Universe
Aver
age
RO
A (2
008 –
2011
)
Assets US$ m (2011)
Conventional Islamic
Performance challenge is further exacerbated due to small size, high proportion of non yielding assets and rather basic risk culture at stand-alone Islamic banks
11COMPETITIVENESS REPORT 2012-2013
Financing growth (CAGR, 2008 - 2011)
8.3%
10.0%
30.4%
12.8%
23.5%
4.2%
12.9%
8.5%
10.2%
12.8%
Corporate Government Personal Real Estate Services
Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
Higher growth in personal financing assets is made up from a number of factors: pricing differential has been reduced or eliminated, customers are more accepting of Islamic finance, and distribution capability has improved
Price to book (November 22, 2012)
Pric
e to
ear
ning
s (N
ovem
ber 2
2, 2
012)
Price to book and price to earning Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
0
5
10
15
20
25
30
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Islamic banks, on the whole, no longer trade at higher valuations despite having better prospects. Regaining investor confidence will require fundamental transformation of business practices
COMPETITIVENESS REPORT 2012-201312
Financing growth (CAGR, 2008 - 2011)
8.3%
10.0%
30.4%
12.8%
23.5%
4.2%
12.9%
8.5%
10.2%
12.8%
Corporate Government Personal Real Estate Services
Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
Higher growth in personal financing assets is made up from a number of factors: pricing differential has been reduced or eliminated, customers are more accepting of Islamic finance, and distribution capability has improved
Price to book (November 22, 2012)
Pric
e to
ear
ning
s (N
ovem
ber 2
2, 2
012)
Price to book and price to earning Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
0
5
10
15
20
25
30
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Islamic banks, on the whole, no longer trade at higher valuations despite having better prospects. Regaining investor confidence will require fundamental transformation of business practices
13COMPETITIVENESS REPORT 2012-2013
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0% 10% 20% 30% 40% 50% 60%
Indonesia
Qatar Turkey
Malaysia
Saudi Arabia UAE
Pakistan Bangladesh
Syria Jordan
Kuwait
Bahrain Egypt
Strategic growth matrix Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
Gro
wth
in Is
lam
ic a
sset
s C
AGR
200
8 - 2
011
Low market share High market share Market share 2011
Market Share = Islamic Assets / Total Banking Assets
Significant variation between similar countries imply
different strategies for banks in those markets
Higher growth markets with potential for large retail play
There remains considerable potential for growth with some strategic quick wins possible; retail specialization, regional diversification, transformation of middle-tier conventional banks to Islamic...
Relatively developed infrastructure
Some infrastructure
Weak or no infrastructure
Several core Islamic finance markets lack regulatory clarity. Recent initiatives by Islamic Development Bank could see more jurisdictions introducing Islamic banking legislation and regulatory framework
In a bold step forward, the draft Islamic banking regulations in Oman
disallow commodity murabaha for liquidity management. For a long time
now, the (mis)use of synthetic instruments has disillusioned the
proponents of Islamic banking
COMPETITIVENESS REPORT 2012-201314
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0% 10% 20% 30% 40% 50% 60%
Indonesia
Qatar Turkey
Malaysia
Saudi Arabia UAE
Pakistan Bangladesh
Syria Jordan
Kuwait
Bahrain Egypt
Strategic growth matrix Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
Gro
wth
in Is
lam
ic a
sset
s C
AGR
200
8 - 2
011
Low market share High market share Market share 2011
Market Share = Islamic Assets / Total Banking Assets
Significant variation between similar countries imply
different strategies for banks in those markets
Higher growth markets with potential for large retail play
There remains considerable potential for growth with some strategic quick wins possible; retail specialization, regional diversification, transformation of middle-tier conventional banks to Islamic...
Relatively developed infrastructure
Some infrastructure
Weak or no infrastructure
Several core Islamic finance markets lack regulatory clarity. Recent initiatives by Islamic Development Bank could see more jurisdictions introducing Islamic banking legislation and regulatory framework
In a bold step forward, the draft Islamic banking regulations in Oman
disallow commodity murabaha for liquidity management. For a long time
now, the (mis)use of synthetic instruments has disillusioned the
proponents of Islamic banking
15COMPETITIVENESS REPORT 2012-2013
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
40848 40878 40909 40940 40969 41000 41030 41061 41091 41122 41153 41183 41214
IIBR 3 Months LIBOR 3 Months
Key Parties Key Facts
Key Milestone
Road Ahead
• Published for nine price points from overnight to 1 year
• USD reference rate applicable based on underlying Murabaha, Mudaraba and Wakala contracts
• Calculated by taking price of 18 contributors, excluding top and bottom quartiles and calculating mean of remaining data points
• Governed by Islamic Benchmark Committee (which oversees contributions, process and governance) and the Shari’a Committee (which oversees compliance)
• Established by 18 major Islamic banks and windows • IDB and Islamic infrastructure institutions are part of the Islamic
Benchmark Committee, including AAOIFI, CIBAFI, Bahrain Association of Bank and Association of Islamic Banking Institutions
• Central banks of Bahrain, Kuwait, UAE and Qatar are observer members
• Continue enhancing governance • Permit more contributions beyond Malaysia
and GCC (subject to Islamic Benchmark Committee approval)
• Develop benchmarks in more local currencies, SAR, QAR, BAH, EGP
• Develop ‘dealt rate’ benchmarks that are derived from actual trades
LIBOR governance to be transferred from BBA to the FSA with more stringent reporting requirements
IIBR launched on 22 November 2011, after several closed door meetings of the Islamic Benchmark (IB) Committee and Shari’a Committee
IB Committee welcome 3 Malaysian banks
IB Committee first deliberates on changing rate from Bid to Ask and strengthening rules for admitting new contributors
IIBR is moved from Bid to Ask contributor field
New rules for admitting new banks including a minimum level of Shari’a compliant assets and trades. Mandatory Code of Conduct for all contributors proposed
LIBOR scandal breaks: US Department of Justice launches criminal investigation
Major global bank fined more than $420 million by US and UK regulators
Code of Conduct reviewed by IB Committee Chairman
Since its inception last year, the Islamic Interbank Benchmark Rate (IIBR) has been evolving through a process of regular reviews from the Islamic Benchmark Committee and the Shari’a Committee
Source: Thomson Reuters
COMPETITIVENESS REPORT 2012-201316
Qatar 12.8% China 10.3% Kazakhstan 8.5% India 7.4% Vietnam 7.2% Nigeria 6.4% Ghana 5.6% Russian Federation 5.3% Indonesia 5.2% Malaysia 5.0% UAE 4.9% Egypt 4.9% Ukraine 4.7% Korea, Rep. 4.6% Thailand 4.4% Turkey 4.2% Colombia 4.1% Argentina 4.1% Poland 3.9% Chile 3.8% Brazil 3.7% South Africa 3.6% Saudi Arabia 3.4% Mexico 2.3%
10 of the world’s 25 Rapid Growth Markets (RGMs) have large Muslim population and offer strong growth prospects for Islamic banking sector (retail, SME, trade finance, wealth management)
GDP CAGR 2000-2010
Rapid Growth Markets
Kuala Lumpur’s audacious financial sector plan could see Islamic financing assets growing to 40% of the total industry by 2020. A vibrant sukuk market, anticipated consolidation among Islamic banks, Shari’a transformation of developmental institutions, private pension scheme, and tax and regulatory reforms are all steps in the same direction.
Bahrain’s unique Islamic banking proposition is guided by four strategic priorities: 1) Regulatory clarity across
major existing and emerging Islamic finance areas
2) Empowering institutions through skills development
3) Consolidation amongst market players
4) Standard setting initiatives facilitated through industry infrastructure institutions
Leading Islamic finance centers
17COMPETITIVENESS REPORT 2012-2013
Several Arab Spring markets are expected to launch Islamic banking initiatives although progress to-date has been slow
Egyp
t ► Regulatory framework for Islamic banks being considered
► Sovereign sukuk planned ► Launch of Shari’a compliant products
by several banks
Saudi Arabia Oman
UAE Qatar Bahrain
Algeria Libya Egypt
Turkey
Tunisia
Morocco Lebanon Jordan
Iraq
Yemen
Syria
Kuwait
Hydrocarbon reserves center
Population center
Tuni
sia
► Regulatory framework for Islamic banks being considered
► Sovereign sukuk planned for 2013
Liby
a ► Approval of Islamic banking legislation ► Regulatory framework for Islamic
banks being considered
Iraq
► Islamic banking legislation being considered
► Several existing and new banks considering Islamic banking operations
COMPETITIVENESS REPORT 2012-201318
Demand for sukuk instruments will continue to grow, outpacing global supply and providing opportunities for banks to establish and grow their Islamic fixed income advisory platforms
Source: IFIS, Standard & Poors , Bloomberg, ThomsonReuters, EY Analysis
Based on current growth forecast, Islamic financial institutions will require at least US$ 400b of short term, credible, liquid securities for liquidity and capital management purposes, by 2015
Including other investor classes, global sukuk demand could be in excess of US$ 600b by 2015
2012 would see in excess of US$ 110b in new issuance – a record year but still short of industry demand
Market opportunity will drive more Islamic banks to set up international platforms to offer Islamic fixed income advisory services
55 15
35
15 20
39 179
400
0
50
100
150
200
250
300
350
400
2012 2013 2014 2015 2016 2017+ TOTAL O/S '11
Est Dem. '15
GAP
Outstanding Sukuk maturity profile and estimated demand by Islamic banks
US$ b
19COMPETITIVENESS REPORT 2012-2013
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
ROE decomposition assists in understanding the key performance indicators of banks
ROE
Leverage
Return on assets
Deposits
Cost of funding
Operating expenses
Provisions
X
Source: Company Reports, Ernst & Young Analysis, EY Universe
COMPETITIVENESS REPORT 2012-201320
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
ROE decomposition assists in understanding the key performance indicators of banks
ROE
Leverage
Return on assets
Deposits
Cost of funding
Operating expenses
Provisions
X
Source: Company Reports, Ernst & Young Analysis, EY Universe
21COMPETITIVENESS REPORT 2012-2013
Islamic banks Conventional banks
Treasury & investment
Corporate
Retail
36% 36% 30%
21%
23% 32% 43% 61%
41% 32% 28%
18%
Malaysia Saudi Arabia UAE Turkey
45%
17% 22% 22%
18%
39%
57%
37%
38% 44%
20%
40%
Malaysia Saudi Arabia UAE Turkey
Includes selected banks from each country based on the availability of data
Segment assets
Source: Company Reports, Ernst & Young Analysis, EY Universe
Islamic banks continue to develop their non-retail banking assets. With the sukuk market development continuing, we expect to see a rapid increase in both Corporate and Treasury & Investments assets
COMPETITIVENESS REPORT 2012-201322
10%
14% 13%
5%
10%
15%
20%
2008 2009 2010 2011
Conventional Islamic
Source: Company Reports, Ernst & Young Analysis, EY Universe
Return on equity
GCC
South East Asia
Rest of the world
17%
12%
18%
15%
5%
7%
9%
11%
13%
15%
17%
19%
2008 2009 2010 2011 13%
12%
16% 14%
5%
10%
15%
20%
2008 2009 2010 2011
15% 14%
18% 19%
5%
10%
15%
20%
2008 2009 2010 2011
After a difficult few years, banking profitability looks to be stabilizing in major Islamic banking markets. However, Islamic banks have experienced a mixed recovery across markets
Based on weighted average
23COMPETITIVENESS REPORT 2012-2013
2.4%
1.5% 1.6% 1.8%
1.0%
1.5%
2.0%
2.5%
2008 2009 2010 2011
Conventional Islamic
Return on assets (ROA)
GCC
Rest of the world
1.7%
1.3%
1.5%
1.7%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
2.6%
2008 2009 2010 2011
1.2% 1.1%
1.4% 1.8%
1.0%
1.5%
2.0%
2.5%
2008 2009 2010 2011
1.2%
1.6% 1.6%
1.0%
1.5%
2.0%
2.5%
2008 2009 2010 2011
South East Asia
With underperforming assets being disposed and capital replenished, banks have seen ROA stabilize or improve. However, Islamic banks must address others factors too…
Source: Company Reports, Ernst & Young Analysis, EY Universe Based on weighted average
Islamic banks Conventional banks
2.1% 2.4% 2.6%
1.4% 1.2% 1.1%
-0.8% -1.0% -1.2% -0.2%
-0.7% -0.6%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2007 2010 2011
2.7% 2.7% 2.9%
2.6%
1.4% 1.0%
-2.1% -1.8% -1.8%
-0.3% -0.9% -0.8%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2007 2010 2011
ROA 2.9% 1.4% 1.3% 2.2% 1.8% 1.7%
Operating expenses
Net financing income
Provisions
Other income
Return on assets
… a more detailed analysis shows operating expenses as a proportion of assets are 50% higher for Islamic banks. For mid to smaller sized banks, this proportion would be higher still
Source: Company Reports, Ernst & Young Analysis, EY Universe Numbers may not add up due to rounding
COMPETITIVENESS REPORT 2012-201324
2.4%
1.5% 1.6% 1.8%
1.0%
1.5%
2.0%
2.5%
2008 2009 2010 2011
Conventional Islamic
Return on assets (ROA)
GCC
Rest of the world
1.7%
1.3%
1.5%
1.7%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
2.6%
2008 2009 2010 2011
1.2% 1.1%
1.4% 1.8%
1.0%
1.5%
2.0%
2.5%
2008 2009 2010 2011
1.2%
1.6% 1.6%
1.0%
1.5%
2.0%
2.5%
2008 2009 2010 2011
South East Asia
With underperforming assets being disposed and capital replenished, banks have seen ROA stabilize or improve. However, Islamic banks must address others factors too…
Source: Company Reports, Ernst & Young Analysis, EY Universe Based on weighted average
Islamic banks Conventional banks
2.1% 2.4% 2.6%
1.4% 1.2% 1.1%
-0.8% -1.0% -1.2% -0.2%
-0.7% -0.6%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2007 2010 2011
2.7% 2.7% 2.9%
2.6%
1.4% 1.0%
-2.1% -1.8% -1.8%
-0.3% -0.9% -0.8%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2007 2010 2011
ROA 2.9% 1.4% 1.3% 2.2% 1.8% 1.7%
Operating expenses
Net financing income
Provisions
Other income
Return on assets
… a more detailed analysis shows operating expenses as a proportion of assets are 50% higher for Islamic banks. For mid to smaller sized banks, this proportion would be higher still
Source: Company Reports, Ernst & Young Analysis, EY Universe Numbers may not add up due to rounding
25COMPETITIVENESS REPORT 2012-2013
2.8% 1.6%
3.5%
1.2% 1.0%
3.0%
5.0%
7.0%
9.0%
2008 2009 2010 2011
Conventional Islamic
Cost of funds
GCC
Rest of the world
2.1%
3.2%
2.3% 1.0%
3.0%
5.0%
7.0%
9.0%
2008 2009 2010 2011
5.5% 4.5%
8.8%
5.6%
1.0%
3.0%
5.0%
7.0%
9.0%
2008 2009 2010 2011
3.5%
2.8%
5.1%
3.1%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2008 2009 2010 2011
South East Asia
Cost of funds remains lower for Islamic banks overall, although smaller banks and those in distressed markets have seen this advantage erode sharply post financial crises
Source: Company Reports, Ernst & Young Analysis, EY Universe Based on weighted average
COMPETITIVENESS REPORT 2012-201326
33%
42% 39%
32%
10% 20% 30% 40% 50% 60%
2008 2009 2010 2011
Conventional Islamic
Operating cost / operating income
GCC
Rest of the world
45% 47%
43% 40%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011
46% 48%
45% 45%
10% 20% 30% 40% 50% 60%
2008 2009 2010 2011
57% 50%
45% 43%
10% 20% 30% 40% 50% 60%
2008 2009 2010 2011
South East Asia
The largest operational cost tends to be for human capital. Inefficient operating models need urgent reform to increase technology enablement
Source: Company Reports, Ernst & Young Analysis, EY Universe Based on weighted average
27COMPETITIVENESS REPORT 2012-2013
17% 19%
14% 12%
5%
10%
15%
20%
25%
30%
2008 2009 2010 2011
15% 22%
13%
19%
5% 10% 15% 20% 25% 30%
2008 2009 2010 2011
Conventional Islamic
Provisions / operating income
Rest of the world
18% 18%
13% 8%
5% 10% 15% 20% 25% 30%
2008 2009 2010 2011
17% 16%
15% 10%
5% 10% 15% 20% 25% 30%
2008 2009 2010 2011
South East Asia
GCC
Asset quality still needs better management with risk and governance often a complex and sensitive factor in deciding revaluations or disposals
Source: Company Reports, Ernst & Young Analysis, EY Universe Based on weighted average
COMPETITIVENESS REPORT 2012-201328
17% 19%
14% 12%
5%
10%
15%
20%
25%
30%
2008 2009 2010 2011
15% 22%
13%
19%
5% 10% 15% 20% 25% 30%
2008 2009 2010 2011
Conventional Islamic
Provisions / operating income
Rest of the world
18% 18%
13% 8%
5% 10% 15% 20% 25% 30%
2008 2009 2010 2011
17% 16%
15% 10%
5% 10% 15% 20% 25% 30%
2008 2009 2010 2011
South East Asia
GCC
Asset quality still needs better management with risk and governance often a complex and sensitive factor in deciding revaluations or disposals
Source: Company Reports, Ernst & Young Analysis, EY Universe Based on weighted average
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
29COMPETITIVENESS REPORT 2012-2013
The severity of performance challenge demands wide-ranging transformation of business practices around the 3 R’s
Faced with mounting pressure to improve sub-par ROE, many institutions are tempted to cut or delay the much needed change agenda.The danger is that banks will miss the limited window they have to implement their future blueprint
Retail Transformation
Regulatory Transformation
Risk Transformation
Regulatory transformation – will deepen the divide between weaker and stronger banks. The impact of reforms will force the industry to adapt to radically different ROE expectations
Impact on Business Model
Risk weighted assets & revenue levers
Capital and funding pressure
Cost of funds and operational cost
Basel III & IFSB - Capital
Basel III & IFSB - Liquidity
Unique Islamic banking framework
Shari’a rulings Sukuk as growth and capital instrument
Transformation Agenda
Capital optimization 1
Dynamic liquidity forecasting 2
Integrated balance sheet management 3
Data management 4
Regulatory reporting 5
Compliance risk management 6
COMPETITIVENESS REPORT 2012-201330
The severity of performance challenge demands wide-ranging transformation of business practices around the 3 R’s
Faced with mounting pressure to improve sub-par ROE, many institutions are tempted to cut or delay the much needed change agenda.The danger is that banks will miss the limited window they have to implement their future blueprint
Retail Transformation
Regulatory Transformation
Risk Transformation
Regulatory transformation – will deepen the divide between weaker and stronger banks. The impact of reforms will force the industry to adapt to radically different ROE expectations
Impact on Business Model
Risk weighted assets & revenue levers
Capital and funding pressure
Cost of funds and operational cost
Basel III & IFSB - Capital
Basel III & IFSB - Liquidity
Unique Islamic banking framework
Shari’a rulings Sukuk as growth and capital instrument
Transformation Agenda
Capital optimization 1
Dynamic liquidity forecasting 2
Integrated balance sheet management 3
Data management 4
Regulatory reporting 5
Compliance risk management 6
31COMPETITIVENESS REPORT 2012-2013
The risk agenda has been elevated significantly as regulators require banks to implement comprehensive reforms. Islamic banks require more attention
Areas of greatest progress*
83% Increased board oversight of risk
89% Strengthen CRO mandate
65% Capital reallocation
92% Liquidity risk management
93% Enhanced stress testing
Areas requiring more progress*
78% Compensation schemes
92% Attention on risk culture
96% Clearly defined risk appetite
59% Enhanced risk transparency
► Boards playing a more active role in setting organizational risk policies and parameters and spending more time on risk
► The influence of the Chief Risk Officers has been elevated, and CROs are now actively participating in strategy planning and product development
► Clearly defining organizational risk appetite and risk strategy for the businesses to follow
► Embedding the risk culture throughout the organization
* Source: Selected responses from Ernst & Young’s survey on risk management practices
Risk transformation – balancing models and judgment
Risk governance
Data & IT infrastructure
Fund transfer pricing
Integrated data and reporting
Strengthening risk governance to integrate risk appetite, stress testing, strategic planning, capital and liquidity management
Longer term strategy to eliminate redundancies across data initiatives, and development of a single data management framework to meet business, Shari’a and regulatory demands
Using granular data and enhanced funds transfer pricing to segment and price products effectively
Building capacity for granular risk, finance and treasury data analysis to improve development and pricing of products
1
2
3
4
Tran
sfor
mat
ion
Agen
da
COMPETITIVENESS REPORT 2012-201332
The risk agenda has been elevated significantly as regulators require banks to implement comprehensive reforms. Islamic banks require more attention
Areas of greatest progress*
83% Increased board oversight of risk
89% Strengthen CRO mandate
65% Capital reallocation
92% Liquidity risk management
93% Enhanced stress testing
Areas requiring more progress*
78% Compensation schemes
92% Attention on risk culture
96% Clearly defined risk appetite
59% Enhanced risk transparency
► Boards playing a more active role in setting organizational risk policies and parameters and spending more time on risk
► The influence of the Chief Risk Officers has been elevated, and CROs are now actively participating in strategy planning and product development
► Clearly defining organizational risk appetite and risk strategy for the businesses to follow
► Embedding the risk culture throughout the organization
* Source: Selected responses from Ernst & Young’s survey on risk management practices
Risk transformation – balancing models and judgment
Risk governance
Data & IT infrastructure
Fund transfer pricing
Integrated data and reporting
Strengthening risk governance to integrate risk appetite, stress testing, strategic planning, capital and liquidity management
Longer term strategy to eliminate redundancies across data initiatives, and development of a single data management framework to meet business, Shari’a and regulatory demands
Using granular data and enhanced funds transfer pricing to segment and price products effectively
Building capacity for granular risk, finance and treasury data analysis to improve development and pricing of products
1
2
3
4
Tran
sfor
mat
ion
Agen
da
33COMPETITIVENESS REPORT 2012-2013
Retail – developing a ‘whole-customer’ view of requirements and profitability will be an essential capability for Islamic banks to improve performance
41%
36%
31%
22%
22%
22%
Service Quality
Price
Product offering
Specific service offering
Trust
Branch proximity
Banking activities customers most want their bank to improve*
Customer centric operating model
Customer acquisition model (integrated onboarding strategy & process definition)
Product portfolio management (up sell and cross sell at customer level)
Sales force effectiveness
Integrated channel strategy (channel proposition, segment alignment, migration)
Customer data design and advanced pricing management
1
2
3
4
5
6
* Source: Selected responses from Ernst & Young’s global consumer banking survey
Transformation Agenda
COMPETITIVENESS REPORT 2012-201334
Retail – developing a ‘whole-customer’ view of requirements and profitability will be an essential capability for Islamic banks to improve performance
41%
36%
31%
22%
22%
22%
Service Quality
Price
Product offering
Specific service offering
Trust
Branch proximity
Banking activities customers most want their bank to improve*
Customer centric operating model
Customer acquisition model (integrated onboarding strategy & process definition)
Product portfolio management (up sell and cross sell at customer level)
Sales force effectiveness
Integrated channel strategy (channel proposition, segment alignment, migration)
Customer data design and advanced pricing management
1
2
3
4
5
6
* Source: Selected responses from Ernst & Young’s global consumer banking survey
Transformation Agenda
Retail – technology will emerge as both an enabler and a differentiator despite all forms of capital expenditure being under heavy scrutiny
Technology to comply
As new regulatory requirements take effect, Islamic banks will need to become more data intensive. The quality and extent of data expected, the connectivity between functions, the level of risk assessment and the speed of delivery will prompt organization-wide change programs
Technology to understand
Islamic banks need to implement new systems for effective collection, management and mining of customer data
Technology to deliver
Although some security concerns remain, technology will play an increasing role in the interaction between bank and customer via multiple channels. Increasing importance of smartphones in Islamic banking markets can no longer be ignored
35COMPETITIVENESS REPORT 2012-2013
Customer & Product
Management
Retail – the digital channel must now be at the heart of an integrated multi-channel offering to improve accessibility, cross sales and servicing
Key Segments Mass market HNW SME
Marketing Retail Marketing
Sales & Distribution
Management
Branches
Internet
Contact centers
Direct sales force
RMs
ATM / self
Intermediaries
Joint ventures
Customer product design & propositions
Consumer products and propositions
HNW Products & Propositions
SME Products & Propositions
Divisional Supports
Strategy & Planning Change Operational
Efficiency Credit Policy
& Risk Shari’a support
Group Manufacturing
Prod Service Fulfillment
Customer Servicing Technology Credit
operations Payments
Group Supports HR Legal Risk & Compliance Credit Finance &
Tax
Develop joint sales & marketing strategy optimizing sales capture
Reassure customers with robust but simple security measures
Develop integrated channel development plan with cost –benefit by channel
Instigate fast track approval & change processes to exploit online channel flexibility
Design end to end experience and operating model for online services, to understand full costs and operating implications
Understand the real needs of your target customers and keep the online offering & experience as simple as possible
Partner with innovative companies to fuel creative channel design
Use champion challenger testing to improve channel performance
Build online capabilities once, for use by all products and brands
Optimizing the value of digital channels
A well executed transformation program would take 2-3 years to be implemented and embedded, and could improve Islamic banks’ profitability by approximately 25%
Global Islamic banking – estimated combined profit pool, 2015 (US$ b)
Current performance (2011)
Growth momentum (2012 – 2015)
Potential combined Islamic banking profit pool (2015)
3 R’s driven improvements
17 - 18
15 - 17
~ 9
41 - 44
► Regulatory transformation
► Risk transformation
► Retail transformation
COMPETITIVENESS REPORT 2012-201336
Customer & Product
Management
Retail – the digital channel must now be at the heart of an integrated multi-channel offering to improve accessibility, cross sales and servicing
Key Segments Mass market HNW SME
Marketing Retail Marketing
Sales & Distribution
Management
Branches
Internet
Contact centers
Direct sales force
RMs
ATM / self
Intermediaries
Joint ventures
Customer product design & propositions
Consumer products and propositions
HNW Products & Propositions
SME Products & Propositions
Divisional Supports
Strategy & Planning Change Operational
Efficiency Credit Policy
& Risk Shari’a support
Group Manufacturing
Prod Service Fulfillment
Customer Servicing Technology Credit
operations Payments
Group Supports HR Legal Risk & Compliance Credit Finance &
Tax
Develop joint sales & marketing strategy optimizing sales capture
Reassure customers with robust but simple security measures
Develop integrated channel development plan with cost –benefit by channel
Instigate fast track approval & change processes to exploit online channel flexibility
Design end to end experience and operating model for online services, to understand full costs and operating implications
Understand the real needs of your target customers and keep the online offering & experience as simple as possible
Partner with innovative companies to fuel creative channel design
Use champion challenger testing to improve channel performance
Build online capabilities once, for use by all products and brands
Optimizing the value of digital channels
A well executed transformation program would take 2-3 years to be implemented and embedded, and could improve Islamic banks’ profitability by approximately 25%
Global Islamic banking – estimated combined profit pool, 2015 (US$ b)
Current performance (2011)
Growth momentum (2012 – 2015)
Potential combined Islamic banking profit pool (2015)
3 R’s driven improvements
17 - 18
15 - 17
~ 9
41 - 44
► Regulatory transformation
► Risk transformation
► Retail transformation
37COMPETITIVENESS REPORT 2012-2013
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201338
Banking sector overview – Bahrain
Banking sector 2011 Macroeconomic 2011
Real GDP growth 1.9%
Nominal GDP (US$b) 29
Nominal GDP per capita (US$) 24,939
Total population (m) 1.2
Total Muslim population (m) 1.1
Population (0-14) 20.2%
Population (15-64) 77.2%
Population (65 & over) 2.6%
Population growth -1.9%
Inflation -0.4%
Unemployment rate 3.7%
Policy interest rate 1.0%
Total domestic assets (US$b) 47
Total loans (US$b) 17
Total deposits (US$b) 32
Total equity (US$b) 27
Assets CAGR (2007-2011) 6.0%
Loans CAGR (2007-2011) 11.4%
Deposits CAGR (2007-2011) 12.8%
Total Islamic assets (US$b) 13
Islamic asset market share 26.9%
Islamic assets CAGR (2007-2011) 7.4%
Total number of commercial banks 23
Total number of Islamic retail banks 6
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
39COMPETITIVENESS REPORT 2012-2013
Banking sector snapshot – Bahrain
21 23
25 27 27
-
5
10
15
20
25
30
2007 2008 2009 2010 2011
11
16 16 15 17
- 2 4 6 8
10 12 14 16 18
2007 2008 2009 2010 2011
20
25 25 29
32
-
5
10
15
20
25
30
35
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
38
49 42
46 47
-
10
20
30
40
50
60
2007 2008 2009 2010 2011
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Top five banks – Bahrain
0
5
10
15
20
25
30
Bank A Bank B Bank C Bank D Bank E 0.0
0.5
1.0
1.5
2.0
2.5
3.0
Bank A Bank B Bank C Bank D Bank E
14%
9%
4% 3% 3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Bank A Bank B Bank C Bank D Bank E
11.5% 11.8% 13.4%
-10.7%
16.8%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201340
Banking sector snapshot – Bahrain
21 23
25 27 27
-
5
10
15
20
25
30
2007 2008 2009 2010 2011
11
16 16 15 17
- 2 4 6 8
10 12 14 16 18
2007 2008 2009 2010 2011
20
25 25 29
32
-
5
10
15
20
25
30
35
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
38
49 42
46 47
-
10
20
30
40
50
60
2007 2008 2009 2010 2011
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Top five banks – Bahrain
0
5
10
15
20
25
30
Bank A Bank B Bank C Bank D Bank E 0.0
0.5
1.0
1.5
2.0
2.5
3.0
Bank A Bank B Bank C Bank D Bank E
14%
9%
4% 3% 3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Bank A Bank B Bank C Bank D Bank E
11.5% 11.8% 13.4%
-10.7%
16.8%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
41COMPETITIVENESS REPORT 2012-2013
Islamic banking sector snapshot – Bahrain
0
3
6
9
12
15
18
21
Bank A Bank B Bank C 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0
Bank A Bank B Bank C
12%
-11%
3%
-15%
-10%
-5%
0%
5%
10%
15%
Bank A Bank B Bank C
8.7%
3.5%
2.1%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
10%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
-10%
-5%
0%
5%
10%
15%
20%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Bank B
Bank A Bank C
Bank D
Bank E Bank A
Bank B
Bank C
Bank G Bank F
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Undifferentiated business models will need to be reconfigured to be specialized (retail, SME) and diversified (regional, trade finance, wealth management, etc.)
Islamic banks in Bahrain need to take a fresh look at their business model
Strategic growth matrix
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
COMPETITIVENESS REPORT 2012-201342
Islamic banking sector snapshot – Bahrain
0
3
6
9
12
15
18
21
Bank A Bank B Bank C 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0
Bank A Bank B Bank C
12%
-11%
3%
-15%
-10%
-5%
0%
5%
10%
15%
Bank A Bank B Bank C
8.7%
3.5%
2.1%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
10%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
-10%
-5%
0%
5%
10%
15%
20%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Bank B
Bank A Bank C
Bank D
Bank E Bank A
Bank B
Bank C
Bank G Bank F
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Undifferentiated business models will need to be reconfigured to be specialized (retail, SME) and diversified (regional, trade finance, wealth management, etc.)
Islamic banks in Bahrain need to take a fresh look at their business model
Strategic growth matrix
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
43COMPETITIVENESS REPORT 2012-2013
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
Banking sector overview – Egypt
Banking sector 2011 Macroeconomic 2011
Real GDP growth 1.8%
Nominal GDP (US$b) 229
Nominal GDP per capita (US$) 2,783
Total population (m) 82
Total Muslim population (m) 78
Population (0-14) 32.5%
Population (15-64) 62.8%
Population (65 & over) 4.7%
Population growth 1.7%
Inflation 10.1%
Unemployment rate 12.0%
Policy interest rate 9.5%
Total assets (US$b) 215
Total loans (US$b) 80
Total deposits (US$b) 162
Total equity (US$b) 14
Assets CAGR (2007-2011) 8.7%
Loans CAGR (2007-2011) 8.5%
Deposits CAGR (2007-2011) 10.7%
Total Islamic assets (US$b) 8
Islamic asset market share 3.8%
Islamic assets CAGR (2007-2011) 9.5%
Total number of banks 39
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201344
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
Banking sector overview – Egypt
Banking sector 2011 Macroeconomic 2011
Real GDP growth 1.8%
Nominal GDP (US$b) 229
Nominal GDP per capita (US$) 2,783
Total population (m) 82
Total Muslim population (m) 78
Population (0-14) 32.5%
Population (15-64) 62.8%
Population (65 & over) 4.7%
Population growth 1.7%
Inflation 10.1%
Unemployment rate 12.0%
Policy interest rate 9.5%
Total assets (US$b) 215
Total loans (US$b) 80
Total deposits (US$b) 162
Total equity (US$b) 14
Assets CAGR (2007-2011) 8.7%
Loans CAGR (2007-2011) 8.5%
Deposits CAGR (2007-2011) 10.7%
Total Islamic assets (US$b) 8
Islamic asset market share 3.8%
Islamic assets CAGR (2007-2011) 9.5%
Total number of banks 39
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
45COMPETITIVENESS REPORT 2012-2013
Banking sector snapshot – Egypt
154 172
189 211 215
-
50
100
150
200
250
2007 2008 2009 2010 2011
58
70 71 75 80
-
20
40
60
80
100
2007 2008 2009 2010 2011
108 124
135 148
162
-
30
60
90
120
150
180
2007 2008 2009 2010 2011
10 11 12
14 14
-
2
4
6
8
10
12
14
16
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Top five banks – Egypt
0
5
10
15
20
25
30
Bank A Bank B Bank C Bank D Bank E 0.0
0.3
0.6
0.9
1.2
1.5
Bank A Bank B Bank C Bank D Bank E
12.7%
6.1% 4.8%
3.5% 2.9%
0%
3%
6%
9%
12%
15%
Bank A Bank B Bank C Bank D Bank E
7.2%
22.7% 20.2%
15.7%
9.0%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201346
Banking sector snapshot – Egypt
154 172
189 211 215
-
50
100
150
200
250
2007 2008 2009 2010 2011
58
70 71 75 80
-
20
40
60
80
100
2007 2008 2009 2010 2011
108 124
135 148
162
-
30
60
90
120
150
180
2007 2008 2009 2010 2011
10 11 12
14 14
-
2
4
6
8
10
12
14
16
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Top five banks – Egypt
0
5
10
15
20
25
30
Bank A Bank B Bank C Bank D Bank E 0.0
0.3
0.6
0.9
1.2
1.5
Bank A Bank B Bank C Bank D Bank E
12.7%
6.1% 4.8%
3.5% 2.9%
0%
3%
6%
9%
12%
15%
Bank A Bank B Bank C Bank D Bank E
7.2%
22.7% 20.2%
15.7%
9.0%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
47COMPETITIVENESS REPORT 2012-2013
3%
5%
7%
9%
11%
13%
15%
0% 2% 4% 6% 8% 10% 12% 14%
Bank B
Bank A
Bank B
Bank A
Post Arab spring, Egypt is expected to be a key market for Islamic banking although pace may be slow initially
Strategic growth matrix Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Great potential for Islamic banking but key challenges related to fiscal stability remain
Regulatory clarity will be key to development of Islamic banking in Egypt
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201348
3%
5%
7%
9%
11%
13%
15%
0% 2% 4% 6% 8% 10% 12% 14%
Bank B
Bank A
Bank B
Bank A
Post Arab spring, Egypt is expected to be a key market for Islamic banking although pace may be slow initially
Strategic growth matrix Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Great potential for Islamic banking but key challenges related to fiscal stability remain
Regulatory clarity will be key to development of Islamic banking in Egypt
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
49COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Indonesia
Banking sector 2011 Macroeconomic 2011
Real GDP growth 6.5%
Nominal GDP (US$b) 847
Nominal GDP per capita (US$) 3,495
Total population (m) 242
Total Muslim population (m) 213
Population (0-14) 27%
Population (15-64) 66.6%
Population (65 & over) 6.4%
Population growth 1%
Inflation 5.4%
Unemployment rate 6.6%
Policy interest rate 6.0%
Total assets (US$b) 408
Total loans (US$b) 381
Total deposits (US$b) 345
Total equity (US$b) 68
Assets CAGR (2007-2011) 16.5%
Loans CAGR (2007-2011) 14.1%
Deposits CAGR (2007-2011) 11.8%
Total Islamic assets (US$b) 16
Islamic asset market share 4.2%
Islamic assets CAGR (2007-2011) 40.5%
Total number of banks 120
Total number of Islamic retail banks 11
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Indonesia
222 258
283 336
408
- 50
100 150 200 250 300 350 400 450
2007 2008 2009 2010 2011
32 35 43
54
68
-
10
20
30
40
50
60
70
80
2007 2008 2009 2010 2011
225 225 255
309
381
- 50
100 150 200 250 300 350 400 450
2007 2008 2009 2010 2011
221 222 243
286
345
-
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201350
Banking sector overview – Indonesia
Banking sector 2011 Macroeconomic 2011
Real GDP growth 6.5%
Nominal GDP (US$b) 847
Nominal GDP per capita (US$) 3,495
Total population (m) 242
Total Muslim population (m) 213
Population (0-14) 27%
Population (15-64) 66.6%
Population (65 & over) 6.4%
Population growth 1%
Inflation 5.4%
Unemployment rate 6.6%
Policy interest rate 6.0%
Total assets (US$b) 408
Total loans (US$b) 381
Total deposits (US$b) 345
Total equity (US$b) 68
Assets CAGR (2007-2011) 16.5%
Loans CAGR (2007-2011) 14.1%
Deposits CAGR (2007-2011) 11.8%
Total Islamic assets (US$b) 16
Islamic asset market share 4.2%
Islamic assets CAGR (2007-2011) 40.5%
Total number of banks 120
Total number of Islamic retail banks 11
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Indonesia
222 258
283 336
408
- 50
100 150 200 250 300 350 400 450
2007 2008 2009 2010 2011
32 35 43
54
68
-
10
20
30
40
50
60
70
80
2007 2008 2009 2010 2011
225 225 255
309
381
- 50
100 150 200 250 300 350 400 450
2007 2008 2009 2010 2011
221 222 243
286
345
-
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
51COMPETITIVENESS REPORT 2012-2013
Top five banks – Indonesia
0
10
20
30
40
50
60
70
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
Bank A Bank B Bank C Bank D Bank E
19.5%
30.3%
25.8%
15.4% 13.3%
0%
10%
20%
30%
40%
Bank A Bank B Bank C Bank D Bank E
16% 13%
11% 9%
6%
0% 2% 4% 6% 8%
10% 12% 14% 16% 18%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Indonesia
0
2
4
6
Bank A Bank B Bank C 0.0
0.1
0.2
0.3
0.4
Bank A Bank B Bank C
17.9%
13.2%
1.7%
0%
5%
10%
15%
20%
Bank A Bank B Bank C
1.3%
0.9%
0.3%
0.0%
0.5%
1.0%
1.5%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201352
Top five banks – Indonesia
0
10
20
30
40
50
60
70
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
Bank A Bank B Bank C Bank D Bank E
19.5%
30.3%
25.8%
15.4% 13.3%
0%
10%
20%
30%
40%
Bank A Bank B Bank C Bank D Bank E
16% 13%
11% 9%
6%
0% 2% 4% 6% 8%
10% 12% 14% 16% 18%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Indonesia
0
2
4
6
Bank A Bank B Bank C 0.0
0.1
0.2
0.3
0.4
Bank A Bank B Bank C
17.9%
13.2%
1.7%
0%
5%
10%
15%
20%
Bank A Bank B Bank C
1.3%
0.9%
0.3%
0.0%
0.5%
1.0%
1.5%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
53COMPETITIVENESS REPORT 2012-2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Bank D
With population approaching 250 million, and a positive stable economic outlook, Indonesia is likely to be the next major growth market for Islamic banking
Strategic growth matrix
Bank A
Bank B
Bank C
Bank D
Bank A
Bank B
Bank C
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
While political and economic risks remain, Indonesia’s nascent Islamic banking industry is forecast to grow five folds to $83 billion by 2015
With local banks focused on retail customers, foreign institutions are developing significant presence in wholesale and corporate banking
A regulatory proposal seeks to limit foreign ownership to less than 50%
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201354
0%
10%
20%
30%
40%
50%
60%
70%
80%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Bank D
With population approaching 250 million, and a positive stable economic outlook, Indonesia is likely to be the next major growth market for Islamic banking
Strategic growth matrix
Bank A
Bank B
Bank C
Bank D
Bank A
Bank B
Bank C
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
While political and economic risks remain, Indonesia’s nascent Islamic banking industry is forecast to grow five folds to $83 billion by 2015
With local banks focused on retail customers, foreign institutions are developing significant presence in wholesale and corporate banking
A regulatory proposal seeks to limit foreign ownership to less than 50%
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
55COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Kuwait
Banking sector 2011 Macroeconomic 2011
Real GDP growth 5.7%
Nominal GDP (US$b) 161
Nominal GDP per capita (US$) 57,102
Total population (m) 2.8
Total Muslim population (m) 2.6
Population (0-14) 25.7%
Population (15-64) 72.3%
Population (65 & over) 2.1%
Population growth 2.6%
Inflation 4.7%
Unemployment rate 2.1%
Policy interest rate 2.5%
Total assets (US$b) 159
Total loans (US$b) 108
Total deposits (US$b) 116
Total equity (US$ b) 22
Assets CAGR (2007-2011) 5.5%
Loans CAGR (2007-2011) 6.1%
Deposits CAGR (2007-2011) 8.7%
Total Islamic assets (US$b) 52
Islamic asset market share 33%
Islamic assets CAGR (2007-2011) 6.5%
Total number of banks 22
Total number of Islamic retail banks 5
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Kuwait
17 17 18
21 22
-
5
10
15
20
25
2007 2008 2009 2010 2011
128 141 145 149
159
- 20 40 60 80
100 120 140 160 180
2007 2008 2009 2010 2011
85 99
104 106 108
-
20
40
60
80
100
120
2007 2008 2009 2010 2011
83 99 104 109
116
-
20
40
60
80
100
120
140
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
COMPETITIVENESS REPORT 2012-201356
Banking sector overview – Kuwait
Banking sector 2011 Macroeconomic 2011
Real GDP growth 5.7%
Nominal GDP (US$b) 161
Nominal GDP per capita (US$) 57,102
Total population (m) 2.8
Total Muslim population (m) 2.6
Population (0-14) 25.7%
Population (15-64) 72.3%
Population (65 & over) 2.1%
Population growth 2.6%
Inflation 4.7%
Unemployment rate 2.1%
Policy interest rate 2.5%
Total assets (US$b) 159
Total loans (US$b) 108
Total deposits (US$b) 116
Total equity (US$ b) 22
Assets CAGR (2007-2011) 5.5%
Loans CAGR (2007-2011) 6.1%
Deposits CAGR (2007-2011) 8.7%
Total Islamic assets (US$b) 52
Islamic asset market share 33%
Islamic assets CAGR (2007-2011) 6.5%
Total number of banks 22
Total number of Islamic retail banks 5
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Kuwait
17 17 18
21 22
-
5
10
15
20
25
2007 2008 2009 2010 2011
128 141 145 149
159
- 20 40 60 80
100 120 140 160 180
2007 2008 2009 2010 2011
85 99
104 106 108
-
20
40
60
80
100
120
2007 2008 2009 2010 2011
83 99 104 109
116
-
20
40
60
80
100
120
140
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
57COMPETITIVENESS REPORT 2012-2013
Top five banks – Kuwait
0
10
20
30
40
50
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
Bank A Bank B Bank C Bank D Bank E
31% 31%
10% 8%
6%
0%
5%
10%
15%
20%
25%
30%
35%
Bank A Bank B Bank C Bank D Bank E
13.0%
2.4%
10.2%
0.2%
9.1%
0%
2%
4%
6%
8%
10%
12%
14%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Kuwait
0
10
20
30
40
50
60
Bank A Bank B Bank C 0.0
1.0
2.0
3.0
4.0
5.0
6.0
Bank A Bank B Bank C
2%
9%
3%
0%
2%
4%
6%
8%
10%
Bank A Bank B Bank C
30.9%
6.0% 3.6%
0%
5%
10%
15%
20%
25%
30%
35%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201358
Top five banks – Kuwait
0
10
20
30
40
50
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
Bank A Bank B Bank C Bank D Bank E
31% 31%
10% 8%
6%
0%
5%
10%
15%
20%
25%
30%
35%
Bank A Bank B Bank C Bank D Bank E
13.0%
2.4%
10.2%
0.2%
9.1%
0%
2%
4%
6%
8%
10%
12%
14%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Kuwait
0
10
20
30
40
50
60
Bank A Bank B Bank C 0.0
1.0
2.0
3.0
4.0
5.0
6.0
Bank A Bank B Bank C
2%
9%
3%
0%
2%
4%
6%
8%
10%
Bank A Bank B Bank C
30.9%
6.0% 3.6%
0%
5%
10%
15%
20%
25%
30%
35%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
59COMPETITIVENESS REPORT 2012-2013
-8%
-3%
2%
7%
12%
17%
22%
27%
0% 5% 10% 15% 20% 25% 30% 35%
Search for a differentiated business model to reignite growth
Strategic growth matrix
Bank C
Bank A Bank B
Bank D
Bank A
Bank B
Bank C
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Retail banking transformation, wealth management solutions and regional expansion will drive the next phase of growth for Islamic banks in Kuwait
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201360
-8%
-3%
2%
7%
12%
17%
22%
27%
0% 5% 10% 15% 20% 25% 30% 35%
Search for a differentiated business model to reignite growth
Strategic growth matrix
Bank C
Bank A Bank B
Bank D
Bank A
Bank B
Bank C
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Retail banking transformation, wealth management solutions and regional expansion will drive the next phase of growth for Islamic banks in Kuwait
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
61COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Malaysia
Banking sector 2011 Macroeconomic 2011
Real GDP growth 5.1%
Nominal GDP (US$b) 288
Nominal GDP per capita (US$) 9,977
Total population (m) 28.9
Total Muslim population (m) 17.3
Population (0-14) 29.4%
Population (15-64) 65.5%
Population (65 & over) 5.1%
Population growth 1.6%
Inflation 3.2%
Unemployment rate 3.1%
Policy interest rate 3%
Total assets (US$b) 579
Total loans (US$b) 325
Total deposits (US$b) 411
Total equity (US$b) 48
Assets CAGR (2007-2011) 9.9%
Loans CAGR (2007-2011) 11.8%
Deposits CAGR (2007-2011) 11.4%
Total Islamic assets (US$b) 106
Islamic asset market share 18.9%
Islamic assets CAGR (2007-2011) 21.3%
Total number of banks 27
Total number of Islamic retail banks 16
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
397 435 464
504 579
-
100
200
300
400
500
600
700
2007 2008 2009 2010 2011
Banking sector snapshot – Malaysia
28 34
40 44
48
-
10
20
30
40
50
60
2007 2008 2009 2010 2011
267 304
334 359
411
-
100
200
300
400
500
2007 2008 2009 2010 2011
208 235
254 286
325
-
50
100
150
200
250
300
350
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201362
Banking sector overview – Malaysia
Banking sector 2011 Macroeconomic 2011
Real GDP growth 5.1%
Nominal GDP (US$b) 288
Nominal GDP per capita (US$) 9,977
Total population (m) 28.9
Total Muslim population (m) 17.3
Population (0-14) 29.4%
Population (15-64) 65.5%
Population (65 & over) 5.1%
Population growth 1.6%
Inflation 3.2%
Unemployment rate 3.1%
Policy interest rate 3%
Total assets (US$b) 579
Total loans (US$b) 325
Total deposits (US$b) 411
Total equity (US$b) 48
Assets CAGR (2007-2011) 9.9%
Loans CAGR (2007-2011) 11.8%
Deposits CAGR (2007-2011) 11.4%
Total Islamic assets (US$b) 106
Islamic asset market share 18.9%
Islamic assets CAGR (2007-2011) 21.3%
Total number of banks 27
Total number of Islamic retail banks 16
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
397 435 464
504 579
-
100
200
300
400
500
600
700
2007 2008 2009 2010 2011
Banking sector snapshot – Malaysia
28 34
40 44
48
-
10
20
30
40
50
60
2007 2008 2009 2010 2011
267 304
334 359
411
-
100
200
300
400
500
2007 2008 2009 2010 2011
208 235
254 286
325
-
50
100
150
200
250
300
350
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
63COMPETITIVENESS REPORT 2012-2013
Top five banks – Malaysia
0
30
60
90
120
150
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
12
Bank A Bank B Bank C Bank D Bank E
25%
14% 13%
8%
4%
0%
5%
10%
15%
20%
25%
30%
Bank A Bank B Bank C Bank D Bank E
14.1%
22.4%
14.2% 14.8% 15.8%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Malaysia
0
5
10
15
20
25
Bank A Bank B Bank C 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Bank A Bank B Bank C
3.7%
2.3% 1.8%
0.0%
1.0%
2.0%
3.0%
4.0%
Bank A Bank B Bank C
16% 18%
13%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201364
Top five banks – Malaysia
0
30
60
90
120
150
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
12
Bank A Bank B Bank C Bank D Bank E
25%
14% 13%
8%
4%
0%
5%
10%
15%
20%
25%
30%
Bank A Bank B Bank C Bank D Bank E
14.1%
22.4%
14.2% 14.8% 15.8%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Malaysia
0
5
10
15
20
25
Bank A Bank B Bank C 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Bank A Bank B Bank C
3.7%
2.3% 1.8%
0.0%
1.0%
2.0%
3.0%
4.0%
Bank A Bank B Bank C
16% 18%
13%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
65COMPETITIVENESS REPORT 2012-2013
0%
5%
10%
15%
20%
25%
30%
35%
40%
0% 5% 10% 15% 20% 25% 30%
Malaysia is seeking to double the share of Islamic banking assets by 2020. The game changer would be conversion of conventional banks
Strategic growth matrix
Bank A
Bank C
Bank B
Bank D
Bank A
Bank B
Bank C Bank D
Conventional Islamic
Bank E
Bank F
Bank D
Bank G
Gro
wth
in A
sset
s C
AG
R 2
008
- 201
1
Low market share High market share
Market share 2011
Consolidation will help create larger Islamic banks with capacity to grow regionally
Operational transformation of Islamic banks and windows is a pre requisite for meaningful growth
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201366
0%
5%
10%
15%
20%
25%
30%
35%
40%
0% 5% 10% 15% 20% 25% 30%
Malaysia is seeking to double the share of Islamic banking assets by 2020. The game changer would be conversion of conventional banks
Strategic growth matrix
Bank A
Bank C
Bank B
Bank D
Bank A
Bank B
Bank C Bank D
Conventional Islamic
Bank E
Bank F
Bank D
Bank G
Gro
wth
in A
sset
s C
AG
R 2
008
- 201
1
Low market share High market share
Market share 2011
Consolidation will help create larger Islamic banks with capacity to grow regionally
Operational transformation of Islamic banks and windows is a pre requisite for meaningful growth
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
67COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Pakistan
Banking sector 2011 Macroeconomic 2011
Real GDP growth 2.4%
Nominal GDP (US$b) 209
Nominal GDP per capita (US$) 1,184
Total population (m) 177
Total Muslim population (m) 170
Population (0-14) 34.7%
Population (15-64) 61%
Population (65 & over) 4.2%
Population growth 1.8%
Inflation 12%
Unemployment rate 6.2%
Policy interest rate 12%
Total assets (US$b) 124
Total loans (US$b) 35
Total deposits (US$b) 58
Total equity (US$b) 7
Assets CAGR (2007-2011) 7.7%
Loans CAGR (2007-2011) 8.1%
Deposits CAGR (2007-2011) 12.9%
Total Islamic assets (US$b) 7
Islamic asset market share 5.7%
Islamic assets CAGR (2007-2011) 20.7%
Total number of banks 38
Total number of Islamic retail banks 5
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Pakistan
92 93 99
112 124
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011
4 4
6 7
7
0
2
4
6
8
2007 2008 2009 2010 2011
26 30
33 34 35
0
10
20
30
40
2007 2008 2009 2010 2011
36 41
44 50
58
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201368
Banking sector overview – Pakistan
Banking sector 2011 Macroeconomic 2011
Real GDP growth 2.4%
Nominal GDP (US$b) 209
Nominal GDP per capita (US$) 1,184
Total population (m) 177
Total Muslim population (m) 170
Population (0-14) 34.7%
Population (15-64) 61%
Population (65 & over) 4.2%
Population growth 1.8%
Inflation 12%
Unemployment rate 6.2%
Policy interest rate 12%
Total assets (US$b) 124
Total loans (US$b) 35
Total deposits (US$b) 58
Total equity (US$b) 7
Assets CAGR (2007-2011) 7.7%
Loans CAGR (2007-2011) 8.1%
Deposits CAGR (2007-2011) 12.9%
Total Islamic assets (US$b) 7
Islamic asset market share 5.7%
Islamic assets CAGR (2007-2011) 20.7%
Total number of banks 38
Total number of Islamic retail banks 5
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Pakistan
92 93 99
112 124
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011
4 4
6 7
7
0
2
4
6
8
2007 2008 2009 2010 2011
26 30
33 34 35
0
10
20
30
40
2007 2008 2009 2010 2011
36 41
44 50
58
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
69COMPETITIVENESS REPORT 2012-2013
Top five banks – Pakistan
0
2
4
6
8
10
12
14
Bank A Bank B Bank C Bank D Bank E 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
Bank A Bank B Bank C Bank D Bank E
10% 10%
7% 6%
4%
0%
2%
4%
6%
8%
10%
12%
Bank A Bank B Bank C Bank D Bank E
13.1%
22.2%
17.3%
21.0% 23.3%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Pakistan
0.0
0.5
1.0
1.5
2.0
2.5
Bank A Bank B Bank C
20.4%
6.3%
-1.2%
-5%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C
1.8%
0.6% 0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Bank A Bank B Bank C
0.00
0.06
0.12
0.18
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201370
Top five banks – Pakistan
0
2
4
6
8
10
12
14
Bank A Bank B Bank C Bank D Bank E 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
Bank A Bank B Bank C Bank D Bank E
10% 10%
7% 6%
4%
0%
2%
4%
6%
8%
10%
12%
Bank A Bank B Bank C Bank D Bank E
13.1%
22.2%
17.3%
21.0% 23.3%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Pakistan
0.0
0.5
1.0
1.5
2.0
2.5
Bank A Bank B Bank C
20.4%
6.3%
-1.2%
-5%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C
1.8%
0.6% 0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Bank A Bank B Bank C
0.00
0.06
0.12
0.18
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
71COMPETITIVENESS REPORT 2012-2013
0%
10%
20%
30%
40%
50%
60%
70%
0% 2% 4% 6% 8% 10% 12%
Islamic banks will continue to experience high growth as they build their distribution capacity
Strategic growth matrix
Bank A
Bank B
Bank C
Bank A Bank B
Bank C
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Industry leader Islamic bank has thrived on differentiating itself from conventional peers
Strong potential for organic growth but Islamic banks need to build distribution capacity and scale
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201372
0%
10%
20%
30%
40%
50%
60%
70%
0% 2% 4% 6% 8% 10% 12%
Islamic banks will continue to experience high growth as they build their distribution capacity
Strategic growth matrix
Bank A
Bank B
Bank C
Bank A Bank B
Bank C
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Industry leader Islamic bank has thrived on differentiating itself from conventional peers
Strong potential for organic growth but Islamic banks need to build distribution capacity and scale
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
73COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Qatar
Banking sector 2011 Macroeconomic 2011
Real GDP growth 14.8%
Nominal GDP (US$b) 174
Nominal GDP per capita (US$) 101,340
Total population (m) 1.7
Total Muslim population (m) 1.3
Population (0-14) 12.5%
Population (15-64) 86.7%
Population (65 & over) 0.8%
Population growth 5.8%
Inflation 1.9%
Unemployment rate 0.6%
Policy interest rate 4.5%
Total assets (US$b) 187
Total loans (US$b) 109
Total deposits (US$b) 98
Total equity (US$b) 26
Assets CAGR (2007-2011) 23.9%
Loans CAGR (2007-2011) 25.9%
Deposits CAGR (2007-2011) 21.4%
Total Islamic assets (US$b) 44
Islamic asset market share 23%
Islamic assets CAGR (2007-2011) 30%
Total number of banks 18
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Qatar
79
109 126
153
187
-
50
100
150
200
2007 2008 2009 2010 2011
9
13 15
17
26
-
5
10
15
20
25
30
2007 2008 2009 2010 2011
45 57
67
83
98
-
20
40
60
80
100
120
2007 2008 2009 2010 2011
43
66 73
85
109
-
20
40
60
80
100
120
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201374
Banking sector overview – Qatar
Banking sector 2011 Macroeconomic 2011
Real GDP growth 14.8%
Nominal GDP (US$b) 174
Nominal GDP per capita (US$) 101,340
Total population (m) 1.7
Total Muslim population (m) 1.3
Population (0-14) 12.5%
Population (15-64) 86.7%
Population (65 & over) 0.8%
Population growth 5.8%
Inflation 1.9%
Unemployment rate 0.6%
Policy interest rate 4.5%
Total assets (US$b) 187
Total loans (US$b) 109
Total deposits (US$b) 98
Total equity (US$b) 26
Assets CAGR (2007-2011) 23.9%
Loans CAGR (2007-2011) 25.9%
Deposits CAGR (2007-2011) 21.4%
Total Islamic assets (US$b) 44
Islamic asset market share 23%
Islamic assets CAGR (2007-2011) 30%
Total number of banks 18
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Qatar
79
109 126
153
187
-
50
100
150
200
2007 2008 2009 2010 2011
9
13 15
17
26
-
5
10
15
20
25
30
2007 2008 2009 2010 2011
45 57
67
83
98
-
20
40
60
80
100
120
2007 2008 2009 2010 2011
43
66 73
85
109
-
20
40
60
80
100
120
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
75COMPETITIVENESS REPORT 2012-2013
Top five banks – Qatar
0
30
60
90
Bank A Bank B Bank C Bank D Bank E
43.5%
10.3% 8.4% 8.0% 7.5%
0%
10%
20%
30%
40%
50%
Bank A Bank B Bank C Bank D Bank E
0
2
4
6
8
10
12
14
Bank A Bank B Bank C Bank D Bank E
17.7%
13.2% 12.2%
16.5% 17.5%
0%
4%
8%
12%
16%
20%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Qatar
0
3
6
9
12
15
18
Bank A Bank B Bank C
8.4% 8.0%
3.4%
0%
3%
6%
9%
Bank A Bank B Bank C
12.2%
16.5%
13.3%
0%
3%
6%
9%
12%
15%
18%
Bank A Bank B Bank C
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201376
Top five banks – Qatar
0
30
60
90
Bank A Bank B Bank C Bank D Bank E
43.5%
10.3% 8.4% 8.0% 7.5%
0%
10%
20%
30%
40%
50%
Bank A Bank B Bank C Bank D Bank E
0
2
4
6
8
10
12
14
Bank A Bank B Bank C Bank D Bank E
17.7%
13.2% 12.2%
16.5% 17.5%
0%
4%
8%
12%
16%
20%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Qatar
0
3
6
9
12
15
18
Bank A Bank B Bank C
8.4% 8.0%
3.4%
0%
3%
6%
9%
Bank A Bank B Bank C
12.2%
16.5%
13.3%
0%
3%
6%
9%
12%
15%
18%
Bank A Bank B Bank C
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
77COMPETITIVENESS REPORT 2012-2013
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Regulatory clarity has helped Islamic banks in Qatar to achieve scale in the high growth market. There is also potential for a strong Islamic capital market play in future
Strategic growth matrix
Bank B
Bank C
Bank A
Bank C
Bank B
Bank A
Conventional Islamic
Gro
wth
in A
sset
s C
AG
R 2
008
- 201
1
Low Market Share High Market Share Market Share 2011
Barring the conventional industry leader, Islamic banks are comparable in size to conventional peers
Large infrastructure spend will fuel continued profitable growth for the banking industry
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201378
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Regulatory clarity has helped Islamic banks in Qatar to achieve scale in the high growth market. There is also potential for a strong Islamic capital market play in future
Strategic growth matrix
Bank B
Bank C
Bank A
Bank C
Bank B
Bank A
Conventional Islamic
Gro
wth
in A
sset
s C
AG
R 2
008
- 201
1
Low Market Share High Market Share Market Share 2011
Barring the conventional industry leader, Islamic banks are comparable in size to conventional peers
Large infrastructure spend will fuel continued profitable growth for the banking industry
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
79COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Saudi Arabia
Banking sector 2011 Macroeconomic 2011
Real GDP growth 7.1%
Nominal GDP (US$b) 597
Nominal GDP per capita (US$) 21,262
Total population (m) 28
Total Muslim population (m) 27
Population (0-14) 29%
Population (15-64) 68%
Population (65 & over) 3%
Population growth 2.2 %
Inflation 5.0%
Unemployment rate 5.8%
Policy interest rate 2%
Total assets (US$b) 417
Total loans (US$b) 232
Total deposits (US$b) 298
Total equity (US$b) 51
Assets CAGR (2007-2011) 9.5%
Loans CAGR (2007-2011) 9.5%
Deposits CAGR (2007-2011) 11.4%
Total Islamic assets (US$b) 207
Islamic asset market share 49%
Islamic assets CAGR (2007-2011) 12.5%
Total number of banks 12
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Saudi Arabia
291
352 370 383 417
-
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010 2011
29
36
44 48
51
-
10
20
30
40
50
60
2007 2008 2009 2010 2011
161
201 199 210 232
-
50
100
150
200
250
2007 2008 2009 2010 2011
194
229 254 266
298
-
50
100
150
200
250
300
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201380
Banking sector overview – Saudi Arabia
Banking sector 2011 Macroeconomic 2011
Real GDP growth 7.1%
Nominal GDP (US$b) 597
Nominal GDP per capita (US$) 21,262
Total population (m) 28
Total Muslim population (m) 27
Population (0-14) 29%
Population (15-64) 68%
Population (65 & over) 3%
Population growth 2.2 %
Inflation 5.0%
Unemployment rate 5.8%
Policy interest rate 2%
Total assets (US$b) 417
Total loans (US$b) 232
Total deposits (US$b) 298
Total equity (US$b) 51
Assets CAGR (2007-2011) 9.5%
Loans CAGR (2007-2011) 9.5%
Deposits CAGR (2007-2011) 11.4%
Total Islamic assets (US$b) 207
Islamic asset market share 49%
Islamic assets CAGR (2007-2011) 12.5%
Total number of banks 12
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Saudi Arabia
291
352 370 383 417
-
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010 2011
29
36
44 48
51
-
10
20
30
40
50
60
2007 2008 2009 2010 2011
161
201 199 210 232
-
50
100
150
200
250
2007 2008 2009 2010 2011
194
229 254 266
298
-
50
100
150
200
250
300
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
81COMPETITIVENESS REPORT 2012-2013
Top five banks – Saudi Arabia
0
30
60
90
Bank A Bank B Bank C Bank D Bank E 0
3
6
9
12
Bank A Bank B Bank C Bank D Bank E
19.5%
14.3% 12.5% 11.7%
9.0%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
17.2%
22.5%
15.2%
10.4%
14.8%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Saudi Arabia
0
10
20
30
40
50
60
Bank A Bank B Bank C 0
2
4
6
8
10
Bank A Bank B Bank C
14.3%
2.5% 2.4%
0%
3%
6%
9%
12%
15%
Bank A Bank B Bank C
22.5%
6.4%
2.7%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201382
Top five banks – Saudi Arabia
0
30
60
90
Bank A Bank B Bank C Bank D Bank E 0
3
6
9
12
Bank A Bank B Bank C Bank D Bank E
19.5%
14.3% 12.5% 11.7%
9.0%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
17.2%
22.5%
15.2%
10.4%
14.8%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Saudi Arabia
0
10
20
30
40
50
60
Bank A Bank B Bank C 0
2
4
6
8
10
Bank A Bank B Bank C
14.3%
2.5% 2.4%
0%
3%
6%
9%
12%
15%
Bank A Bank B Bank C
22.5%
6.4%
2.7%
0%
5%
10%
15%
20%
25%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
83COMPETITIVENESS REPORT 2012-2013
-5%
0%
5%
10%
15%
20%
25%
30%
35%
0% 5% 10% 15% 20%
Strategic growth matrix
Bank C
Bank D
Bank B Bank A Bank A
Bank B
Bank C
Bank D
Bank E
Conventional Islamic
Low market share High market share Market share 2011
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
With more than 50% share of the banking system assets in 2012, Islamic banking is in fact mainstream banking in Saudi Arabia
Conventional banks have large Islamic banking book which is more than just a ‘window’ operation
Housing finance will be reconfigured based on new mortgage law and (draft) regulations and offers significant growth opportunity
A key systemic challenge is to safeguard and strengthen Shari’a governance framework
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201384
-5%
0%
5%
10%
15%
20%
25%
30%
35%
0% 5% 10% 15% 20%
Strategic growth matrix
Bank C
Bank D
Bank B Bank A Bank A
Bank B
Bank C
Bank D
Bank E
Conventional Islamic
Low market share High market share Market share 2011
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
With more than 50% share of the banking system assets in 2012, Islamic banking is in fact mainstream banking in Saudi Arabia
Conventional banks have large Islamic banking book which is more than just a ‘window’ operation
Housing finance will be reconfigured based on new mortgage law and (draft) regulations and offers significant growth opportunity
A key systemic challenge is to safeguard and strengthen Shari’a governance framework
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
85COMPETITIVENESS REPORT 2012-2013
Banking sector overview – Turkey
Banking sector 2011 Macroeconomic 2011
Real GDP growth 8.5%
Nominal GDP (US$b) 775
Nominal GDP per capita (US$) 10,524
Total population (m) 74
Total Muslim population (m) 72
Population (0-14) 26.2%
Population (15-64) 67.4%
Population (65 & over) 6.4%
Population growth 1.2%
Inflation 6.5%
Unemployment rate 8.8%
Policy interest rate 5.8%
Total assets (US$b) 631
Total loans (US$b) 354
Total deposits (US$b) 378
Total equity (US$b) 88
Assets CAGR (2007-2011) 20%
Loans CAGR (2007-2011) 27.2%
Deposits CAGR (2007-2011) 18.9%
Total Islamic assets (US$b) 31
Islamic asset market share 4.9%
Islamic assets CAGR (2007-2011) 30%
Total number of banks 62
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Turkey
299
374 427
520
631
-
100
200
300
400
500
600
700
2007 2008 2009 2010 2011
136 168
189
268
354
-
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
189
239 270
325 378
-
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
50 54
71
86 88
- 10 20 30 40 50 60 70 80 90
100
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201386
Banking sector overview – Turkey
Banking sector 2011 Macroeconomic 2011
Real GDP growth 8.5%
Nominal GDP (US$b) 775
Nominal GDP per capita (US$) 10,524
Total population (m) 74
Total Muslim population (m) 72
Population (0-14) 26.2%
Population (15-64) 67.4%
Population (65 & over) 6.4%
Population growth 1.2%
Inflation 6.5%
Unemployment rate 8.8%
Policy interest rate 5.8%
Total assets (US$b) 631
Total loans (US$b) 354
Total deposits (US$b) 378
Total equity (US$b) 88
Assets CAGR (2007-2011) 20%
Loans CAGR (2007-2011) 27.2%
Deposits CAGR (2007-2011) 18.9%
Total Islamic assets (US$b) 31
Islamic asset market share 4.9%
Islamic assets CAGR (2007-2011) 30%
Total number of banks 62
Total number of Islamic retail banks 4
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – Turkey
299
374 427
520
631
-
100
200
300
400
500
600
700
2007 2008 2009 2010 2011
136 168
189
268
354
-
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
189
239 270
325 378
-
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
50 54
71
86 88
- 10 20 30 40 50 60 70 80 90
100
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
87COMPETITIVENESS REPORT 2012-2013
Top five banks – Turkey
0
20
40
60
80
100
120
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
12
14
Bank A Bank B Bank C Bank D Bank E
17% 15% 15%
13% 11%
0%
5%
10%
15%
20%
Bank A Bank B Bank C Bank D Bank E
11.8%
16.5%
24.8%
13.9%
18.3%
0%
5%
10%
15%
20%
25%
30%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Turkey
0
2
4
6
8
10
Bank A Bank B Bank C 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Bank A Bank B Bank C
9.9%
13.6% 14.6%
0%
4%
8%
12%
16%
Bank A Bank B Bank C
1.5% 1.3%
1.2%
0.0%
0.4%
0.8%
1.2%
1.6%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201388
Top five banks – Turkey
0
20
40
60
80
100
120
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
12
14
Bank A Bank B Bank C Bank D Bank E
17% 15% 15%
13% 11%
0%
5%
10%
15%
20%
Bank A Bank B Bank C Bank D Bank E
11.8%
16.5%
24.8%
13.9%
18.3%
0%
5%
10%
15%
20%
25%
30%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – Turkey
0
2
4
6
8
10
Bank A Bank B Bank C 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Bank A Bank B Bank C
9.9%
13.6% 14.6%
0%
4%
8%
12%
16%
Bank A Bank B Bank C
1.5% 1.3%
1.2%
0.0%
0.4%
0.8%
1.2%
1.6%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
89COMPETITIVENESS REPORT 2012-2013
0%
5%
10%
15%
20%
25%
30%
35%
40%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Bank A
Bank B
Bank C
Bank D
Bank A
Bank B
Bank E
Bank C Bank D
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Turkey’s 2023 financial services vision could see Islamic banking industry tripling in size to more than $100 billion (approximately where Malaysia is today)
Strategic growth matrix
Islamic banks will continue to post strong growth helped by regulatory clarity and new liquidity management solutions
Possible entry of more foreign Islamic banks through acquisition & conversion
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201390
0%
5%
10%
15%
20%
25%
30%
35%
40%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Bank A
Bank B
Bank C
Bank D
Bank A
Bank B
Bank E
Bank C Bank D
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Turkey’s 2023 financial services vision could see Islamic banking industry tripling in size to more than $100 billion (approximately where Malaysia is today)
Strategic growth matrix
Islamic banks will continue to post strong growth helped by regulatory clarity and new liquidity management solutions
Possible entry of more foreign Islamic banks through acquisition & conversion
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
91COMPETITIVENESS REPORT 2012-2013
Banking sector overview – UAE
Banking sector 2011 Macroeconomic 2011
Real GDP growth 4.2%
Nominal GDP (US$b) 339
Nominal GDP per capita (US$) 42,921
Total population (m) 7.9
Total Muslim population (m) 6
Population (0-14) 20.5%
Population (15-64) 78.5%
Population (65 & over) 0.9%
Population growth 5.0%
Inflation 0.9%
Unemployment rate 4.6%
Policy interest rate 1.0%
Total assets (US$b) 450
Total loans (US$b) 268
Total deposits (US$b) 289
Total equity (US$b) 76
Assets CAGR (2007-2011) 8.5%
Loans CAGR (2007-2011) 12.2%
Deposits CAGR (2007-2011) 10.6%
Total Islamic assets (US$b) 75
Islamic asset market share 16.7%
Islamic assets CAGR (2007-2011) 14.8%
Total number of banks 50
Total number of Islamic retail banks 7
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – UAE
325
391 411 434 450
-
100
200
300
400
500
2007 2008 2009 2010 2011
35
45
66 74 76
-
20
40
60
80
2007 2008 2009 2010 2011
193
246 265
283 289
-
50
100
150
200
250
300
350
2007 2008 2009 2010 2011
169
250 259 262 268
-
100
200
300
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201392
Banking sector overview – UAE
Banking sector 2011 Macroeconomic 2011
Real GDP growth 4.2%
Nominal GDP (US$b) 339
Nominal GDP per capita (US$) 42,921
Total population (m) 7.9
Total Muslim population (m) 6
Population (0-14) 20.5%
Population (15-64) 78.5%
Population (65 & over) 0.9%
Population growth 5.0%
Inflation 0.9%
Unemployment rate 4.6%
Policy interest rate 1.0%
Total assets (US$b) 450
Total loans (US$b) 268
Total deposits (US$b) 289
Total equity (US$b) 76
Assets CAGR (2007-2011) 8.5%
Loans CAGR (2007-2011) 12.2%
Deposits CAGR (2007-2011) 10.6%
Total Islamic assets (US$b) 75
Islamic asset market share 16.7%
Islamic assets CAGR (2007-2011) 14.8%
Total number of banks 50
Total number of Islamic retail banks 7
Note: Only commercial banks Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Banking sector snapshot – UAE
325
391 411 434 450
-
100
200
300
400
500
2007 2008 2009 2010 2011
35
45
66 74 76
-
20
40
60
80
2007 2008 2009 2010 2011
193
246 265
283 289
-
50
100
150
200
250
300
350
2007 2008 2009 2010 2011
169
250 259 262 268
-
100
200
300
2007 2008 2009 2010 2011
Total domestic banking assets (US$b) Total equity (US$b)
Total banking deposits (US$b) Total advances (US$b)
Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
93COMPETITIVENESS REPORT 2012-2013
Top five banks – UAE
0
20
40
60
80
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
Bank A Bank B Bank C Bank D Bank E
17.1% 15.4%
11.0% 9.5%
5.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Bank A Bank B Bank C Bank D Bank E
7.1%
14.0% 13.8% 13.9%
10.4%
0%
4%
8%
12%
16%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – UAE
0
5
10
15
20
25
30
Bank A Bank B Bank C 0.0
0.5
1.0
1.5
2.0
2.5
3.0
Bank A Bank B Bank C
10.4%
13.5%
6.7%
0%
4%
8%
12%
16%
Bank A Bank B Bank C
5.4%
4.5%
1.7%
0%
1%
2%
3%
4%
5%
6%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
COMPETITIVENESS REPORT 2012-201394
Top five banks – UAE
0
20
40
60
80
Bank A Bank B Bank C Bank D Bank E 0
2
4
6
8
10
Bank A Bank B Bank C Bank D Bank E
17.1% 15.4%
11.0% 9.5%
5.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Bank A Bank B Bank C Bank D Bank E
7.1%
14.0% 13.8% 13.9%
10.4%
0%
4%
8%
12%
16%
Bank A Bank B Bank C Bank D Bank E
Return on equity
Total equity (US$b) Total assets (US$b)
Market share (Assets)
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
Islamic banking sector snapshot – UAE
0
5
10
15
20
25
30
Bank A Bank B Bank C 0.0
0.5
1.0
1.5
2.0
2.5
3.0
Bank A Bank B Bank C
10.4%
13.5%
6.7%
0%
4%
8%
12%
16%
Bank A Bank B Bank C
5.4%
4.5%
1.7%
0%
1%
2%
3%
4%
5%
6%
Bank A Bank B Bank C
Total equity of top 3 Islamic banks (US$b) Total assets of top 3 Islamic banks (US$b)
Market share of top 3 Islamic banks ROE of top 3 Islamic banks
2011 Figures Source: Central Bank Report, Industry Sources, Ernst & Young Analysis Limitation: Impact of consolidation, off-shore business and window operation
95COMPETITIVENESS REPORT 2012-2013
-10%
-5%
0%
5%
10%
15%
20%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Strategic Growth Matrix
Bank B
Bank A
Bank D
Bank A
Bank C
Bank C
Bank B
Bank D
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Regaining momentum through retail banking transformation is essential for Islamic banks in UAE
Undifferentiated business models will need to be reconfigured to be specialized (retail & SME) and diversified (regional, infrastructure, wealth management, etc.)
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
COMPETITIVENESS REPORT 2012-201396
-10%
-5%
0%
5%
10%
15%
20%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Strategic Growth Matrix
Bank B
Bank A
Bank D
Bank A
Bank C
Bank C
Bank B
Bank D
Conventional Islamic
Gro
wth
in a
sset
s C
AG
R 2
008
- 201
1
Low market share High market share Market share 2011
Regaining momentum through retail banking transformation is essential for Islamic banks in UAE
Undifferentiated business models will need to be reconfigured to be specialized (retail & SME) and diversified (regional, infrastructure, wealth management, etc.)
Banks are ranked based on asset size 2011 Source: Central Bank Report, Industry Sources, Ernst & Young Analysis
Report structure
Country spotlight
Bahrain
Egypt
Kuwait
Malaysia
Pakistan
Qatar
Turkey
United Arab Emirates
Indonesia Saudi Arabia
Global industry insights
Competitive positioning
Performance analysis
CEO agenda
Executive brief Opening
97COMPETITIVENESS REPORT 2012-2013
Ernst & Young Leadership – Islamic Banking Center of Excellence (and what they have to say)
Ashar Nazim ashar.nazim@bh.ey.com
Game changer for us would be bold, fresh thinking that drives responsible innovation
Abid Shakeel abid.shakeel@bh.ey.com
Successful strategy execution is dependant on a bank's operating model being realigned to deliver on the new strategy
Nida Raza nida.raza@bh.ey.com
Islamic banking is no rocket science but structuring real Islamic products requires sophisticated thinking
Sohaib Umar sohaib.umar@bh.ey.com
Industry may potentially face an existential threat if it cannot manage its most important risk, i.e. Shari'a non-compliance
Shoaib Qureshi shoaib.qureshi@sa.ey.com
Real progress will only come from greater integration with the real economy
Shahid Mughal shahid.mughal@om.ey.com
If the change does not happen at the right time, there will be nothing left to change
Mustafa Adil mustafa.adil@bh.ey.com
Market leadership will belong to those who can meet both commercial and Shari'a needs of their customers
Noman Mubashir noman.mubashir@bh.ey.com
I wish my Islamic bank could deliver the same service levels that my previous conventional bank had to offer!
Report methodology and tools
► The break down of banks selected country wise in the EY Universe is:
► Bahrain – 7 Islamic and 4 conventional banks ► Saudi Arabia – 4 Islamic and 5 conventional banks ► Kuwait – 4 Islamic and 3 conventional banks ► Qatar – 3 Islamic and 3 conventional banks ► UAE – 8 Islamic and 4 conventional banks ► Indonesia – 5 Islamic and 4 conventional banks ► Malaysia – 13 Islamic and 4 conventional banks ► Pakistan – 5 Islamic and 3 conventional banks ► Bangladesh – 5 Islamic and 2 conventional banks ► Jordan – 2 Islamic and 1 conventional banks ► Egypt – 2 Islamic and 4 conventional banks ► Turkey – 4 Islamic and 5 conventional banks
Anonymity and Quotes
► All interviewees were assured of anonymity and minutes documented during our discussions
► Quotations have been used to support arguments made in the report.
► Global Islamic banking assets are estimated based on publicly available data from 22 Islamic banking markets
► The research and insights are primarily based on EY Islamic Banking Universe (EY Universe), which is proprietary, based on sample, and is not meant to be fully exhaustive
► The EY Universe analysis covers 62 Islamic banks and 42 conventional banks across 12 Islamic banking markets, with a total asset base of $2.6 trillion (2011)
► For the purpose of this report, the analysis excludes Iran market due to its unique characteristics (except when reporting estimated global industry assets)
► EY Universe covers approximately 80% of the estimated global Islamic banking assets (excluding Iran market)
► Insights are also based on industry survey, including interviews with executives and industry observers, to identify key trends, risks and priorities
► Limited disclosures on Islamic windows, subsidiary operation and offshore businesses was a limiting factor
► The EY Universe is categorized as follows: ► GCC – Bahrain, Kuwait, Qatar, Saudi Arabia, UAE ► South East Asia – Indonesia, Malaysia ► Rest of the World – Bangladesh, Egypt, Jordan, Pakistan,
Turkey
COMPETITIVENESS REPORT 2012-201398
Report methodology and tools
► The break down of banks selected country wise in the EY Universe is:
► Bahrain – 7 Islamic and 4 conventional banks ► Saudi Arabia – 4 Islamic and 5 conventional banks ► Kuwait – 4 Islamic and 3 conventional banks ► Qatar – 3 Islamic and 3 conventional banks ► UAE – 8 Islamic and 4 conventional banks ► Indonesia – 5 Islamic and 4 conventional banks ► Malaysia – 13 Islamic and 4 conventional banks ► Pakistan – 5 Islamic and 3 conventional banks ► Bangladesh – 5 Islamic and 2 conventional banks ► Jordan – 2 Islamic and 1 conventional banks ► Egypt – 2 Islamic and 4 conventional banks ► Turkey – 4 Islamic and 5 conventional banks
Anonymity and Quotes
► All interviewees were assured of anonymity and minutes documented during our discussions
► Quotations have been used to support arguments made in the report.
► Global Islamic banking assets are estimated based on publicly available data from 22 Islamic banking markets
► The research and insights are primarily based on EY Islamic Banking Universe (EY Universe), which is proprietary, based on sample, and is not meant to be fully exhaustive
► The EY Universe analysis covers 62 Islamic banks and 42 conventional banks across 12 Islamic banking markets, with a total asset base of $2.6 trillion (2011)
► For the purpose of this report, the analysis excludes Iran market due to its unique characteristics (except when reporting estimated global industry assets)
► EY Universe covers approximately 80% of the estimated global Islamic banking assets (excluding Iran market)
► Insights are also based on industry survey, including interviews with executives and industry observers, to identify key trends, risks and priorities
► Limited disclosures on Islamic windows, subsidiary operation and offshore businesses was a limiting factor
► The EY Universe is categorized as follows: ► GCC – Bahrain, Kuwait, Qatar, Saudi Arabia, UAE ► South East Asia – Indonesia, Malaysia ► Rest of the World – Bangladesh, Egypt, Jordan, Pakistan,
Turkey
99COMPETITIVENESS REPORT 2012-2013
Ernst & Young universe of Islamic and conventional banks
Islamic banks that contributed data to Universe: Bahrain ► Al Baraka Banking Group (ex subsidiaries) ► Al Baraka Bank Bahrain ► Ithmaar Bank ► Al Salam Bank ► Bahrain Islamic Bank ► Khaleeji Commercial Bank ► Kuwait Finance House Bahrain
Saudi Arabia ► Al Rajhi Bank ► Bank Al Jazira ► Alinma Bank ► Bank AlBilad
Kuwait ► Kuwait Finance House ► Ahli United Bank ► Boubyan Bank ► Kuwait International Bank
Qatar ► Qatar Islamic Bank ► Masraf Al Rayan ► Qatar International Islamic Bank
Conventional banks that contributed data to our Universe : Bahrain ► Arab Banking Corporation ► Ahli United Bank ► Bank of Bahrain and Kuwait ► National Bank of Bahrain
Saudi Arabia ► National Commercial Bank ► Samba Financial Group ► Riyad Bank ► The Saudi British Bank ► Arab National Bank
Kuwait ► National Bank of Kuwait ► Burgan Bank ► Commercial Bank Kuwait
Qatar ► Doha Bank ► Qatar National Bank ► Commercial Bank of Qatar
Ernst & Young universe of Islamic and conventional banks
UAE ► Abu Dhabi Islamic Bank ► Ajman Islamic Bank ► Al Hilal Bank ► Dubai Islamic Bank ► Emirates Islamic Bank ► Noor Islamic Bank ► Sharjah Islamic Bank
Indonesia ► Bank Bri Syariah ► Bank Muamalat ► Bank Syariah Mandiri ► Bank Syariah Mega ► Bank Syariah Bukopin
Malaysia ► Affin Bank ► Al Rajhi Bank ► Alliance Bank ► Asian Finance ► Bank Islam ► Bank Muamalat ► CIMB Islamic Bank ► Hong Leong Islamic Bank ► Kuwait Finance House Malaysia ► Maybank Islamic Bank ► Public Islamic bank ► RHB Islamic Bank
UAE ► Abu Dhabi Commercial Bank ► Emirates NBD ► First Gulf Bank ► Mashreq Bank ► National Bank of Abu Dhabi
Indonesia ► Bank Central Asia ► Bank Mandiri ► Bank Negara Indonesia ► Bank Rakyat Indonesia
Malaysia ► CIMB Bank ► Maybank Bank ► RHB Bank ► Public Bank
COMPETITIVENESS REPORT 2012-2013100
Ernst & Young universe of Islamic and conventional banks
Islamic banks that contributed data to Universe: Bahrain ► Al Baraka Banking Group (ex subsidiaries) ► Al Baraka Bank Bahrain ► Ithmaar Bank ► Al Salam Bank ► Bahrain Islamic Bank ► Khaleeji Commercial Bank ► Kuwait Finance House Bahrain
Saudi Arabia ► Al Rajhi Bank ► Bank Al Jazira ► Alinma Bank ► Bank AlBilad
Kuwait ► Kuwait Finance House ► Ahli United Bank ► Boubyan Bank ► Kuwait International Bank
Qatar ► Qatar Islamic Bank ► Masraf Al Rayan ► Qatar International Islamic Bank
Conventional banks that contributed data to our Universe : Bahrain ► Arab Banking Corporation ► Ahli United Bank ► Bank of Bahrain and Kuwait ► National Bank of Bahrain
Saudi Arabia ► National Commercial Bank ► Samba Financial Group ► Riyad Bank ► The Saudi British Bank ► Arab National Bank
Kuwait ► National Bank of Kuwait ► Burgan Bank ► Commercial Bank Kuwait
Qatar ► Doha Bank ► Qatar National Bank ► Commercial Bank of Qatar
Ernst & Young universe of Islamic and conventional banks
UAE ► Abu Dhabi Islamic Bank ► Ajman Islamic Bank ► Al Hilal Bank ► Dubai Islamic Bank ► Emirates Islamic Bank ► Noor Islamic Bank ► Sharjah Islamic Bank
Indonesia ► Bank Bri Syariah ► Bank Muamalat ► Bank Syariah Mandiri ► Bank Syariah Mega ► Bank Syariah Bukopin
Malaysia ► Affin Bank ► Al Rajhi Bank ► Alliance Bank ► Asian Finance ► Bank Islam ► Bank Muamalat ► CIMB Islamic Bank ► Hong Leong Islamic Bank ► Kuwait Finance House Malaysia ► Maybank Islamic Bank ► Public Islamic bank ► RHB Islamic Bank
UAE ► Abu Dhabi Commercial Bank ► Emirates NBD ► First Gulf Bank ► Mashreq Bank ► National Bank of Abu Dhabi
Indonesia ► Bank Central Asia ► Bank Mandiri ► Bank Negara Indonesia ► Bank Rakyat Indonesia
Malaysia ► CIMB Bank ► Maybank Bank ► RHB Bank ► Public Bank
101COMPETITIVENESS REPORT 2012-2013
Ernst & Young universe of Islamic and conventional banks
Pakistan ► Al Baraka Pakistan ► Bank Islami ► Burj Bank ► Dubai Islamic Bank Pakistan ► Meezan Bank
Bangladesh ► Al Arafah Bank ► First Security Bank ► ICB Islamic Bank ► Islami Bank Bangladesh ► Shahjalal Islamic Bank
Jordan ► Jordan Dubai Bank ► Jordan Islamic Bank
Egypt ► Al Baraka Egypt ► Faisal Islamic Bank of Egypt
Turkey ► Al Baraka Turk ► Bank Asya ► Kuveyt Turk ► Turkiye Finanse
Pakistan ► MCB Bank ► National Bank ► United Bank
Bangladesh ► Agrani bank ► Rupali Bank
Jordan ► Arab Bank
Egypt ► Arab Cairo Bank ► Banque Misr ► Commercial International Bank ► Union National Bank Egypt
Turkey ► Turkiye Vakiflar Bankasi ► Yapi ve Kredi Bankasi ► Turk Economi Bankasi ► Turkiye Garanti Bankasi ► AK Bank
COMPETITIVENESS REPORT 2012-2013102
Ernst & Young universe of Islamic and conventional banks
Pakistan ► Al Baraka Pakistan ► Bank Islami ► Burj Bank ► Dubai Islamic Bank Pakistan ► Meezan Bank
Bangladesh ► Al Arafah Bank ► First Security Bank ► ICB Islamic Bank ► Islami Bank Bangladesh ► Shahjalal Islamic Bank
Jordan ► Jordan Dubai Bank ► Jordan Islamic Bank
Egypt ► Al Baraka Egypt ► Faisal Islamic Bank of Egypt
Turkey ► Al Baraka Turk ► Bank Asya ► Kuveyt Turk ► Turkiye Finanse
Pakistan ► MCB Bank ► National Bank ► United Bank
Bangladesh ► Agrani bank ► Rupali Bank
Jordan ► Arab Bank
Egypt ► Arab Cairo Bank ► Banque Misr ► Commercial International Bank ► Union National Bank Egypt
Turkey ► Turkiye Vakiflar Bankasi ► Yapi ve Kredi Bankasi ► Turk Economi Bankasi ► Turkiye Garanti Bankasi ► AK Bank
References and acknowledgments
Sources ► Making the right moves – Global banking outlook 2012-13 ► Financial regulatory reform – What it means for bank business models ► Rapid Growth Markets (RGMs) forecast ► DNA of the CIO ► Trading places - the emergence of new patterns of international trade ► Central bank reports ► Global Insight - comparative world overview tables ► Zawya ► Economist intelligence unit ► The Banker ► Islamic Finance News ► Bloomberg ► Bank annual reports Ernst & Young’s Project Team ► Shoaib Qureshi ► Noman Mubashir ► Saad Qureshi ► Zahid Awan ► Ali Al Musawi
For questions or comments, please contact : Shoaib Qureshi: shoaib.qureshi@bh.ey.com
Our industry awards
Consistently ranked the best Islamic Advisory firm with awards every year since 2006
► Nader Rahimi ► Ashar Nazim ► Abid Shakeel ► Nida Raza ► Sohaib Umar ► Mohd Husin ► Murat Hatipola
18TH Annual World Islamic Conference
2011, Bahrain
3rd International Takaful Summit,
London
CPI Financial Islamic Finance Awards,
Dubai
► Thought Leadership
Award, 2011
► Best Takaful Advisory
Firm, 2011/2009
► Best Islamic Research,
2011
CPI Financial Islamic Finance Awards
World Islamic Banking Awards,
Bahrain
World Islamic Banking Awards,
Bahrain
► Best Islamic Advisory
Firm, 2011/2010/2009
► Best Islamic Finance
Advisory Firm, 2009/2008/2007
► Best Islamic Finance
Advisory Firm, 2009/2008/2007/2006
World Islamic Banking Awards,
Bahrain
Kuala Lumpur Islamic Finance Forum, Malaysia
Sheikh Mohammed Bin Rashid Al
Maktoum Award
► WIBC Leading Islamic
Financial Services Provider, 2008
► Most Outstanding
Business Advisory & consulting Firm, 2007/2006
► Best Islamic
Consulting Firm, 2006
103COMPETITIVENESS REPORT 2012-2013
Ernst & Young
Assurance Tax Transactions Advisory
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. The Middle East practice of Ernst & Young has been operating in the region since 1923. For over 85 years, we have evolved to meet the legal and commercial developments of the region. Across the Middle East, we have over 4,200 people united across 20 offices and 15 Arab countries, sharing the same values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
© 2012 EYGM Limited. All Rights Reserved.
EYG no. AU1369
This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.
COMPETITIVENESS REPORT 2012-2013104
A MEGA Brand: Shaping the Future of the Global Islamic Finance Industry Since 1993P.O. Box 72045, Dubai, UAE | t. +9714 343 1200 | f+971 4 343 6003 MEGA Brands. MEGA Clients. Market Leaders. www.megaevents.net
Celebrating 20 Years of Leadership and Innovation in the Islamic Finance WorldMEGA: Shaping the Future of the Global Islamic Finance Industry Since 1993
2 Decades of Supporting the Market Leaders
MEGA is the leading international information firm focused on achieving business results for the Islamic banking & finance industry since 1993. Our exclusive focus on Islamic finance has enabled us to create significant value for the leading players in the Islamic banking, finance and investment markets. The portfolio of MEGA brands represents the landmark industry conferences and our clients are the leading players in the international financial markets.
Partnering with Governments and the Industry Thought Leaders
Our Strategic Partners are world leaders in their respective fields and include key government finance and regulatory agencies such as the Central Bank of Bahrain, Dubai International Financial Centre, UK Trade & Investment, the Monetary Authority of Singapore, the Economic Development Board of Bahrain, the Qatar Financial Centre Authority, Luxembourg for Finance, Business Bermuda, the U.S. Chamber of Commerce and Invest in Mauritius. These and our other strategic alliances with international thought leaders including Ernst & Young further strengthen MEGA’s brand leadership position by providing original new research insights on the Islamic finance industry worldwide.
Investing in Our Brands: Number 1 in Each of Our Markets
MEGA continues to grow its portfolio of Islamic finance brands to further extend our leadership position across the Banking, Takaful, Funds, Capital Markets, and Project Finance segments. Each brand is successfully developed over many years in order to further cement its number 1 position in its respective market.
In 1994 we founded the World Islamic Banking Conference (WIBC), which at the time was one of the first conferences in the world to focus on this nascent industry. That first year we had 120 pioneering delegates and one sponsor. Today, fast approaching 2 decades later and with more than 1,200 delegates from over 50 countries attending the conference each year, WIBC is an iconic brand internationally recognised as the world’s largest gathering of Islamic finance leaders.
A World Stage: Genuinely Global Dialogues
MEGA brands have a genuinely global reach across the Islamic finance industry. An initiative to further broaden this international representation ‘The World Comes to WIBC’ was launched at WIBC 2007 and has grown to now feature a British Pavilion led by UKTI and comprising leading British-based banks. Over the years, the World Comes to Initiative has expanded and now features a series of Country Pavilions, Country Interfaces and Country Focus Roundtable Debates showcasing exciting new high-growth markets for Islamic finance. A number of leading international Islamic banking groups also now convene their annual board meetings along the sidelines of WIBC.
Understanding Client Needs & Delivering Long-Term Value
MEGA’s leadership position has come as a result of our relentless focus on the constantly changing needs of our clients as the Islamic finance industry has grown and matured. Whether it be the challenges of launching a new bank, a new investment fund, an innovative new retail financial product or raising corporate profile in a key target market, we ensure that our offerings are closely aligned to the immediate business priorities of our clients. Then we make sure that we deliver on our promises and that is why the market leaders come back and work with us year after year. Our genuine value creation is highlighted by our long-term relationship with Ernst & Young who have worked with us continuously since the inception of the World Islamic Banking Conference 19 years ago - and who are also now our partners across the portfolio of MEGA brands.
20 Years of shaping the future of the global Islamic finance industry
20 Years of gathering industry thought leaders in dynamic debate
20 Years of bringing together more than 1,200 international industry leaders
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20 Years of delivering a one-of-a-kind spectacle to the Islamic finance industry
1,200 Industry leaders. 50+ Countries. 1 Gathering: WIBC 2013The World’s Largest Annual Gathering of International Islamic Finance Leaders
WIBC: Celebrating 2 Decades of Supporting Growth, Excellence & Innovation in the Global Islamic Finance Industry
To be a part of the 2 decades of WIBC celebrations please contact: sophie@megaevents.net | t:+971 4 343 1200 | f:+971 4 343 6003 | P.O. Box 72045, Dubai | www.megaevents.net/Islamic_banking
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WIBC is a MEGA Brand
20th Annual
8, 9 & 10 December 2013, The Gulf Hotel, Kingdom of Bahrain
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