can islamic finance go global.....truth or dare?
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Presentation at the International Conference on International Studies (ICIS 2014) on 1 December 2014TRANSCRIPT
Can Islamic Finance go global … Truth or Dare?
International Conference on
International Studies (ICIS 2014)
Raja Teh Maimunah
MD/CEO
Hong Leong Islamic Bank Berhad
1 December 2014
2
Islamic Finance on the uptrend
USD1.7 trillion
in 2013
Source: World Islamic Banking Competitiveness Report 2013-2014, Ernst & Young
Source: World Islamic Banking Competitiveness Report 2013-2014, Ernst & Young Image courtesy of jscreationzs at FreeDigitalPhotos.net
3
However …
Global Islamic Assets
USD1.7 trillion
in 2013^
Source: ^ World Islamic Banking Competitiveness Report 2013-2014, Ernst & Young
We have a long way to go …
World 20 Largest Banks by Total Assets 2013*
Rank Bank Country Total assets
US$ trillion**
1 Industrial & Commercial Bank of China (ICBC) China 3.18
2 HSBC Holdings UK 2.76
3 China Construction Bank Corporation China 2.60
4 BNP Paribas France 2.59
5 Mitsubishi UFJ Financial Group Japan 2.51
6 JPMorgan Chase & Co US 2.48
7 Agricultural Bank of China China 2.47
8 Bank of China China 2.44
9 Credit Agricole Group France 2.35
10 Barclays PLC UK 2.27
11 Deutsche Bank Germany 2.25
12 Bank of America US 2.15
13 Japan Post Bank Japan 1.97
14 Citigroup Inc US 1.89
15 Societe Generale France 1.74
16 Mizuho Financial Group Japan 1.71
17 Royal Bank of Scotland Group UK 1.70
18 Banco Santander Spain 1.61
19 Sumitomo Mitsui Financial Group Japan 1.57
20 Groupe BPCE France 1.57
Notes:
* Latest financial reports ranging from mid-2013 to mid-2014
** Exchange rates based on 31 March 2014
Source: http://www.relbanks.com
Global Islamic Total Banking Assets of USD1.7 trillion
4
Limited Coverage by Geography
Source: Islamic Finance in OIC Member Countries, OIC Outlook Series May 2012
OIC Countries by largest Shariah
Compliant Assets (USD billion), 2011
Approx 90% of total IF
assets sits in only 7 countries
5
… and lacking infrastructure in most
Weak or no infrastructure
Some infrastructure
Relatively developed infrastructure
Source: World Islamic Banking Competitiveness Report 2011-2012, Ernst & Young
6
Development in Non-Muslim Countries
United Kingdom
Issue Date : 25 June 2014
Amount : GBP200 million
Type : Sukuk Ijara
South Africa
Issue Date : 17 September 2014
Amount : USD500 million
Type : Sukuk Ijara
More traction
seen in
Non-Muslim
countries?
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net
Luxembourg
Issue Date : 1 October 2014
Amount : EURO 200 million
Type : Sukuk Ijara
Hong Kong
Issue Date : 11 September 2014
Amount : USD1 billion
Type : Sukuk Ijara
7
The truth …
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net
Misconception of IFRestrictive Legal, Regulatory & Tax
Framework
Lack of drive & support by Islamic
countries
Dearth of Liquidity Management tools
Challenge in decoupling from
conventional banking prudential
framework
Dominance of conventional
banking liquidity
Education on Ribaamongst Muslims
Standardisation of contract documents