Can Islamic Finance Go Global....Truth or Dare?
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Presentation at International Conference on International Studies (ICIS 2014)
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Can Islamic Finance Go Global....Truth or Dare?
- 1. 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. 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 jscreationzsat FreeDigitalPhotos.net
- 3. 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* RankBankCountryTotal assets US$ trillion** 1Industrial & Commercial Bank of China (ICBC)China3.182HSBC HoldingsUK2.763China Construction Bank CorporationChina2.604BNP ParibasFrance2.595Mitsubishi UFJ Financial GroupJapan2.516JPMorgan Chase & CoUS2.487Agricultural Bank of ChinaChina2.478Bank of ChinaChina2.449Credit Agricole GroupFrance2.3510Barclays PLCUK2.2711Deutsche BankGermany2.2512Bank of AmericaUS2.1513Japan Post BankJapan1.9714Citigroup IncUS1.8915Societe GeneraleFrance1.7416Mizuho Financial GroupJapan1.7117Royal Bank of Scotland GroupUK1.7018Banco SantanderSpain1.6119Sumitomo Mitsui Financial GroupJapan1.5720Groupe BPCEFrance1.57Notes: * Latest financial reports ranging from mid-2013 to mid-2014** Exchange rates based on 31 March 2014Source: http://www.relbanks.comGlobal Islamic Total Banking Assets of USD1.7 trillion
- 4. 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. 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. 6 Development in Non-Muslim Countries United Kingdom Issue Date :25 June 2014 Amount :GBP200 million Type: SukukIjara South Africa Issue Date :17 September 2014 Amount :USD500 million Type: SukukIjara More traction seen in Non-Muslim countries? Image courtesy of David Castillo Dominiciat FreeDigitalPhotos.net Luxembourg Issue Date :1 October 2014 Amount :EURO 200 million Type: SukukIjara Hong Kong Issue Date :11 September 2014 Amount :USD1 billion Type: SukukIjara
- 7. 7 The truth … Image courtesy of David Castillo Dominiciat FreeDigitalPhotos.net Misconception of IF Restrictive 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 Standardisationof contract documents
- 8. 8 The dare? Image courtesy of cooldesignat FreeDigitalPhotos.net