Risk management in islamic banking and fiannce

1. Risk management in Islamic banking and financeThe Arab finance house example Thesis presented for the MBA program at UNCW © Bilal Fleifel Fall ‘09

2. Chapter 1 Introduction about Islamic Banking and Finance

3. Chapter 1 Reasons for Research in This Topic Overview of Islamic Principles History of Islamic Banking and Finance Major Prohibitions and Reasons Primary Reasons for Establishing an Islamic Bank Islamic Financial Contracts and Instruments Role of the Shari'ah Board

4. Reasons for Research in This Topic Fast Growth of this industry of around 20% each year Establishment of 500+ Islamic financial institutions Huge potential to grow between the 1.8 billion Muslims

5. Overview of Islamic Principles One God that sent all the prophets including Jesus, Muhammad, Moses and Abraham Quran and Sunna are the main sources of legislation Concept of Stewardship All aspects of life are related (Indeed, my prayer, my rites of sacrifice, my living and my dying are for Allah , Lord of the worlds) Islamic Ethics must govern all acts

6. History of Islamic Banking and Finance New phenomena Started in the 1970’s In Lebanon in started in mid 1990s

7. Major Prohibitions and Reasons Riba Gharar Alcohol Pork Tobacco Weapons and Arms Entertainment (hotels, casinos, pornography, etc..)

8. Reasons for Establishing an Islamic Bank Expansion of knowledge about the industry Demand for an interest-free banking system Wide spread and success of Islamic banks recently Social development

9. Islamic Financial Contracts and Instruments Murabahah Musharakah Mudarabah Salam Istisna Ijarah Wakalah

10. Chapter 2 Risk Management in Islamic Banking and Finance

11. Chapter 2 Risks Factors Surrounding Islamic Banks Financial Engineering and Product Innovation in Islamic banks Development of Sukuk Challenges

12. Risks Factors Surrounding Islamic Banks Liquidity Risk Commodity Risk/ Price Risk Credit Risk Foreign Exchange rate risk Legal Risks Benchmark risk Fiduciary Risk

13. Risks Factors Surrounding Islamic Banks Securities Price Risk Reputation Risk Interest Rate Risk Operations Risk People Risk Technological and System Risk

14. Financial Engineering and Product Innovation in Islamic banks Imitation Mutation Innovation

15. Development of Sukuk Leasing Sukuk Mudarabah Sukuk Musharakah Sukuk Salam Sukuk Other types of Sukuk

16. Challenges Shortage of Experts in the industry Accounting Standardization Islamic Banks and Central Banks Are Islamic banks really Islamic? Attacking Challenges

17. Chapter 3 Lebanon and the Arab Finance House

18. Chapter 3 The Economic Situation in Lebanon The Arab Finance House development Marketing Ideas for AFH Strategies of AFH Financial Highlights AFH investments Money Laundering Prevention Future of the Arab Finance House

19. The Economic Situation in Lebanon During the Last Five Years Lebanon has a debt of more than 50 billion USD Internal and External Threats SWOT analysis Relationship with the Gulf Technological Development in Banking

20. The Arab Finance House development History of AFH Development and expansion Employees Challenges

21. Marketing Ideas for AFH Promotions Advertisement Sponsorship Social Interaction Religious Support

22. Strategies of AFH develop operations maximum returns for partners, investors and shareholders To satisfy the objectives of clients by offering innovative Islamic banking solutions Encourage the professional development of employees Enhance the geographical reach of products and services Improve efficiency and lessen costs

23. Financial Highlights Net profit: 5.047 billion LBP in 2008 compared to 3.3 Billion LBP in 2007 (Growth: 53 percent) Assets: Increased to 183.889 billion LBP in 2008 from 163.06 billion LBP in 2007 (Growth: 13%) Deposits: 16.6 billion LBP in 2008 compared to 12.2 billion LBP in 2007 (Growth: 36%)

24. Financial Figures for AFH for the recent three years

25. Total Assets

26. Total Deposits

27. Customers’ Current Accounts

28. Net Profits

29. Real Estate Investments

30. Net Revenue from Investments

31. Customer’s Financing

32. Expenses

33. AFH investments Real Estate Investments Acceptable Sukuk Investments Mutual Funds Other Types of Investments

34. Money Laundering Prevention Strict Central Bank Supervision AFH commitment for Prevention of Money Laundering

35. Future of the Arab Finance House Continuous commitment to the Shari'ah regulations Creating innovative product that meet the client’s demands Geographical expansion Social Interaction Cost Leadership along with product differentiation

36. Chapter 4 Conclusion