WORLD - REPORTS - Ernst Young World Competitiveness Report 2011

Announcing the Exclusive Launch of the Ernst & Young World Islamic Banking Competitiveness Report 2012/13 at the 19th Annual World Islamic Banking Conference (WIBC 2012) Islamic Finance: Adapting to the New Dynamics of Global Finance 1200+ Industry Leaders. 50+ Countries. 1 Global Gathering: WIBC 2012 For 19 Years the World's Largest Annual Gathering of Islamic Finance Leaders Dear Banking & Finance Leader, The Ernst & Young World Islamic Banking Competitiveness Report 2011/12, which was launched at the 18th Annual World Islamic Banking Conference (WIBC 2011) last year, noted that Islamic banking assets with commercial banks globally will reach US$1.1 trillion in 2012, a significant jump of 33% from their 2010 level of US$826 billion. The report also highlighted that Islamic banking assets in the Middle East and North Africa (MENA) region increased to US$416 billion in 2010, representing a five year CAGR of 20% compared to less than 9% for conventional banks. The report also indicated that as new geographies open up to Islamic banking, the MENA Islamic banking industry is expected to more than double to US$990 billion by 2015. The World Islamic Banking Competitiveness Report 2011 identified two key themes that were starting to emerge. The first was the need for excellence in banking operations and the second was to improve product innovation. The report indicated that the combined MENA Islamic banking profit pool could rise to US$15 - 19 billion in 2015 from the 2010 levels of US$5 - 6 billion, primarily by  combining operational transformation with a more robust risk infrastructure. The Report also said that potential growth opportunities for regional Islamic banks include the emerging Islamic geographies, growing affluence among retail customers, better alignment with real economy and rising SME banking. Abid Shakeel, Executive Manager, Ernst & Young discussing the findings of the Report 2011/12 at WIBC 2011 The Exclusive On-site Launch of the Ernst & Young World Islamic Banking Competitiveness Report 2012/13 at the 19th Annual World Islamic Banking Conference The WIBC Competitiveness Report is a ground-breaking initiative designed to not only identify but also to raise the bar of competitive excellence, strategic leadership and performance improvement in the industry. The Competitiveness Report has rapidly evolved into an indispensable reference resource for the key decision-makers in the global Islamic banking & finance industry. Developed in collaboration with Ernst & Young, the 9th edition of the Report, will be launched exclusively at the 19th Annual World Islamic Banking Conference (WIBC 2012), which will be held on the 9th to the 11th of December 2012 in the Kingdom of Bahrain. A recent statement issued by Ernst & Young noted that the 2012/13 edition of the World Islamic Banking Competitiveness Report comes at a time when conventional giants are under unprecedented regulatory scrutiny and several European banks are deleveraging and curtailing operations in emerging markets. With the half yearly results out, 2012 looks to be another difficult year for Islamic banks in terms of profitability. Clearly for Islamic banks, achieving the second trillion dollars is about demonstrating exceptional value to mainstream customers. This demands unconventional leadership, to build a business architecture that will help win in the retail market. The Ernst & Young World Islamic Banking Competitiveness Report 2012/13 will examine Islamic banks' efforts to penetrate the mainstream retail customers. The groundbreaking report also explores the road map being adopted by Islamic banks to make a transition to a double-compliant model, i.e., excellence in banking operations topped up by exceptional Shari'ah proposition.

INDONESIA - IMF - Detailed Assessment of Observance of IMF Code of Good Practices on Transparency in Monetary and Financial Policies

Date:	July 18, 2012
Electronic Access:	Free Full text (PDF file size is 932KB). Use the free Adobe Acrobat Reader to view this PDF file
Series:	Country Report No. 12/188
Subject(s):	Indonesia

INDONESIA - IMF - Indonesia: CPSS-IOSCO Recommendations for Securities Settlement Systems - The Equity and Corporate Bonds Securities Settlement Systems

Date:	July 18, 2012
Electronic Access:	Free Full text (PDF file size is 520KB). Use the free Adobe Acrobat Reader to view this PDF file
Series:	Country Report No. 12/186
Subject(s):	Indonesia

INDONESIA - IMF - Country report - Implementation of the IOSCO Objectives and Principles of Securities Regulation

Date:	July 18, 2012
Electronic Access:	Free Full text (PDF file size is 721KB). Use the free Adobe Acrobat Reader to view this PDF file
Series:	Country Report No. 12/189
Subject(s):	Indonesia

WORLD - REPORTS - Deloit : Empowering Risk Intelligence in Islamic Finance Managing risk in uncertain times

www.bi-me.com - SAUDI ARABIA. A Deloitte Middle East Islamic Finance Knowledge Center (IFKC) report, entitled ‘Empowering Risk Intelligence in Islamic Finance’, addresses and investigates the important issues in practice and regulation in Islamic Finance in the current market challenges.
The report also assesses the impact of Islamic Financial Institutions in different countries, highlighting that Saudi Arabia is one of the main contributors to the Islamic Finance industry, with an estimated US$ 94 billion in Islamic Finance Assets.

Based on analysis provided by Deloitte Middle East Islamic Finance Knowledge Center, the total of the Saudi Arabia Islamic Finance Assets, valued at US$ 94 billion, represent 26% out of total GCC Islamic Finance assets and 8.2% out of total Global Islamic Finance assets. (source -  access deloit)

WORLD - PUBLICATIONS - Sesric : Islamic Finance in OIC Member Countries

www.sesric.org - Islamic finance is emerging as an alternative source of finance in addressing the major development challenges faced by many Organization of Islamic Cooperation (OIC) countries. The global market for Islamic financial services, as measured by the total volume of Shariah compliant assets, is estimated to have reached US$ 1.1 trillion at end-2011. OIC countries, with a collective share of 98% in these assets, continue to be the main actors in the industry’s impressive growth story.
Recently, the global financial and economic crisis of 2008-09 has brought to the forefront a wide range of issues concerning the stability and soundness of the conventional financial system. This has prompted an extensive global re-examination by the international community on the adequacy of the existing international economic and financial architecture and the search for a more enduring solution. In the search for a new architecture, there was a general consensus on the need to restore the financial transactions to their basic function – to provide services that add value to the real economy. This, in fact, represents the very essence of Islamic finance, which can be traced back to the Shariah principles. However, concerns remain regarding the compatibility of Islamic financial principles with the conventional performance metrics. Whether socioeconomic goals like sustainability and poverty alleviation can be reconciled with the goals of profitability and market share is strongly challenged. Although certain Islamic products and practices have been lauded for their potential to advance socioeconomic development in OIC member countries, many still argue that the impact of Islamic finance on the development process has primarily been modest. Particularly the development of Islamic financial products has generally been limited to the re-engineering of the conventional products to meet Shariah requirements. All these factors have contributed to Islamic finance’s missing the opportunity during the recent financial turmoil to promote itself as a sound alternative to the conventional system, which was then on the brink of collapse. Moreover, the recent crisis has highlighted that the Islamic finance industry remains vulnerable to the similar systemic risks as its conventional counterpart, and its quest for achieving authenticity is still a challenging task.
In the light of these observations, the present report examines the contemporary trends in the Islamic finance industry in the OIC member countries and its inherent potential for developing into a mainstream financing alternative to the conventional interest-based system.
Online Electronic Version
Islamic Finance in OIC Member Countries (English)

WORLD - HALAL - The Economist Report : The Sharia-Conscious Consumer

  Download at www.Halalfocus.net

WORLD - REPORTS - A.T. Kearney analysis suggests it's time for Islamic banks to tackle slowing growth rates and eroding profitability

www.ameinfo.com - Traditionally, Islamic banks have outperformed their conventional peers in most markets. However, a closer look suggests the market dynamics are changing, demonstrating a new trend. Two key indicators are cause for reflection: slowing growth rates and eroding profitability, according to A.T. Kearney, a global management consultancy. Declining growth rates are occurring in key geographies including KSA, Bahrain and the UAE, where growth rates have dropped to between 3% and 8% from double-digit figures. In parallel cost income ratios are increasing in most markets, putting pressure on profitability.

Up until now, Islamic banks have typically emulated the conventional bank offer, but the eroding profitability trend suggests it is now time for a new approach. A.T. Kearney says to sustain profitable growth a more sophisticated leveraging of the Islamic Banking potential is required.  (source)

WORLD - REPORTS - A.T.Kearney : the future of Islamic banking

www.atkearney.com - The Future of Islamic Banking

Declining growth rates and eroding profitability suggest it is time to better leverage the Islamic banking potential. In order to do this, Islamic banks should revisit their strategic positioning and improve their operational efficiency.
For years, many Islamic banks have witnessed double-digit growth rates, surpassing their conventional peers. At first glance, all seems well for the Islamic banking industry. There is ample room for growth as Islamic banking rarely exceeds a third of total market share, even in the Gulf Cooperation Council (GCC) countries and Malaysia. Several potential markets with large Muslim populations remain largely untapped, such as India and the Commonwealth of Independent States countries, made up of the former Soviet republics. In addition, overall banking penetration in many of the industry's core markets is still low. For example, GCC countries have not yet achieved the banking penetration levels of countries such as France or the United Kingdom. At the same time, several new markets have opened up for Islamic banking, with even more on the horizon (see sidebar: A Market Overview). (download link report here) (source)

WORLD - PUBLICATIONS - Empowering Risk Intelligence in Islamic Finance

Empowering Risk Intelligence in Islamic Finance Managing risk in uncertain times

www.deloitte.com - The Islamic Finance Risk Intelligence survey, published by IFKC at Deloitte Middle East, assesses the status quo of risk management practice in the Islamic Finance industry. The report is based on a survey and group of case studies developed during the second half of 2011 encompassing 20 Islamic Financial institutions from the Middle East and South East Asia, with aggregate assets of more than $50 billion, and representing a range of Islamic Financial institutions.

In summary, the following key challenges warrant the attention of Islamic Finance industry leaders and stakeholders: (source and download link report)

WORLD - REPORTS - TAKAFUL - Takaful Premium Jumped 19% in 2010 to $8.3 Billion, E&Y Says

www.bloomberg.com  -Global Islamic insurance contributions surged 19 percent in 2010 to $8.3 billion helped by Saudi Arabia, the world’s biggest oil exporter, which made up more than half the industry, an Ernst & Young report said.

The six-nation Gulf Cooperation Council, which also includes the United Arab Emirates, Qatar, Bahrain, Oman and Kuwait, made $5.68 billion of Islamic insurance or takaful contributions in 2010, and South East Asia $2 billion, according to the World Takaful Report 2012 e-mailed today.  (source)

WORLD - FIQH - New report on Shariah scholars released

www.tradearabia.com - Failaka Advisors, in partnership with Paris-based Grapes Market Research & Advisory, has released the second edition of The Shariah Report.

The 2012 version of the report is the world's first comprehensive report on Shariah scholars, with detailed profiles of more than 120 of the top scholars in the Middle East and from around the globe highlighting Islamic Finance’s global reach.

“Spanning from East to West, the report profiles Shariah scholars from Asia, Middle East, Africa, Europe and North America, providing insight into the depth and breadth of the industry”, said Anne-Sophie Gintzburger, founding director at Grapes.  (source)

WORLD - CAPITAL MARKETS - USD 85 billion sukuk issued in 2011

www.zawya.com - By Adnan Halawi, Team Leader – Fixed Income, Zawya

 

USD85bn of sukuk were sold in 2011, an increase of 62% from 2010, writes Adnan Halawi, Zawya's Fixed Income Analyst, who presents a sukuk timeline for 2011 and pipeline for 2012.
GLOBAL SUKUK REVIEW: 2011

USD 84.4 billion of sukuk were issued in 2011 across the world, an increase of 62% from the USD 52 billion issued in 2010. This made the year the best on record in terms of sukuk issuance according to data compiled by Zawya's Sukuk Monitor.

Malaysia continued to constitute the main sukuk market worldwide, followed by the GCC, while sovereign issuers were the main drivers of the growth. The global sukuk market now stands at USD 182 billion. (source)

WORLD - RATINGS - AM BEST Takaful Rating Methodology

www.ambest.com - Takaful (Shari'a Compliant) Insurance Companies - This report highlights the main issues arising when applying A.M. Best's rating methodology to takaful insurance companies. Takaful is clearly on the rise, particularly in the Middle East and Malaysia, but A.M. Best's main principles remain unchanged, regardless of the type of company analyzed. (download - source)

WORLD - PUBLICATIONS - Ernst and Young - World Islamic Banking Competitiveness Report 2011-2012

Source

INDONESIA - TAKAFUL - Takaful Insurance Market in Saudi Arabia to reach around USD 7.7 billion in 2012 - Indonesia grows 67 %

KSA to be the First Worldwide with a Market Size of USD 25 billion in 2015. The size of the global Takaful insurance market is of around USD 12 billion for the current year, and it is expected to reach around USD 25 billion within 2015. Furthermore, 49% of the total insurance premiums will be in the Gulf Cooperation Council (GCC) countries, while the size of Takaful insurance market will reach around 1% of the global insurance market, with the possibility of development by 20% annually.

The Kingdom of Saudi Arabia is at the top of the world in terms of the growth of Takaful market, where the size of Takaful insurance market is expected to reach USD 7.7 billion by the end of 2012, after reaching nearly USD 5 billion in the first quarter of this year, according to recently published reports. (source)

WORLD - BANKING - Islamic banking assets could reach $1.8 trillion by end of 2016

JEDDAH: Islamic banks may be bolstered by a nearly doubling of assets within five years, as borrowers seek alternative methods of financing due to a cutback in lending at European and US banks, according to a report by Deutsche Bank.

The bank expects that mortgage financing, particularly in Saudi Arabia, could provide $100 billion in assets to the overall industry. (source)

WORLD - REPORTS - Discovering Limits: Global Microfinance Valuation Survey 2011

Discovering Limits: Global Microfinance Valuation Survey 2011
Jul 2011, Reille, X., Rozas, D. & Mariz, F.

Presenting microfinance equity valuations

 

This report, the result of a collaborative effort between CGAP and J.P. Morgan, presents valuation of microfinance equity, of both private and publicly listed microfinance companies, for the year 2010 for eight countries. It also predicts the pattern for 2011.

The report notes that many countries enjoyed significant investor support, with 2010 book multiples remaining above the 4 year median value for nearly all countries on the list. Findings of this study include:

• Latin America and the Caribbean represented the largest share of investments, 56% of the total transaction value;
• The public markets in 2010 set a major milestone, with the IPO of SKS, the largest MFI in India raising US$350 million in August, 2010. But, the social and political crisis in Andhra Pradesh has pushed the stock down by 45% from its listing price;
• Over the long run, the LIFI (Lower Income Finance Institutions) index has largely outperformed traditional banks both globally and in emerging markets.

The report predicts that in 2011, it will be difficult to see new flagship IPOs as the sector is still emerging from crisis. Mergers and acquisitions in the private market will continue, especially in Latin America. More price variations between countries will be seen as valuations become guided by company and market specifics.
 
 The report manages the LIFI index.  The LIFI Index is a market cap–weighted index of 11 companies, encompassing  arious geographies and business models. The index includes banks that are not exclusively offering working capital loans to micro-entrepreneurs, broadening the scope to include consumer loans and other financial services.

The resulting weighting of the index only serves to remind us that Indonesia combines the most mature and competitive market for microfinance (Bank Rakyat was founded in 1895) with an especially well-developed stock market (unlike Bangladesh, for example).

Source / Access the document

WORLD - REPORTS - AM BEST Special Sector Report : Takaful Poised for Growth, But Greater Focus is Required (July 2011)

Takaful operators in the Gulf Cooperation Council (GCC) and Malaysia are growing at a rapid pace and are enjoying strong capitalisation on a consolidated funds basis.

A.M. Best Co.’s research compares the performance of takaful operators to those of conventional insurers in the same markets.

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WORLD - REPORT - Malaysia still largest domestic sukuk issuer

LABUAN:Malaysia remains the largest issuer of domestic sukuk at 72 per cent by value with the balance split between a number of other issuers such as Sudan, Saudi Arabia, the United Arab Emirates (UAE), Bahrain, Brunei, Pakistan and Indonesia.(source)