GCC Islamic Finance Report - Marmore Mena
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Markaz Sector Reports 2013 GCC Islamic Finance An industry growing beyond niche Research Highlights: Analyzing the Islamic Finance Industry with focus Islamic Banking, Sukuk (Islamic Bonds), Islamic Mutual Funds and Takaful (Islamic Insurance) domains, discussing the growth drivers, regulations, challenges and future outlook for the industry
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The traditional system of Islamic finance based on the principles of Sharia emerged as recently as in the 1970s. From being a concept popular only in the countries with Muslim-majority population, such as the Middle East and Malaysia in the 1980s and the 1990s, Islamic finance has expanded significantly in size and presence over the past decade. More particularly for the GCC region, a variety of factors have contributed in the growth of Islamic finance industry like growing GDP, improving economic environment, increasing oil prices, rising middle class society, the perception of Islamic finance being a relatively ‘risk-averse’ system and most importantly increased awareness of the concept of Islamic Finance. In this report we provide details about the size and growth of the GCC Islamic finance industry along with Global Islamic Finance Industry. The report includes performance of key GCC Islamic finance institutions. The report provides details of GCC region wise split, trends and outlook for individual segments of GCC Islamic Finance like Islamic Banking, Sukuk, Takaful and Islamic Mutual Funds. The report also discusses some other types of GCC Islamic Finance Products, growth drivers for GCC Islamic Finance, regulatory framework and challenges for GCC Islamic finance. For Full report, visit: http://www.e-marmore.com/offerstores/gcc-islamic-finance/66/1/2067/
Transcript of GCC Islamic Finance Report - Marmore Mena
Markaz Sector Reports 2013
GCC Islamic Finance
An industry growing beyond niche
Research Highlights:
Analyzing the Islamic Finance Industry with focus Islamic Banking, Sukuk (Islamic Bonds), Islamic Mutual Funds and Takaful (Islamic Insurance) domains, discussing the growth drivers, regulations, challenges and future outlook for the industry
MARKAZ SECTOR RESEARCH GCC Islamic Finance - October 2013
Kuwait Financial Centre K.P.S.C “Markaz” 2
Disclaimer This report has been prepared and issued by Kuwait Financial Centre K.P.S.C. (Markaz), which is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. . Any user after obtaining Markaz permission to use this report must clearly mention the source as “Markaz“. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Kuwait Financial Centre K.P.S.C. (Markaz) may seek to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz’s website shall be at your own risk. For further information, please contact ‘Markaz’ at P.O. Box 23444, Safat 13095, Kuwait ; Email: [email protected] ; Tel:
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Support
M.R. Raghu CFA, FRM | Head of Research [email protected]
Pavan | Intern
Jenevivu Lasrado | Secretary, Research
Fatima Priya | Office Manager - Administration, Research
Nael Aboul Huda | Manager, Media & Communications
MARKAZ SECTOR RESEARCH GCC Islamic Finance - October 2013
Kuwait Financial Centre K.P.S.C “Markaz” 3
Table of Contents
1. Executive Summary ................................................................................... 6
2. Overview of Islamic Finance ..................................................................... 8
Principles of Islamic Finance .............................................................................. 8
Benefits and critics of Islamic Finance ............................................................... 10
Tax regulation for Islamic Financial Transactions ................................................ 11
3. Industry size and growth ........................................................................ 13
Growth of Islamic Finance globally .................................................................... 13
Growth and Size of Islamic Finance Industry in the GCC ..................................... 16
4. Performance of Key Islamic Finance Institutions in the GCC .................. 18
Islamic Banks .................................................................................................. 18
Islamic Insurance Companies ........................................................................... 21
Islamic Investment Firms ................................................................................. 23
5. Trends and Potential for Islamic Banking ............................................... 26
Introduction .................................................................................................... 26
Size of Islamic Banking .................................................................................... 26
Challenges for Islamic Banking ......................................................................... 28
Outlook for Islamic Banking .............................................................................. 29
6. Trends and Potential for Sukuk ............................................................... 32
Introduction .................................................................................................... 32
Size of Sukuk Issuance ..................................................................................... 32
Challenges ...................................................................................................... 35
Outlook .......................................................................................................... 36
7. Trends and Potential for Takaful (Insurance) ......................................... 37
Size ................................................................................................................ 38
Challenges ...................................................................................................... 39
Outlook .......................................................................................................... 40
MARKAZ SECTOR RESEARCH GCC Islamic Finance - October 2013
Kuwait Financial Centre K.P.S.C “Markaz” 4
8. Islamic Mutual Funds .............................................................................. 42
Structure ........................................................................................................ 42
Size ................................................................................................................ 42
Challenges ...................................................................................................... 44
Outlook .......................................................................................................... 45
9. Other Islamic Finance Products .............................................................. 46
Sharia compliant project finance ....................................................................... 46
Islamic Real-Estate Financing ........................................................................... 48
Sharia compliant consumer credit options .......................................................... 50
10. Growth Drivers for the GCC Islamic Finance ........................................... 52
11. Regulatory Framework for Islamic Financial Institutions in the GCC ..... 57
12. Challenges for Islamic Finance in the GCC ............................................. 64
13. Opportunities in Islamic finance ............................................................. 70
14. Appendix ................................................................................................. 72
MARKAZ SECTOR RESEARCH GCC Islamic Finance - October 2013
Kuwait Financial Centre K.P.S.C “Markaz” 5
Tables and Charts
Tables Charts
3.1 Distribution of Islamic assets by country and sector (USD Bn), 2011
2.1 Basic Principles of Islamic Finance
4.1 Performance of Key Islamic Banks in the GCC 3.1 Growth in size of global Islamic assets by sector (USD bn)
4.2 Performance of Key Islamic Insurance Companies in the GCC 3.2 Distribution of global Islamic assets, 2011
4.3 Performance of Key Islamic Investment Firms in the GCC 3.3 Global Islamic Finance assets by sector, 2012
6.1 Region Wise Sukuk Issuances in the GCC Market (in USD Bn) 3.4 GCC Islamic Finance Industry growth by sector (in USD bn)
6.2 Region Wise Sukuk Issuances in the GCC Market (Number of Issues per region)
3.5 Share of Islamic Finance Industry in the GCC, 2011
7.2 Region Wise Expected Growth of Takaful Insurance Premiums in the GCC (in USD Mn)
3.6 Composition of the Islamic Finance Industry in the GCC (in 2011)
8.1 GCC Islamic Funds Number of Funds by Mandate Coverage and Asset Class, 2011
5.1 Overview of Profit Mechanism in Islamic Banking
8.2 GCC Islamic Funds AUM by Mandate Coverage and Asset Class, 2011
5.2 Comparison of the Islamic Banking Industry in the GCC and the World (in USD Bn)
14.1 Growth Rate Matrix based on Co-relation values 5.3 Region wise split of Islamic Banking Assets in the GCC (2012) (USD Bn)
14.2 Growth Rate Matrix based on Co-relation values 5.4 Expected Growth of the Islamic Banking Industry in the GCC (in USD Bn)
14.3 Differences between Conventional and Islamic Banking 5.5 Banking Asset Outgrowth
14.4 Classification of banks 5.6 Cost Income Ratio
14.5 List of Islamic Banks in GCC 6.1 Structure of Ijarah Sukuk
14.6 List of insurance Companies in GCC 6.2 Sukuk Issuances across GCC and World (in USD Bn)
14.7 List of Investment Firms in GCC 6.3 Split up of Global Outstanding Sukuk Market
6.4 Expected Growth of the Sukuk Issuances in the GCC (in USD Bn)
7.1 Simplified form of Takaful based on Mudharabah and Wakalah Models
7.2 Expected Growth of Takaful Insurance Premiums in the GCC (in USD Bn)
8.1 Global Assets under Management (AUM) of Islamic Funds (in BUSD)
9.1 Structure of Islamic REITs
10.1 Market-share of foreign banks in the GCC (as % of total assets)
10.2 GDP growths by Country
11.1 Corporate Governance Structure for Islamic Financial Institutions
12.1 Average Size of Assets (2010, USD Bn)
12.2 Stock Market Capitalization in Trillion USD
12.3 Top 20 Scholars based on Overall Positions
MARKAZ SECTOR RESEARCH GCC Islamic Finance - October 2013
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