Ey World Islamic Banking Competitiveness report 2014-15

World Islamic Banking Competitiveness Report 2014–15 Participation Banking 2.0

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Contents

Abdulaziz Al-Sowailim

World Islamic Banking Competitiveness Report 2014–156

82%

Ashar Nazim

World Islamic Banking Competitiveness Report 2014–15 7

Robert Abboud Jan Bellens


Customers: is anyone listening?•

•

Growth•

•

Connectivity: key to sustainable growth •

•

•


Going mainstream: Participation Banking 2.0•

•

Customers•

•


Industry overview


International Participation banking assets* (US$b)

295

517

71

160

333

93

385

117

454

140

2009 2010 2011 2012 2013

GCC ASEAN Turkey and ROW South Asia

41

78

11 50

14 53

17 69

20

23

417

778

17%

Share of international Participation banking assets*

0% 20% 40% 60% 80% 100%

Turkey and ROW

South Asia

ASEAN

GCC

Islamic Conventional Malaysia

5%

12%

14%

33%


Banking penetration and Participation assets market share

Malaysia

Saudi Arabia

UAE

Kuwait

Qatar

Turkey

Bahrain

Indonesia

Bangladesh

Egypt

PakistanJordan

0%

20%

40%

60%

0% 50% 100% 150% 200% 250%

Part

icip

atio

n ba

nkin

g m

arke

t sha

re

Banking penetration

Size of circle depicts Participation banking asset volumes

Growth rate of assets YOY 2013 (in local currency)

–20% 0% 20% 40% 60% 80% 100%

Pakistan

Bahrain

Indonesia

Turkey

Qatar

Kuwait

UAE

Malaysia

Saudi Arabia

Conventional Islamic

CAGR 2009–13

17%

19%

11%

11%

26%

19%

43%

2%

29%

Going mainstream


Global distribution of Participation banking assets*

•

•

National market shares for Participation banking

•

•

Bahrain

31.7% 16.7%

48.9%20.7%

1.7%

27.7%

UAE

Saudi Arabia

Kuwait

Malaysia21.4% 44.6%

14.6%10.5%


3.8%

5.5%

Turkey

IndonesiaQatar

23.6%

5.9%

7.7%

5.8%

Pakistan

9.5%

1.2%


Strengthening of capital base

•

•

Capitalization of top 20 banks

2010 2011–13

US$b

20%

CAR2013

17%

33%

18%

17%

19%

17%

21%

14%

15%

14%

19%

14%

13%

19%

14%

31%

16%

16%

14%

20%

CAR2012

13%

28%

17%

16%

19%

21%

17%

13%

16%

19%

19%

14%

15%

19%

14%

35%

16%

12%

14%

10 2 3 4 5 6 7 8 9 10 11


•

•

Top 20 Participation banksAverage ROE 2009–2013Total assets 2013

0% 10% 20%020406080US$b

Average ROE

Average assets

Average growth 2009–13

Comparable


Future direction, opportunities and priorities for Participation banking

Initiatives to support implementation

• • • •

Opportunities ahead

• • •

• Contributing to the global dialogue

Challenges ahead

• •

•

Immediate sector priorities

• •

Impact of macro and environmental shifts

• • • • • •


KPIs for measuring progress

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15


Financial market infrastructure challenges Challenge scale*

Question marks remain on the state of the industry’s infrastructure

HighState of readiness


Performance outlook


0 100 200 300 400 500 600 700 800

2019f assets (US$b)2014e assets (US$b)

Pakistan

Bahrain

Indonesia

Turkey

Qatar

Kuwait

Malaysia

UAE

Saudi Arabia290

127

155

90

86

58

37

15

11

683

263

394

157

202

135

143

27

25

US$b


US$10.2b in 2013

2013 2019

3x

Potential profit pool from business as usual

Potential incremental profit resulting fromtransformation improvements

0

5

10

15

20

25

30

35

40


Digitization

Impact banking

positioning itself as socially responsible

Customer engagement

Like Share


Your talking customers


More than

2.25 million

Key message

Implications for future

Customers are increasingly active online and vocal about their experiences.

4 out of every 10 Participation banks are not “listening.”


Moment of truth

Malaysia

Relevant posts (000)

Indonesia

Bahrain

Kuwait

UAE

Qatar

Turkey

Oman

Saudi Arabia

375

22

184

44

25

905

47

212

523

Customer service

Branch experience

Online and phone

banking

Other general

sentiments

Products and services

Note: Bubble size represents size of comments in category for the country.Negative comments outnumber positive comments for category by more than 5%.Variance between positive and negative comments is less than 5%.Positive comments outnumber negative comments for category by more than 5%.


experience-led”


Purpose and ambition Creating great moments for everyone, everyday

The soul of our business is our customers. We seek to delight our customers by providing the best, accessible and consistent experience across our portfolio

Recognized

Unified

Distinct

High performing

Positioning

Bold Together Passionate

Customers

Accessibility

Quality of service

Consistency

Empowerment

Loyalty

Take a fresh look at business goals, keeping in mind the banking customers of tomorrow

Personas Bring users to life with rich insights on your customers’ experiences, journeys and pain points

Hassles and delights

Before During After

Phas

eJo

urne

y

+ve

Cust

omer

Ex

perie

nce

Identify experience delights and hassles for key customer journeys by person

Identify experience delights and hassles for key customer journeys by persona

xxx


xxx


xxx

Illustrative

–ve



Intentional journey maps

48 hours

Journey maps

Stage 1: Enter branch Stage 2: Customer contact Stage 3: Phone reg. Stage 4: Issue

Xxx Xxx

Xxx Xxx Xxx

Xxx

Xxx

Xxx

Xxx

Xxx

Create journey maps to communicate future experience and identify areas for improvement

Capability needs and gaps

Customer Interations

Life cycle stages

People Process Technology Data

See

Aware

Buy

Deposit

Post Exp

Training1. 2. 3.4.

Activity1. 2. 3.4.

Tech1. Applications

cannot currentlygather secondarycutomer information

Data1. Data collected only for

the primary customer2. Birth date and previous

historical transactionscannot be identified

ILLUSTRATIVE

1. ..................................

2. ..................................

3. ..................................

4. ..................................

5. ..................................

6. ..................................

7. ..................................

8. ..................................

9. ..................................

10. Customer walks-in

11. .................................

12. .................................

13. .................................

14. .................................

15. .................................

16. .................................

P1 P2 Px R1 R2 Rx T1 T2 Tx D1 D2 Dx

Experiences prioritized based on importance and complexity

Experiences aligned to work-stream and sub-groups

Ownership assigned for gaps

Build future-state, multichannel customer experience across talent, process, data, tools and technology

Experience calculator and road map

Impa

ct

High

Act Now

Act Now

Act Now Act Now

Medium

Long-term

Long-term

Long-term

Low

Aware Aware

Low Medium High

Complexity

Initiatives

123

123

123

123

123

123

123

123

123

12332

32

32

32

32

32

32

32

32

32

32

32

32

3232

32

32

32

Type 1Type 2Type 3Type 4Type 5Type 6Type 7Type 8

Prioritize initiatives on the basis of their value to customer and complexity to implement


Bahrain

30,397sentiments monitored

Total post and relevant post — daily volume

0

50

100

150

200

250

300

350

400

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Irrelevant Volume Relevant Volume

posts on this

termination of

Positive and negative (Total)

General


Customer service

Branch experience

Online and mobile banking

Neutral: general neutral

42%45%

5%12%

2%16%

17%4%

7%13%

10%1%

13%

Positive Negative Neutral

Topic wheel highlighting key negative opinions*

General

Topic wheel highlighting key positive opinions*

Positive and negative opinion breakdown

Bank B

Bank

B

Bank B



Call to action

Changing the status quo

Abid Shakeel


0

2000

4000

6000

8000

10000

12000


Irrelevant Posts Relevant Posts


General


Customer service

Branch experience



63%26%

6%3%

3%1%

29%4%

7%7%

17%10%

11%



General



Interest generated from




Call to action

Mohd Husin

Saudi Arabia


0

1000

2000

3000

4000

5000

6000

7000

8000

9000




General





General


Customer service

Branch experience



67%29%

7%14%

16%7%

7%3%

20%4%

17%1%

5%


More than

posts related to an online and

Saudi Arabia



Ashar Nazim

Call to action



0

200

400

600

800

1000

1200

1400




General




General


Customer service

Branch experience



58%30%

11%4%

5%17%

29%1%

11%7%

2%1%

12%


posts on this

sentiments

Bank B



Call to action

Karan RanaManager


0

100

200

300

400

500

600

700

800

900



posts related

partnership

a leading

Qatar


General




General


Customer service

Branch experience



30%33%

7%2%

8%6%

2%1%

5%20%

8%4%

38%



Qat

ar

Bank B

Feedback

FeedbackSpeed

Qatar Bankin

g

Customer request

Product 1Marke

ting



Call to action

Houssam Itani



0

1000

2000

3000

4000

5000

6000

7000




General




General


Customer service

Branch experience



58%27%

4%15%

39%7%

2%2%

8%2%

4%1%

16%



Call to action

Challenge the status quo

Maged FanousPartner




0

500

1000

1500

2000

2500




General




General


Customer service

Branch experience



55%15%

16%3%

9%1%

8%2%

4%5%

18%4%

30%



Call to action

Noman MubashirManager




0

20000

40000

60000

80000

100000

120000




General




General


Customer service

Branch experience



45%38%

20%34%

10%1%

1%1%

1%2%

12%1%

18%


about a



Call to action

Murat Hatipoglu

Indonesia



0

2000

4000

6000

8000

10000

12000




General



General


Customer service

Branch experience



Positive and negative (Total) 11%88%

2%3%

1%6%

7%18%

1%53%

1%9%

2%

Positive NeutralNegative


sentiments relate to disappointing


Call to action

Yasir YasirPartner

Country outlook


•

•

•

Participation banking penetration in Bahrain

Total banking assets**

US$

b

2009 2010 2011 2012 2013

13

35

29% 28%

0

10

20

30

40

US$

b

2009 2010 2011 2012 2013

12

22

31% 35%

0

10

20

30

40

Total deposits**

30% 33%

0

10

20

30

40

2009 2010 2011 2012 2013

11

23

US$

b

Assets** YoY growth 2% 4%

5%

2010 2011 2012 2013

–1%

–10%

0%

10%

20%

Financing** YoY growth 2% -2%

2010 2011 2012 2013

7%

–10%–10%

0%

10%

20%

Deposits** YoY growth 4% 1%

7%

–15%

–5%

5%

15%

2010 2011 2012 2013

0%

Bahrain


Share of global market*

Return on assets

–1.0%

0.0%

1.0%

2.0%

2009 2010 2011 2012 2013

1.6%

0.1%

Return on equity

2009 2010 2011 2012 2013

12.2%

0.7%

–5%

0%

5%

10%

15%

Cost to income ratio

2009 2010 2011 2012 2013

76.0%

37.0%

0%

20%

40%

60%

80%

100%

Leverage

2009 2010 2011 2012 2013

7.7

6.8

0

4

8

12

Revenue/asset ratio

0.0%

1.0%

2.0%

3.0%

4.0%

2012 2013

2.9%3.4%

0%

10%

20%

30%

40%

2012 2013

29%30%


Saudi Arabia

• Participation banking penetration in the Saudi Arabia

Total banking assets

0

100

200

300

400

2009 2010 2011 2012 2013

247258

US$

b

36% 49%

2009 2010 2011 2012 2013

207174

0

100

200

300

400

US$

b

47% 54%

Total deposits*

0

100

200

300

400

2010 2011 2012 2013

374

US$

b

2009

Assets YoY growth 17% 2%

0%

10%

20%

30%

40%

2010 2011 2012 2013

14%

5%

Financing YoY growth 15% 7%

–10%

0%

10%

20%

30%

40%

2010 2011 2012 2013

16%12%

Deposits YoY growth* 10%

–10%

0%

10%

20%

30%

40%

2010 2011 2012 2013

11%



Return on assets

0.0%

1.0%

2.0%

3.0%

2009 2010 2011 2012 2013

1.9%

2.3%

Return on equity

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013

15%

14%


25%

30%

35%

40%

2009 2010 2011 2012 2013

36%

35%

Leverage

2009 2010 2011 2012 2013

7.2

6.7

0

5

10

Revenue/asset ratio

2012 2013

4.6%

3.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0%

10%

20%

30%

40%

2012 2013

32%34%



US$

b

16% 21%

0

200

400

600

2009 2010 2011 2012 2013

498

130

US$

b

0

200

100

300

500

400

2009 2010 2011 2012 2013

85

282

17% 23%

Total deposits

0

200

100

300

500

400

2009 2010 2011 2012 2013

106

360

US$

b

17% 23%


0%

10%

20%

30%

40%

2010 2011 2012 2013

1%

8%16%


0%

10%

20%

30%

40%

2010 2011 2012 2013

14%

1%

22%

Deposits YoY growth 19% 9%

–10%

0%

10%

20%

30%

2010 2011 2012 2013

–1%

15%

7%

Participation banking penetration in Malaysia•

•


Return on assets

0.0%

1.0%

2.0%

2009 2010 2011 2012 2013

0.9%

0.8%

Return on equity

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013

11%

10%


30%

40%

50%

60%

2009 2010 2011 2012 2013

48%

41%

Leverage

2009 2010 2011 2012 2013

12.2

12.1

11

12

13

14

Revenue/asset ratio

0%

1%

2%

3%

4%

5%

2012 2013

2.6%3.3%

2012 2013

34%33%

0%

10%

20%

30%

50%

40%



•

•

Participation banking penetration in the UAE


0

100

200

300

400

2009 2010 2011 2012 2013

US$

b

18% 21%

416

114

2009 2010 2011 2012 2013

75

229

US$

b

19% 25%

0

100

200

300

400

Total deposits

2009 2010 2011 2012 2013

86

262

US$

b

22% 25%

0

100

200

300

400


–5%

0%

5%

10%

15%

20%

25%

2010 2011 2012 2013

17%

6%


–5%

0%

5%

10%

15%

20%

25%

2010 2011 2012 2013

10% 8%


–5%

0%

5%

10%

15%

20%

25%

2010 2011 2012 2013

16%

7%



Return on assets

0.0%

1.0%

2.0%

3.0%

2009 2010 2011 2012 2013

1.6%

1.3%

Return on equity

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013

12%

10%


20%

30%

40%

50%

2009 2010 2011 2012 2013

46%

31%

Leverage

7

8

9

2009 2010 2011 2012 2013

7.9

7.8

Revenue/asset ratio

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2012 2013

3.6%3.7%

0%

10%

20%

30%

40%

2012 2013

30%25%


Participation banking penetration in Kuwait

more than three times their

•

•


020

406080

100

120

2009 2010 2011 2012 2013

82101

US$

b

38% 45%

020

406080

100

120

2009 2010 2011 2012 2013

5647U

S$b

41% 54%

Total deposits

020

406080

100

120

2009 2010 2011 2012 2013

6168

US$b

44% 47%


–15%

–5%

5%

15%

25%

2010 2011 2012 2013

12%7%

Financing YoY growth 11% –3%

–15%

–5%

5%

15%

25%

2010 2011 2012 2013

0%

16%


–15%

–5%

5%

15%

25%

2010 2011 2012 2013

10%7%



Return on assets

0.0%

1.0%

2.0%

3.0%

2009 2010 2011 2012 2013

1.0%

1.0%

Return on equity

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013

7.4%

7.7%


20%

30%

40%

50%

60%

2009 2010 2011 2012 2013

49.2%

34.8%

Leverage

0

4

8

12

2009 2010 2011 2012 2013

8.1

7.6

Revenue/asset ratio

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2012 2013

4.7%

3.4%

0%

10%

20%

30%

40%

2012 2013

17%

28%


Qatar

Participation banking penetration in Qatar•

•


0

50

100

150

200

250

2009 2010 2011 2012 2013

60

US$b

18% 24%

193

0

50

100

150

200

250

2009 2010 2011 2012 2013

38

121

US$

b

21% 24%

Total deposits

0

50

100

150

200

250

2009 2010 2011 2012 2013

39

111

US$

b

16% 26%


0%

20%

40%

80%

60%

2010 2011 2012 2013

11%12%


0%

20%

40%

80%

60%

2010 2011 2012 2013

13%14%


0%

20%

40%

80%

60%

2010 2011 2012 2013

16%20%



Return on assets

0.0%

1.0%

2.0%

3.0%

4.0%

2009 2010 2011 2012 2013

2.1%2.1%

Return on equity

0%

5%

10%

15%

20%

25%

2009 2010 2011 2012 2013

13%

16%


0%

10%

20%

30%

40%

2009 2010 2011 2012 2013

28%

25%

Leverage

0

5

10

2009 2010 2011 2012 2013

7.7

6.0

Revenue/asset ratio

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2012 2013

3.4%3.3%

0%

10%

5%

15%

20%

25%

2012 2013

11%

23%


Participation banking penetration in Turkey•

•


US$

b

4% 6%

0

200

400

600

800

2009 2010 2011 2012 2013

45

726

US$

b

7% 6%

0

200

400

600

800

2009 2010 2011 2012 2013

30

447

Total deposits

US$

b

6% 7%

0

200

400

600

800

2009 2010 2011 2012 2013

29

410


0%

10%

20%

30%

40%

2010 2011 2012 2013

14%5%

37%


–10%0%

10%20%30%40%50%60%

2010 2011 2012 2013

8% 11%30%


–10%0%

10%20%30%40%50%60%

2010 2011 2012 2013

3% 7%24%



Return on assets

0.0%

1.0%

2.0%

3.0%

2009 2010 2011 2012 2013

1.6%

1.0%

Return on equity

0%

5%

10%

15%

20%

25%

2009 2010 2011 2012 2013

15%11%


0%

20%

40%

60%

2009 2010 2011 2012 2013

51%

45%

Leverage

0

4

8

12

2009 2010 2011 2012 2013

10.7

9.1

Revenue/asset ratio

0.0%

2.0%

4.0%

6.0%

2012 2013

5.1%4.9%

0%

10%

20%

30%

40%

2012 2013

34%33%


•

•

•

Participation banking penetration in Indonesia


US$

b

2% 6%

0

200

400

600

2009 2010 2011 2012 2013

510

30

US$

b

2% 4%

0

200

400

600

2009 2010 2011 2012 2013

15

356

Total deposits

US$

b

2% 4%

0

200

400

600

2009 2010 2011 2012 2013

15

398


–20%

0%

20%

40%

60%

80%

2010 2011 2012 2013

46%

–11%

85%


–20%

0%

20%

40%

60%

80%

2010 2011 2012 2013

–1%–3%

25%


–20%

0%

20%

40%

60%

80%

2010 2011 2012 2013

–1%–10%

24%

Indonesia



Return on assets

0.0%

1.0%

2.0%

3.0%

2009 2010 2011 2012 2013

2.7%

1.3%

Return on equity

0%

5%

10%

15%

20%

25%

2009 2010 2011 2012 2013

22%

15%


0%

20%

40%

60%

80%

2009 2010 2011 2012 2013

64%

37%

Leverage

0

5

10

15

20

2009 2010 2011 2012 2013

11.8

8.0

Revenue/asset ratio

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2012 2013

6.8%

8.8%

0%

5%

10%

15%

20%

25%

2012 2013

17%20%


Participation banking penetration in Pakistan

assets and is aspiring to


2009 2010 2011 2012 2013

10

US$

b

6% 10%

0

50

100

150

200

91

02009 2010 2011 2012 2013

337

US$

b

5% 8%

50

100

150

200

Total deposits

02009 2010 2011 2012 2013

8

70US$

b

6% 11%

50

100

150

200


–10%0%

10%20%30%40%50%

2010 2011 2012 2013

12%

–2%

21%


–10%0%

10%20%30%40%50%

2010 2011 2012 2013

26%

–2%

36%


–10%0%

10%20%30%40%50%

2010 2011 2012 2013

13%1%

23%

•

•



Return on assets

0.0%

1.0%

2.0%

3.0%

2009 2010 2011 2012 2013

1.4%

0.5%

Return on equity

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013

12.2%

6.9%


0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013

75.0%

49.7%

Leverage

0

4

8

12

16

2009 2010 2011 2012 2013

14.7

8.6

Revenue/asset ratio

0.0%

2.0%

4.0%

6.0%

2012 2013

3.9%

5.3%

0%5%

10%15%20%25%30%35%

2012 2013

17%

32%


Our industry awards

Best Islamic Advisory Firm,

2014

Euromoney Islamic Banking Award

Best Takaful Advisory Firm,

2011/2009

3rd International Takaful Summit,

London

WIBC Leading Islamic Financial

Services Provider,2008

World Islamic Banking Awards, Bahrain

Best Islamic Finance

Advisory Firm, 2009/2008/

2007

World Islamic Banking Awards, Bahrain

Best Islamic Advisory Firm,

2014

8th International Takaful Summit 2014

Thought Leadership

Award, 2013

20th Annual World Islamic Banking

Conference Awards, Bahrain

ADIB — Appreciation Award, 2013

1st Annual Global Islamic Economy Summit, Dubai

10th international Real Estate Finance Summit Awards —

London

Best Islamic Advisory Firm, 2013/2011/ 2010/2009


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Ashar Nazim

Gordon Bennie

Robert Abboud


Wajih Ahmed(Bahrain)

Nader Rahimi(Bahrain)

Muzammil Kasbati(Bahrain)

Sarvesh Ramachandran(Dubai)

Imitiaz Ibrahim(Qatar)

Abid Shakeel(Saudi Arabia)

Karan Rana(Dubai)

Nida Raza(Dubai)

Adnan Setaih(Bahrain)

Noman Mubashir(Bahrain)

Umair Yousaf(Bahrain)

Houssam Itani(Qatar)

Ashar Nazim

Noman Mubashir

Murat Hatipoglu (Turkey)

Mohd Husin (Malaysia)

Ken Eglinton (UK)

Merisha Kassie (South Africa)

Yasir Yasir (Indonesia)


EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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The MENA practice of EY has been operating in the region since 1923. For over 90 years, we have grown to over 5,000 people united across 20 offices and 15 countries, sharing the same values and an unwavering commitment to quality. As an organization, we continue to develop outstanding leaders who deliver exceptional services to our clients and who contribute to our communities. We are proud of our accomplishments over the years, reaffirming our position as the largest and most established professional services organization in the region.

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EYG no. EK0339

ED 0115

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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Ey World Islamic Banking Competitiveness report 2014-15

Economy & Finance

Transcript of Ey World Islamic Banking Competitiveness report 2014-15