The Islamic finance industry continues to thrive despite falling oil prices in many of its key markets and regulatory changes that obstruct integration. As the sector matures, The Banker celebrate the industry’s finest in our Islamic Bank of the Year Awards 2016.
This year’s Islamic Bank of the Year Awards offer another snapshot of an industry that has continued to expand strongly across the Middle East, Asia and beyond. Many Islamic banks and sharia-compliant windows posted impressive growth figures in 2015 in terms of asset growth as well as profits and return on equity. Yet the growth of the global Islamic finance market is beginning to plateau as the sector converges with the conventional financial sector.
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For the first time since The Banker’s Top Islamic Financial Institutions survey began nine years ago, the industry’s total assets moved into negative growth territory in the 2015 report, after years of double-digit growth up until 2013, and single-digit growth in 2014. In the 2015 edition, total Islamic banking assets fell 8.48%, though this was partly attributable to exchange rate volatility in key markets.
Nevertheless, most of the winners performed better than their conventional market peers. The judges were impressed by the number of strong entries this year, and by the range of new products and deals they had brought to market in 2015.
We have also included Sri Lanka as a new market in our 2016 awards, an indication of the continued global spread of the Islamic banking industry. China’s emerging role in Islamic finance, as well as the implications for this among Asia’s Islamic banks, could well mean that we add more markets in the coming years.
While Islamic finance is currently dealing with the impact of the fall in global oil prices in many of its key markets, as well as country-specific regulatory changes and a lack of overall integration, there are also clear signs of maturing practices and governmental frameworks.
Key changes are taking place in Islamic banking, with Oman, Bahrain and the United Arab Emirates all moving, or having moved, towards centralised sharia boards or higher sharia authorities to better regulate their respective Islamic finance sectors, following the example of Malaysia. Many banks have also continued to improve on their e-banking services, investing heavily in modern technologies, while continuing their investment in Islamic banking education among their employees and the population in general.
As Islamic finance continues to grow and more products and services are offered by the banks, the sector is becoming increasingly innovative, and that is apparent from the achievements of the winners of our awards in 2016.
Global, Asia-Pacific, Malaysia
Winner: CIMB Islamic
Our winner of global Islamic Bank of the Year award for 2016 once again comes from Malaysia, highlighting the impressive Islamic banking growth and innovation coming out of south-east Asia.
CIMB Islamic, the Islamic banking and finance franchise of CIMB Group, had a highly impressive 2015 both in terms of its overall growth and its involvement in a number of major deals. The judges were also impressed by its role in expanding Islamic banking in its home market and internationally.
CIMB Islamic covers Islamic wholesale banking, Islamic consumer banking, Islamic commercial banking and Islamic asset management and investment, and also has the highest number of Islamic consumer banking products in Malaysia. It takes the mantle of overall Islamic Bank of the Year from fellow Malaysian bank Maybank Islamic, which won the global award in both 2014 and 2015.
Over the past 10 years, CIMB Islamic has emerged as a leading mid-sized, full-service Islamic banking franchise in the Association of South-east Asian Nations (Asean) region, with its success stemming partly from its adoption of a dual banking leverage model that offers clients comprehensive Islamic banking and finance solutions while using the full infrastructure and resources of CIMB Group regionally. The bank emphasises a sharia-compliant framework at the enterprise level rather than the product level, and was the first non-standalone Islamic bank in Malaysia to appoint an independent sharia committee to help manage its enterprise-wide sharia compliance.
Starting with six basic deposits and financing products, CIMB Islamic now offers more than 100 products that cater to different customer segments, from the mass-market to high-net-worth individuals, and from small enterprises to medium-sized corporates. CIMB Islamic currently has about 1100 branches across the Asean region as well as offices in major global financial centres such as London, New York and Hong Kong. This has helped it record impressive growth figures.
In 2015, CIMB Islamic saw total sharia-compliant assets rise by 9% to $13.9bn, while Tier 1 capital grew by 13% to $820m and net profits rose 3% to $103m. Return on equity was slightly down at 11.85% and the bank’s cost-to-income ration rose slightly to 44.49%. The non-performing loan ratio also grew slightly, up from 0.98% in 2014 to 1.32% in 2015.
“We will continue to grow our Islamic banking business by focusing on core businesses and product innovations, deepening customer relationships and growing our ancillary businesses,” says CIMB Islamic chief executive Rafe Haneef. “We see opportunities from various government initiatives, further internationalisation on Islamic finance, heightened requirements for companies to be classified as sharia-compliant and increased needs for infrastructure funding.”
CIMB Islamic has been a pioneer in Islamic financial markets, having advised on the world’s first sharia-compliant exchangeable sukuk and the largest sovereign sukuk issue. In 2015 CIMB was once again heavily involved in major deals, accounting for 25.8% of the total issuances on the Malaysian ringgit sukuk league table. Globally, CIMB retained the number one spot, having lead managed 15.2% of global sukuk deals. The successful launch of a sovereign sukuk for Indonesia, the UK and Hong Kong has paved the way for a flurry of sovereign sukuk activities, many being co-led by CIMB, with several deals attracting more than 10 times oversubscription.
The bank has been involved in an impressive number of landmark deals in 2015, including the $2.5bn wakala sukuk programme for the Republic of Indonesia, due in 2021 and 2026; the $1bn and $500m trust certificates programme for Malaysia; and the $1.5bn in trust certificates for IDB Trust Services, due in 2021.
On the treasury front, CIMB Islamic has been successful in the development of Islamic hedging instruments in Malaysia, including an Islamic Profit Rate Swap, a Cross Currency Profit Rate Swap and FX Forward-i variants to complement the Islamic debt market.
In January 2015, CIMB Islamic also signed a memorandum of understanding (MoU) with Universiti Islam Malaysia to establish a research centre for Islamic banking studies, following a similar MoU signed with the International Centre for Education in Islamic Finance in November 2014.
CIMB Islamic currently has more than 8 million customers in its home market. In 2015, CIMB introduced new features such as Plug n Pay, Malaysia’s first chip-based mobile point-of-sale solution, which offers a secure way of managing e-payments using smartphones and tablets.
The bank is working on a number of new initiatives to deepen its Islamic offerings, including an Islamic version of stock lending and borrowing with Bursa Malaysia, as well as Islamic equity derivatives, which are expected to be rolled out in 2016. On January 12, 2016, CIMB Islamic officially launched Takaful Suria, an individual family Takaful Hajj plan with tailored investment features, further enhancing the bank’s reputation as a product innovator. This suggests a bright future for the bank and Islamic banking operations as a whole in Malaysia.
Middle East, Qatar
Winner: Qatar Islamic Bank
Two-thousand and fifteen was another year of remarkable growth for Qatar Islamic Bank (QIB), which is a key part of why it has been chosen as our Middle East and Qatari Islamic Bank of the Year. Total sharia-compliant assets grew 32%, while net profits grew 22% and Tier 1 capital increased 26%. Meanwhile, return on equity increased from 13.4% to 15.1%, while the bank’s cost-to-income ratio fell from 31.7% to 30.6% and non-performing loans dropped to just 0.7%, from 0.9%.
In December 2015, QIB launched its first series of certificates of deposit. These products, the first of their kind in Qatar, are available for individuals and corporate customers in both riyal and dollar terms for tenors of two, three or five years. The fully sharia-compliant certificates encourage customers to make long-term savings by yielding attractive annual profits, with certificate holders also able to apply for financing up to 95% of the certificate amount, with the financing tenors equivalent to the certificate’s maturity.
In 2015, QIB also issued a QR2bn ($550m) Basel III- and Islamic Financial Services Board-compliant additional Tier 1 perpetual sukuk, priced at 5% a year, one of the lowest prices in its class.
The judges were impressed by QIB’s corporate banking growth of 51.7% in its financing portfolio compared with the previous year, as well as the bank’s financial institutions division growth of more than 71.5%, driven by a greater level of involvement in several bilateral and syndicated financing transactions to regional and international banks.
QIB was involved in a number of high-profile syndicated deals in the Middle East in 2015, including the five-year, $570m murabaha facility for Noga Holding, the investment and business development arm of Bahrain’s National Oil and Gas Authority, as well as participating in the sharia-compliant syndicated finance facility for Stanford Asia Holding Company and the syndicated murabaha financing facility for Al Baraka Turk Bank. QIB also acted as lead arranger and bookrunner for the two-year, $350m syndicated murabaha financing for Kuveyt Turk KatilimBankasi, the Turkish subsidiary of Kuwait Finance House.
Sharia-compliant Window of the Year
Winner: ADCB Islamic Banking
ADCB Islamic Banking, the second winner of our Sharia-compliant Window of the Year award, impressed the judges with its strong growth figures as well as its trendsetting Islamic banking products.
The United Arab Emirates-based Islamic window is an independently managed business comprised of the Islamic Banking Department of Abu Dhabi Commercial Bank (ADCB) and Abu Dhabi Commercial Islamic Finance, a wholly owned subsidiary of ADCB.
In terms of its number of customers and balance sheet, ADCB Islamic Banking is the largest Islamic banking window in the UAE. Its total sharia assets rose 40% in 2015, to $4.02bn, while the banking window’s net profits rose 13% to $127m. This growth was achieved following ADCB Islamic Banking’s decision to focus more on the wholesale and small and medium-sized enterprise banking sectors, developing unique sharia-compliant product structures to meet the needs of these segments.
The Islamic banking window currently has more than 103,000 customers, offering a complete range of Islamic banking products and services when it comes to the retail, corporate and treasury sectors. In 2015, the bank also enhanced its distribution team, who source Islamic assets, while its representative offices in the fast-growing markets of the UK and Singapore became functional in 2015.
ADCB Islamic Banking became the first bank in the world to launch Salam Personal Finance, which has proved extremely popular with customers. Under the structure a customer can sell goods or commodities to the bank as long as the goods and quantity is defined and the delivery date fixed; under sharia law a sale cannot normally be conducted unless the goods are in existence at the time of the contract. Not only did ADCB Islamic Banking launch the service in 2015, it also made it available entirely online. The Salam Personal Finance asset portfolio has passed $1.28bn.
“As we continue this successful and exciting journey, while sticking to our strategies, maintaining an agile business model and a seamless balance between the push and pull of our channels and brand respectively, we intend to increase our market share in line with the bank’s vision,” says Amr Al Menhali, head of ADCB Islamic Banking.
Iran
Winner: Bank Pasargad
Bank Pasargad, Iran’s second largest listed bank, has won our Islamic Bank of the Year award for Iran every year for the past four years. In 2015, the bank’s total sharia-compliant assets grew by 17.5%, after a rise of 26.3% in 2014 and 31.6% in 2013, while Tier 1 assets grew 28.7%, up from 16.4% and 9.4%, respectively. However, the bank’s net profits dropped to -19.3% in 2015, from 18.3% in 2014, affected by three years of negative growth in the Iranian economy and by monetary policies of the Central Bank of Iran that saw a reduction in interest rates. Many Iranian banks have endured losses during this period.
Launched in 2005, Bank Pasargad offers sharia-compliant products and services to its 4.5 million clients, as well as the 9 million clients of the Pasargad Financial Group. In 2015, the bank enhanced its business units to respond to new customer requirements, including fully sharia-compliant product packages with asset management, wealth management and different types of funds and consulting services. The bank also introduced a Green Deposit Account, in which depositors can dedicate all or part of their interests and profits to environmental protection causes, a first for Iran.
Bank Pasargad launched more than 30 e-banking services in 2015, including mobile banking, multifunctional cards, batch payment of bills and electronic certificates of deposit. It also began proposing various non-bank financial services, such as brokerage, insurance and cross-sale, to customers in selected branches, and introduced complementary insurance schemes for depositors.
Bank Pasargad continues to help finance large industrial and infrastructure projects, including the Gas Pipeline Project, involving three domestic pipelines and two pipelines from southern Iran to Iraq, with total sharia-complaint financing of $1.8bn, as well as the $400m Siraf Refinery Project and the $20m Dana Energy Oil Platform Project. It also sponsors Iran’s national wrestling and football teams, as well as organising academic conferences and seminars at Khatam University, which is wholly owned by the bank.
The bank plans to introduce a number of new sharia-compliant products over the next year, including an Islamic bond based on ijarah and finance lease agreements.
With the lifting of sanctions on Iran, the bank could be set for a strong next few years. “There are significant opportunities to be seized in Iran’s import and export trade volume,” says Bank Pasargad chief executive and vice-chairman Majid Ghassemi.
“We plan to play a major role in financing of Iran’s large projects benefiting from foreign financing lines of credit.”
Jordan
Winner: Jordan Islamic Bank
Despite opting for a conservative strategy for 2015 to avoid any fallout from regional or global uncertainty, Jordan Islamic Bank (JIB) experienced a strong year, with continued growth and new sharia-compliant products and services coming online.
At 16.42%, the bank had the highest return on equity among banks operating in Jordan in 2015, both conventional and Islamic, while its sharia-complaint assets grew by 6.9% in 2015, hitting $5.36bn by year-end. This was enough to win JIB our Islamic Bank of the Year award for Jordan.
The bank’s Tier 1 capital also grew, to 10.2%, while overall profits grew by 8%, up from just 0.1% year-on-year in 2014. At the same time, JIB’s non-performing loans ratio dropped from 4.35% in 2013 to 3.87% in 2015, one of the lowest rates among all banks operating in Jordan.
JIB holds 60% of the Islamic banking market share in terms of assets, deposit, finance and investments in the country, and is the third largest bank in Jordan overall in terms of assets, deposits and financing. The bank supplied sharia-compliant funding worth $141m to commercial companies in 2015 and also put together two deals for the National Electricity Company, guaranteed by the Jordanian government, to the tune of $156m. These were in accordance with murabaha financing and were for the purchasing of fuel and oil derivatives for electricity generation.
In 2015, JIB also expanded its physical presence across the country, with the number of its branches and ATMs rising to 93 and 167, respectively, up from 84 and 153 at the end of 2014.
The bank plans to launch life insurance products, in co-operation with insurance companies, savings accounts to cover
the cost of education, and products to finance the installation of solar technology for households. JIB is also planning to
start issuing tradable sukuk bonds, having already adjusted its article of association
in order to be able to officially issue tradable sukuk.
“JIB is supporting the wider economy through additional financing to small and medium-sized enterprises,” says chief executive and general manager Musa Shihadeh. “This is helping to address a number of societal challenges, including high levels of unemployment.”
Kuwait
Winner: Ahli United Bank Kuwait
The operations and innovations of Ahli United Bank Kuwait continue to impress The Banker’s judges, with the 74-year-old Kuwaiti bank, the oldest in the country, winning our Islamic Bank of the Year award for Kuwait for the fourth consecutive year. Since transforming into a fully sharia-compliant bank on April 1, 2010, Ahli United Bank Kuwait has continued to go from strength to strength.
“Ahli United Bank continues to play an active and supportive role as banker to our customers by building and expanding our business in the corporate, institutional and retail sectors,” says deputy chief executive officer Ahmed Zulficar.
The bank’s total Tier 1 capital rose by 18.4% in 2015, after growth of 13.9% in 2014, while its sharia-complaint assets grew by 8.5% to reach $12.86m, slightly down from the 13.6% growth rate in 2014. Overall, net profits increased 8.9% to hit $142m, while return on equity stood at 12.7%, down from 15.1% in 2014, but still the highest in Kuwait in 2015. The cost-to-income ratio dropped from 15.1% to 12.7% in the period. The slight reduction in annual profits in 2015, down from $155.9m in 2014 to $142m, was due to a special one-off provision of $26m. Excluding this, the bank’s profits would have been $168m.
Ahli United Bank Kuwait has continued to launch sharia-compliant products, which have contributed to the growth of its businesses and results. The bank has targeted the youth segment of the market, offering start-up finances and Qard Hasan loans, which are interest-free loans paid back in instalments. The Qard Hasan loans can be used for car purchases, medical expenses, educational support and home renovations. Meanwhile, the bank’s Al Hassad Islamic saving investment account prize programme is the first and only prize account in Kuwait that is sharia compliant.
The bank also acquired a 30% stake in a Saudi investment and brokerage company in 2015, with the aim of expanding its Islamic banking investment services elsewhere in the Gulf Co-operation Council region.
Ahli United Bank is placing a great deal of attention on technology by offering more innovative electronic services for its customers, including mobile banking, e-banking and contact centres. “The bank will maintain its leading position among Islamic banks in Kuwait with delivery of innovative digital banking services for both corporate and retail customers,” says Mr Zulficar.
Oman
Winner: Maisarah Islamic Banking
It has been an impressive couple of years for Maisarah Islamic Banking, which operates as a ‘bank within a bank’ within BankDhofar, one of the leading financial institutions in Oman. Since the Central Bank of Oman enacted the Islamic Banking Regulatory Framework in 2012, approving the formation of a sharia-compliant finance sector in the country, Maisarah Islamic Banking has experienced phenomenal growth.
In 2015, its third year of operations, the bank saw net profits increase an astonishing 1016.96%, with Tier 1 capital growth at 76.29% and sharia-compliant assets rising by 56.11%. This was after achieving year-on-year Tier 1 capital growth rate of 123.6% in 2014, along with an asset growth of 283.4% and net profits increasing by 110.5%. Maisarah is the fastest growing Islamic banking entity in Oman.
Maisarah has a portfolio of 15 sharia-compliant investment and financing products catering to the investment and financing needs of individuals, corporate and government institutions, with nine more products in development and set to be rolled out by the end of 2016. Maisarah is also the first Islamic banking entity in Oman to introduce forward cover products based on the concept of wa’ad, and the only Islamic bank in Oman with an award-winning Islamic alternative to an overdraft facility for its corporate customers.
In addition, Maisarah is committing time and resources to training staff, launching a Certified Islamic Finance Executive programme, which has a 100% staff enrolment rate and from which 60% of staff have already received certification. Maisarah arranged more than 78 training session in 2015, covering different areas related to Islamic banking and finance. At the same time, Maisarah organised public and private seminars for individuals and corporate entities, attended by large audiences from different business segments and professions.
Maisarah’s retail operations are based out of 10 strategically located branches in different parts of Oman, up from two branches when it launched in 2013. Maisarah has also signed more than 18 wakala agreements with different banks in the local and international market.
Pakistan
Winner: Meezan Bank
The Banker’s winner of Pakistani Islamic Bank of the Year for 2016, Meezan Bank, saw its sharia-complaint assets grow by 16.6% year on year in 2015, after an increase of 39.1% in 2014. Tier 1 capital increased by 6.4%, while net profits rose 5.4% to $47.95m. Meanwhile, return on equity remained above 20% for the third year running, at 20.57%, while the bank’s cost-to-income ratio went up slightly to 60.49%.
During 2015 the bank maintained its strong market position, successfully closing syndicated financing transactions of more than Rs190bn ($1.82bn) for a range of clients, many of them in the energy sector. One key deal was the structuring and arrangement of a Rs22bn rated, listed and secured diminishing musharaka sukuk for Pakistani power company K-Electric.
Meezan Bank has utilised running musharakah, partnerships undertaken for the purpose of profit-sharing, to provide sharia-compliant financing solutions for a variety of clients, including blue-chip corporations and quasi-governmental entities. Total running musharakah financing at year-end stood at approximately Rs48bn, 23% of the bank’s total financing portfolio.
Meezan Bank added another milestone to its credit in 2015, by acting as joint financial adviser to the Pakistani government for the raising of sharia-compliant funds through an ijarah sukuk. It also continued to play an active role in co-ordinating with the country’s central bank on various matters that would promote the growth of Islamic banking in the country, including the launch of an Islamic benchmark rate, an Islamic long-term trade financing scheme, an Islamic discount window and the development of a sharia governance framework for Islamic finance.
The judges were impressed by the fact that Meezan Bank, together with the Karachi Stock Exchange (KSE), has developed the All Shares Islamic Index, made up of 225 companies, including all sharia-compliant shares traded on the KSE.
On the retail side, MeezanUpaisa, a collaboration between Meezan Bank and Ufone, became the world’s first branchless Islamic banking service, enabling customers to send and receive money, pay utility bills and top up their mobile phone accounts, all with minimal effort. The service has a network of 30,000 retailers and agents as well as franchises in almost 500 cities and towns in Pakistan, helping those not reached by traditional banking operations.
Saudi Arabia
Winner: Saudi Hollandi Bank
Saudi Hollandi Bank, Saudi Arabia’s oldest financial institution, is the winner of our Saudi Arabian Islamic Bank of the Year award for 2016, after seeing its total sharia-compliant assets grow by 30.84% in 2015. This came on the back of a similar rise of 31.99% in 2014. The bank now has more than $11m in sharia-compliant assets. Tier 1 capital grew by 16.2% in 2015, while net profits grew 11.07%. Return on equity was roughly stable, year on year, at 16.82%.
The demand for sharia-compliant financial services among Saudi Arabian banking clients has continued to grow over the past 12 months, and Saudi Hollandi group has grown its offerings in the sector to match.
In 2015 Saudi Hollandi Capital (SHC) launched its Alyusr Saudi Hollandi IPO Fund, which primarily invests in sharia-compliant initial public offering of companies listed on the Saudi stock market or in shares of recently listed companies on the Saudi stock market. SHC initially launched a conventional IPO fund in 2014, but this was converted into a sharia-compliant fund in 2015 due to strong demand from investors. In the first half of 2015 the fund was the best performing IPO fund on the Saudi market.
The bank has actively marketed sharia-compliant rate hedging solutions, which give customers the opportunity to hedge their interest rate exposures in a sharia-compliant way. Saudi Hollandi also launched a first-of-its-kind sharia-compliant personal finance product, Ready Cash, in 2015, which caters to the bank’s retail clients and provides customers with flexible repayment options and usage.
At the same time, the bank has continued to show its strong commitment to promoting financing for small and medium-sized enterprises as the country tries to diversify its economy, which impressed the judges.
Saudi Hollandi is placing greater emphasis on sharia-compliant structured deposits and innovative treasury solutions, as well as launching further variations in sharia-compliant home and personal finance solutions.
Sri Lanka
Winner: Amana Bank
In just over four years, Amana Bank has successful established a strong foothold in the nascent Islamic banking and finance industry in Sri Lanka, as well as in the overall banking sector, with total bank assets standing at $335m at the end of 2015. In 2015 the bank saw its total sharia-compliant assets grow 37.2% year on year, after an increase of 49.1% in 2014. Net profits rose 297.6% in 2015, a four-fold increase on 2014 figures, while the bank’s Tier 1 capital growth was 13.9%.
On top of these impressive figures, Amana Bank has introduced more than 20 products since being incorporated in 2009, including an alternative to conventional pawning, solar financing, education financing and a variety of products to facilitate corporate and small and medium-sized enterprise (SME) banking requirements. As well as murabaha, musharaka and wakala Islamic financing products, the bank has also introduced ijarah and istisna products to finance working capital for businesses.
On the corporate and SME banking side, Amana Bank has been successful in expanding its Islamic banking portfolio through creating awareness of the benefits of Islamic banking and through dedicated relationship management. The bank has been involved in a number of landmark deals, including the financing of small hydro power plants and Sri Lanka’s first oceanic fish farm. These deals have helped reinforce the image of Islamic finance as a model of financial suitability for larger, more complex projects. The bank has set up a knowledge marketing arm, responsible for educating the general public on Islamic banking.
Amana Bank is planning to introduce treasury money market facilities for corporates, sukuk-based products for corporates and high-net-worth customers, as well as sharia-compliant alternative solutions for credit cards, overdrafts and bill discounting. The bank also plans to facilitate sukuk issuance by the Sri Lankan government.
Having commenced operations with 14 branches, Amana Bank now has 25 strategically located branches covering the regions with a demand for Islamic banking and finance solutions in Sri Lanka.
Turkey
Winner: Al Baraka Turk Participation Bank
The Banker’s 2014 winner for Turkish Islamic Bank of the Year, Al Baraka Turk Participation Bank, has once again snapped up the prize for the country. While Al Baraka Turk’s sharia-compliant assets grew by 4%, down from 22.68% in 2014 and 16.16% in 2013, the bank witnessed impressive growth in other areas. The number of new small and medium-sized enterprise clients grew by 30% over the period, to reach 54,731, while retail segment customer deposits increased by 18% and home financing increased by 43%. At the same time, the bank’s Tier 1 capital increased by 19.18%, up from an 8.59% increase in 2014. The bank still saw net profits of -2.8%, albeit up from the -4.1% seen in 2014.
In November 2015, Al Baraka Turk successfully completed the issuance of a subordinated Tier 2 sukuk worth $250m, listed on the Irish Stock Exchange, with a tenor of 10 years with a non-call for five years. The transaction represents the first Basel III-compliant Tier 2 sukuk issuance in Turkey. Al Baraka previously accessed the sukuk market in 2013 and 2014. The bank also successfully completed two syndicated murabaha (profit-loss sharing) facilities in April and September, the first time this has happened in the Turkish participation banking sector, which impressed the judges.
Al Baraka Turk is currently the leading participation bank in Turkey in terms of musharaka project finance. At the end of 2014 the bank had 12 musharaka projects, all of them in the construction sector. The bank earned Tl54m ($18.2m) in 2015 from these musharaka projects, down from Tl57m in 2014 and Tl63m in 2013.
Al Baraka Turk has also founded an Islamic private pension system company called Katılım Emeklilikve Hayat, in partnership with Kuveyt Türk Katılım Bankası, providing customers with sharia-compliant private pension services, a first for Turkey.
In 2015 the bank expanded its physical presence, opening 11 new branches to reach 213, including one in northern Iraq. The bank intends to open five to 10 new branches every year for the foreseeable future.
United Arab Emirates
Winner: Abu Dhabi Islamic Bank
The United Arab Emirates remains one of the most competitive markets in the Middle East for both conventional and sharia-compliant banking, which only proves the strength of Abu Dhabi Islamic Bank (ADIB), the winner of our Islamic Bank of the Year award for the UAE for the third year in a row.
ADIB posted a 10.5% increase in net profits in 2015 to $528m, while total sharia assets grew by 5.8% year on year to reach $32.3m. Return on equity hit 18.7% in 2015, a slight rise from 18.4% in 2014, while the non-performing loans ratio dropped to 3.9% in 2015, down from 6.5% in 2013. The bank’s strong financial performance reflects its continued robustness and adaptability to the economic situation and competitive environment in which it operates.
In 2015, ADIB served more than 875,000 active customers across multiple client segments, up more than 100,000 year on year. The bank continues to target the expat population in the UAE, which comprises both Muslims and non-Muslims, believing Islamic banking can have a universal appeal. It is no surprise then that consumers have voted ADIB the best bank for customer service in the UAE for the past five years. ADIB was also the main sponsor of the World Islamic Finance Forum held in Dubai in 2015.
ADIB raised $137m in new common equity capital through a rights issue of 168 million new ordinary shares in the third quarter of 2015, as part of its efforts to build capital levels to lay the foundation for its next growth cycle and the adoption of Basel III by the UAE central bank. Other landmark deals completed by ADIB in 2015 included a $300m syndicated finance package to support the construction of SKAI’s Viceroy Dubai Palm Jumeirah and Viceroy Dubai Jumeirah Village projects and a $913m senior unsecured 144A/RegS amortising sukuk for Emirates Airline US.
ADIB acquired Barclays’ UAE retail banking operations in 2014 and the judges believe that the expertise is likely to significantly complement ADIB’s existing strengths. ADIB was able to retain about 96% of Barclays’ portfolio after the acquisition went through.
