Islamic Bank of the Year Awards 2015

This year’s Islamic Bank of the Year Awards offer another insight into a global industry that continues to go from strength to strength. With entries from a record-breaking number of countries, coupled with a significant increase in first-time entrants as well as newly established Islamic banks, the judges were encouraged by the visible growth of the market over the past 12 months. 

Some of this development is the result of regulatory changes, including in Oman, which recently enacted legislation permitting the development of Islamic finance. Elsewhere, however, surging demand for Islamic financial services has catalysed the birth of a new generation of Islamic banks and sharia-compliant windows. 

Amid this competitive field of entries, the judges looked for those lenders who not only exhibited excellent growth figures and a commitment to innovation but also to those banks that have helped to raise the profile of the industry, either through involvement in groundbreaking deals or in spreading sharia-compliant financial services to untapped markets. 

The judging process this year also took into account the fact that the Islamic finance industry has been shaped by a number of significant developments over the past 12 months, including sovereign sukuk issuances emerging from the UK, South Africa, Luxembourg and Hong Kong. 

These deals, and others, helped to increase the volume of hard currency transactions in the sukuk space, and were accompanied by the world’s first yen-denominated transaction emerging from the Bank of Tokyo Mitsubishi in Malaysia. 

A number of entrants in this year’s awards were involved in these industry-defining deals, demonstrating the growing sophistication, expertise and global reach of the industry’s key players. Yet, this year’s winners also reflect the stellar growth of Islamic banking in terms of profitability and asset growth. Data from The Banker’s latest Top Islamic Financial Institutions report shows a year-on-year increase in assets of 9.8%. 

Though Islamic banks face a number of challenges on the road ahead, including meeting Basel III requirements, it seems that the remainder of 2015 will see a continuation of a now familiar growth story.

Global, Asia-Pacific, Malaysia

Winner: Maybank Islamic 

Impressive results, a commitment to product and service innovation,successful regional and international growth and involvement in industry-shaping deals all ensured that Maybank Islamic scooped the global award for the second year in a row. As one of Malaysia’s national champions of Islamic finance, Maybank Islamic has continued to enjoy outstanding success in the home market while continuing to push further afield, particularly in south-east Asia. 

In 2014, Maybank Islamic grew its Tier 1 capital by 19% in ringgit terms, while sharia-compliant assets jumped by 17%. This performance was underscored by a 7% increase in net profits. Among Malaysian Islamic lenders, Maybank Islamic stood apart for its impressive return on equity, which hit 16.43%, as well as its non-performing loan ratio, which was a low 0.47% 

“Despite the continuous record growth in all our key headline numbers in earnings, profitability and our overall balance sheet, I am pleased that we have also achieved key milestone transactions such as the largest ringgit Basel III-compliant Tier-2 capital subordinated sukuk and other regional transactions,” says Muzaffar Hisham, chief executive of Maybank Islamic. 

Indeed, Maybank Islamic participated in some of the industry’s most notable banking and capital markets transactions in 2014. These include the Export Import Bank of Malaysia’s $1bn multi-currency sukuk programme in February, which was the first multi-currency issue by a Malaysian financial development institution. Moreover, in October 2014 the bank announced its participation as the underwriter for phase three of Battersea Power Station’s £200m ($315.6m) financing programme in the UK. 

In conjunction with its sister arm, Maybank Investment, Maybank Islamic holds about a 10% global market share in terms of sukuk arrangements. This is partly due to the bank’s size in the domestic market – Malaysia is the largest source of sukuk transactions globally – but also due to its presence in some of the fastest growing frontier markets for Islamic finance. Maybank Islamic has established itself in Singapore, Indonesia, Bahrain, Hong Kong and the UK, and is scaling up from a regional to a truly global player.

In particular, stellar growth figures emerged from Maybank Islamic’s Indonesian unit – Bank Internasional Indonesia Unit Usaha Syariah (BII UUS) – in 2014. Total assets, deposits and financing growth reached 31%, 70% and 34%, year on year, respectively. BII USS’s distribution centres reached nine standalone locations and 450 dual branches across the country, which translated into the bank crossing the Rp1000bn ($77.2bn) mark for sharia-compliant current accounts and savings accounts in 2014. 

Maybank Islamic also achieved notable success in Singapore. Islamic financing assets enjoyed growth of 11% in 2014 with the bank’s activities in the corporate space accounting for much of this. Maybank Islamic also introduced sharia-compliant trade facilities and foreign currency deposits, an industry first for the market, as well as business term financing options targeting small and medium-sized enterprises (SMEs) and the retail sector. This follows the earlier launch of sharia-compliant auto financing and home financing options and the introduction of a savings account dedicated to supporting clients’ pilgrimage duties. 

“Maybank Islamic’s main challenges have come from our continued ambition to transform from being a regional leader to a global leader in Islamic finance without losing our main focus of not just empowering businesses and creating wealth for our customers but at the same time contributing to the community,” says Mr Muzaffar. 

The bank’s new business offerings reflect this ambition. In January 2015, Maybank Islamic unveiled new custodial services in an effort to tap into the RM1.4m ($391,000) of assets under management that come from Malaysia’s leading institutional investors, fund managers, government-related entities and sovereign wealth funds. This comes as the sharia-compliant asset management industry experiences rapid growth globally and allows the bank to complete the asset-servicing cycle for its clients around the world. 

In the domestic market, Maybank Islamic has worked hard to introduce a number of new products and services for both retail and SME customers. On the retail side, the bank launched the Maybank Islamic MasterCard Ikhwan-I, which has an in-built charity fund, meaning that for every ringgit spent the bank will contribute 0.1% to charity. In addition, the roll out of Ezyinvest-i, a long-term investment plan suitable for retirement planning and saving for future generations, has enjoyed considerable take up. 

“Steadfast in our focus in enhancing value to our stakeholders and customers, humanising financial services will remain our bedrock principle. We want to sustain our leadership, continue to manage risks effectively, and give more focus to innovation, in line with the new Islamic Financial Services Act 2013 to differentiate us from others in terms of innovative structures,” says Mr Muzaffar. 

Sharia-compliant window of the year

Winner: FGB Siraj

This is the first year in which The Banker has provided an award for the best sharia-compliant window. It also emerged as one of the most competitive categories in the 2015 Islamic Bank of the Year Awards. With compelling entries coming from well-established entities to newer start-ups, the judges faced a difficult task in selecting a winner. In the end, the United Arab Emirates’ FGB Siraj scooped the prize.

In selecting FGB’s Islamic banking platform, known as Siraj, the judges were impressed by the bank’s involvement in a number of landmark deals, including various sukuk issuances, its diverse range of products and services and the success it has achieved in terms of growth and profitability in only its second year of conducting business. FGB Siraj achieved net profit growth of 177% in 2014, reaching $36m, while total sharia-compliant assets increased by 70% to hit $1.28bn. 

“Our main success has been our ability to establish a profitable and fully operational Islamic banking business within two years from inception. This can be measured by our strong growth in asset and revenue as well as our capability to execute complex sharia-compliant financing and lead debt market transactions globally. This is further evidenced by FGB moving up to number three Islamic mandated lead arranger position across the Europe, Middle East and Africa region in 2014, up from 21st previously,” says Shamzani Hussain, global head of Islamic banking at FGB. 

FGB Siraj has successfully rolled out a diverse range of products and services, including bilateral financing, global transaction services (GTS), debt markets and syndications, liquidity solutions and risk management solutions, among others. Under its GTS product suite, the bank covers trade financing, including sharia-compliant export financing, discounting and avalisation finance. This is particularly impressive, given that Islamic finance lacks a direct equivalent to conventional export financing and discounting. 

On top of this, FGB Siraj has played a role in some notable sukuk transactions both regionally and internationally. These include the bank’s involvement in two Islamic Development Bank sukuk issuances in 2014, where it acted as lead manager and bookrunner for the $1.5bn transactions. 

“FGB Siraj aims to become an industry leader by diversifying our revenue streams and introducing innovative sharia-compliant solutions. A global Islamic banking centre of excellence has been established to achieve this goal. While the UAE will continue to be our main market, we will be actively offering our sharia-compliant propositions through our seven international offices, with a particular focus on London and Singapore,” says Mr Hussain.

Middle East and Qatar

Winner: Qatar Islamic Bank

While Qatar’s banking market has enjoyed several years of impressive growth,it is nonetheless highly competitive. This is particularly true for the sharia-compliant sector, which, in line with other jurisdictions, has significantly outperformed its conventional banking peers. For these reasons, Qatar Islamic Bank’s (QIB’s) win for both the Middle East and Qatar categories is an appreciable achievement. 

The judges were impressed not only by QIB’s excellent growth figures but also by its substantial product and service suite and commitment to financial inclusion. QIB’s Tier 1 capital, sharia-compliant assets and net profits grew by 23%, 24% and 20% year on year, respectively, in 2014. Meanwhile, return on equity increased from 11.5% to 13.4% in 2014, while its cost-to-income ratio fell from 33.6% to 31.7% over the same period. 

“We increased business volumes across all business segments while at the same time improving efficiency within the group. Our corporate portfolio grew 29% year on year, while our personal portfolio grew 18% year on year. Both local and international associates and subsidiaries contributed positively to the growth rates posted by the group, allowing us to increase market share across all areas,” says Bassel Gamal, group chief executive of QIB. 

Over the past year, QIB has expanded its product and service offerings across its various business lines. In particular, a standout offering to small and medium-sized enterprises (SMEs), called ‘Amaly’, set the bank apart. Amaly acts as a one-stop shop banking package, providing SMEs with financing, current and savings accounts, trade services, cash flow management, credit and debit cards. The success of Amaly is demonstrated in QIB’s financing numbers for SMEs; over the past two years it has exceeded QR2.7bn ($741.7m). 

Outside of the domestic market, QIB has been strengthening its presence across the Middle East and beyond. Over the past two years, the bank has secured a 100% stake in QIB-UK London, full ownership of Arab Finance House in Lebanon, established QIB Sudan and raised its stake in Asian Finance Bank (Malaysia) to 60%. 

“The huge infrastructure investment projects that are taking place as part of the country’s 2030 vision will enable QIB... to finance and be part of the investment projects being implemented. Rising population is also expected to increase aggregate local consumption and demand for retail financial services. Within this climate, we will continue to primarily finance companies and projects contributing to the country’s development,” says Mr Gamal.

Brunei

Winner: Bank Islam Brunei Darrusalem

For the third year in a row,Bank Islam Brunei Darrusalem (BIBD) has scooped the country award for Brunei. Once again, the bank posted excellent growth figures both in terms of its assets and profitability. Sharia-compliant assets grew by 18.85% year on year in 2014, while net profits were up 15% in local currency terms and Tier 1 capital increased by 10%. BIBD’s return on equity, non-performing loans and cost-to-income ratio all remained steady, more or less matching previous years at 10.39%, 2% and 39.29%, respectively. 

BIBD has made a number of notable improvements and additions to its online and mobile banking platforms over the past 12 months. These include upgrades to the bank’s mobility and digital economy engagement programme designed to make online banking more attractive to both retail and small and medium-sized enterprise (SME) customers, and to secure additional incremental revenue for the bank from new mobile payment services. Among other innovations, BIBD customers can now make purchases with their smartphones and tablets at specific merchant outlets. 

In terms of electronic payments services, BIBD’s existing eTunai platform, designed to facilitate payments via QR codes and the bank’s mobile app, now has a new feature known as eBayar. Through this feature, the bank’s customers are able to purchase online goods through participating outlets with their BIBD Online or BIBD Mobile log-in details. This system also provides additional security, as customers must verify their acquisition either through BIBD Online or the eTunai security platforms.

The launch of BIBD’s Perdana banking platform, geared towards affluent customers, achieved considerable success in 2014, both in terms of new customer acquisitions and an increase in portfolio size. In addition, the bank offers a similarly targeted service to SMEs, known as the Tijarah platform, to cater to the needs of this growing market segment, which no other bank in the country offers.

The bank has maintained an active presence in the international Islamic debt markets. BIBD secured lead roles in a number of notable transactions, including the lead manager role in the $500m syndicated financing facility for the Ezdan Holding Group Qatar, and co-lead manager in the International Finance Facility of Immunisation $500m sukuk for the Global Vaccine Alliance. 

BIBD has also worked hard to augment its securities package to its customers. The bank added physical gold investments to its portfolio in addition to the trading of BIBD and foreign shares. The bank provides access to internationally listed securities traded at the Singapore and Kuala Lumpur stock exchanges. 

Iran

Winner: Bank Pasargad

Under difficult political and economic circumstances,Bank Pasargad has once again demonstrated its ability to achieve impressive financial results while maintaining a commitment to product and service development. The bank managed to grow its Tier 1 capital by 18.1% year on year in 2014, while total sharia-compliant assets increased by 26.3% and net profits rose by 18.3% over the same period. Most impressively, non-performing loans (NPLs) remained stable at 5.91% and return on equity hit 31.86%. This was achieved despite an array of pressing challenges in the domestic market.

“We were able to maintain a low NPL ratio despite a very challenging and difficult economic environment. This was achieved through the implementation of a rigorous risk management policy, the diversification of our loan portfolio, installing new cost control measures and better management,” says Majid Ghasemi, vice-chairman and chief executive of Bank Pasargad. 

In addition, Bank Pasargad has successfully launched a range of innovative new sharia-compliant products across its banking business lines. The bank’s premier private banking customers now have a home delivery banking service for their nominated premises, while the launch of a green deposit account allows retail customers to dedicate all or part of their generated profit to environmental causes. 

The successful performance of the Andishe Farda Mutual Investment Fund, guaranteed by Bank Pasargad with the purpose of aggregating investors’ funds and creating and managing an investment portfolio, also impressed the judges. The fund’s investments are made in securities, certificates of deposit, shares and share purchase rights. As such, it diversifies client risk more cost effectively and more efficiently that would otherwise be possible as an individual investor.

Looking ahead, Bank Pasargad is finalising a microfinancing plan in order to promote financial inclusion in Iran. Similarly, it is also prioritising lending to small and medium-sized enterprises to assist with job creation and self-employment. While much of the bank’s future growth will depend on the outcome of international talks on Iran, Bank Pasargad’s continued success in the domestic market points to a high degree of innovation and resilience. 

“Bank Pasargad had to maintain a sustainable growth while Iran’s gross domestic product plunged from approximately $480bn to $403bn,” says Mr Ghasemi.

Jordan

Winner: Jordan Islamic Bank

Jordan Islamic Bank’s (JIB’s) strong performance in 2014, coupled with its ongoing physical expansion, product and service development and participation in key domestic sharia-compliant deals, ensured that it once again secured the country award for Jordan. While net profits only showed a marginal increase of 0.1% year on year, sharia-compliant assets grew by 8.3%, while Tier 1 capital increased by an impressive 13%. 

These figures are all the more notable in light of the difficult operating environment experienced by Jordanian lenders in 2014. “Regional political turmoil, particularly in neighbouring Iraq, was a source of concern for the country’s banks last year. In addition, some local citizens were reluctant to establish new businesses or to expand their existing commercial activities, which resulted in fewer options for financing. Nevertheless, JIB continued to offer new products and services to cater to its retail clients,” says Musa Shihadeh, chief executive of JIB. 

At 16.79%, JIB enjoyed a strong return on equity in 2014, distinguishing itself as the leading lender among both conventional and Islamic banks by this metric. Moreover, the bank’s non-performing loan ratio fell from 4.35% in 2013 to 4.21% in 2014, one of the lowest in Jordan’s banking sector. 

In the final quarter of 2014, JIB introduced a substantial range of new sharia-compliant products and services to cater to Jordan’s growing Islamic finance marketplace. These include financing options for green and renewable energy projects, the financing of hybrid cars, a financing product for medical treatment and a new online payment portal that settles invoices from both the public and private sector. 

“JIB will continue to diversify, develop and improve the quality of its banking services. We also intend to introduce even more product and service options that satisfy the financial needs of our diverse client base. As part of our growth model, we want to expand programmes for small and medium-sized enterprise financing as well as to help address issues of poverty and unemployment in Jordan,” says Mr Shihadeh. 

Additionally, JIB has invested heavily in its physical expansion across the country. As of 2014, the bank had 84 branches and 153 ATMs, which are expected to increase to 96 branches and 166 ATMs by the end of 2015.

Kuwait

Winner: Ahli United Bank Kuwait

Building on its success in previous years,Ahli United Bank Kuwait (AUB Kuwait) once again clinched the award for Islamic Bank of the Year in Kuwait. The bank’s exemplary financial performance, which included a 10.7% increase in net profits in 2014, coupled with a 14.3% increase in sharia-compliant assets and a 13.9% increase in Tier 1 capital, was underscored by its status as the leading bank in the country based on return on equity and return on assets. AUB Kuwait’s return on equity in 2014 was 15.1%, signalling a marginal increase from the previous year. Moreover, the cost-to-income ratio was 32%, while non-performing loans stood at 2.9%

“Last year was a challenging year for the banking sector in Kuwait. However, with prudent yet profitable parameters, the bank has managed once again to show growth and achieved the highest key performance indicators in the sector, while improving the quality of our balance sheet,” says Richard Groves, chief executive of AUB Kuwait. 

In conjunction with this strong performance, the bank has also worked to enhance and expand its product and service offerings. In the retail sector, this includes the Hassad Islamic investment savings account, the only one in the country to offer a draw programme allowing customers to win weekly and quarterly prizes. In the private banking and wealth management space, AUB Kuwait has formalised a partnership agreement with a Knight Frank subsidiary, a premier real estate services provider, providing opportunities for the bank’s clients to invest in the UK. 

“The initiatives and development of new services and products at AUB Kuwait with new, up-to-date internet banking solutions, a utility bill payment facility and our new virtual and physical channels network, stood behind our success in meeting the latest market challenges. We also provided services and integrated solutions for our customers, enhancing the presence of the bank in retail, corporate and private banking, and treasury services,” says Mr Groves. 

In corporate banking, AUB Kuwait successfully launched its business-to-business cash management unit to offer a secure electronic banking solution to facilitate and streamline banking transactions through integration between the clients’ Enterprise Planning System and the bank’s system.

Meanwhile, the bank’s treasury division has introduced the unique Wa’ad (Promise) product, which allows customers to hedge against fluctuating foreign exchange rates in a fully sharia-compliant way.

Oman

Winner: Maisarah Islamic Banking Services

In late 2012, the Central Bank of Omanenacted the Islamic Banking Regulatory Framework, permitting the formation of a sharia-compliant finance sector in the country. Since then, a number of Islamic windows have opened in conjunction with two fully sharia-compliant lenders resulting in a competitive and fast-growing sharia-compliant banking sector. With most lenders, registering striking growth figures, the judges looked to entries that demonstrated a high degree of product and service innovation as well as strong activity in the country’s burgeoning sukuk market. 

Here, Maisarah Islamic Banking Services, the sharia-compliant window of BankDhofar, stood apart in a competitive category. Since its launch in 2013, Maisarah has witnessed year-on-year Tier 1 capital growth of 123.6%, asset growth of 283.4% and net profit increases of 110.5%. More impressively, the bank has generated a suite of 15 sharia-compliant investment and financing products and services geared towards individuals, corporates and government institutions. 

“Since launch of Maisarah by BankDhofar in March 2013, we set our vision to be the best Islamic banking services provider in the sultanate of Oman, and we have taken concrete steps in that direction. Our team of dedicated and highly qualified professionals provide a wide array of financial and banking solutions through innovative products and services,” says Sohail Niazi, chief Islamic banking officer at Maisarah. 

Maisarah’s success in Oman has translated into 5000 customers since its launch, in conjunction with $1bn in financing provided across its business segments. More notably, Maisarah has taken a leading role in the country’s major corporate banking deals, including acting as the joint lead manager for the first corporate sukuk in Oman by property development group Tilal Development. 

Significant progress has also been achieved with respect to product and service development. Maisarah offers a number of sharia-compliant trade finance functions and treasury products, as well as an award-winning corporate overdraft facility based around the principle of mudaraba. 

Maisarah’s retail operations are based out of three dedicated branches located in Muscat, Salalah and Sohar. In 2015, the bank plans to expand its presence across the country through the addition of seven new branches. This is in addition to a 24-hour call centre, cash deposit machines and ATMs located across the country. 

“As a part of our operational strategy, we have maintained high standards of corporate governance, research and development, corporate social responsibility and customer service that placed Maisarah at the top of the best Islamic banking service providers in the country,” says Mr Niazi.

Pakistan

Winner: Meezan Bank

Pakistan’s booming Islamic banking marketproduced a number of strong entries in this year’s awards. The winner, Meezan Bank, stood out through its impressive growth numbers, the strength of its small and medium-sized enterprise offering and successful acquisition and integration of HSBC’s Pakistan operations. 

In 2014, the bank increased its Tier 1 capital by 30%, while total sharia assets grew by 33% and net profit growth reached 15%. These growth rates broadly mirrored Meezan Bank’s performance over the past few years, as the lender has capitalised on surging demand in Pakistan. Meanwhile, the bank’s return on equity, cost-to-income ratio and non-performing loans, at 22.2%, 59.3% and 3.8%, respectively, more or less remained stable in 2014. 

In terms of innovation, Meezan Bank boasts an in-house product development and structuring team that works closely with clients to tailor sharia-compliant solutions to meet their financing needs. In 2014 alone, more than 1000 cases were structured and processed by the team. 

In May 2014, Meezan Bank agreed to acquire HSBC’s Pakistan operations in a transaction that falls in line with a wider sell off by foreign lenders to local players. The deal is expected to generate an extra $4.91m of annual profit for Meezan, while it has also provided the sharia-compliant lender with 75 new multinational clients. Meezan has already successfully converted HSBC’s conventional banking portfolio to a fully sharia-compliant structure. 

Meanwhile, in the investment banking space, Meezan Bank successfully syndicated 15 structured transactions involving hybrids of various sharia-compliant structures, including ijarah, diminishing musharakah and shirkat ul aqd, among others. The volume of deals executed in 2014 maintained Meezan’s position as the country’s leading Islamic investment bank. 

Meezan Bank’s corporate offerings continued to enjoy success through the running musharakah (profit-loss sharing) product. More than 48 blue-chip clients, including K-Electric, Millat Group, Clariant and Novatex, have opted for this structure to support their financing needs. By year-end 2014, the bank’s total running musharakah financing stood at Rs21.7bn ($213.2m), or roughly 13.8% of Meezan Bank’s total financing portfolio. 

In addition, the bank is working hard to improve financial inclusion across Pakistan. Looking ahead, Meezan is working on the development of a branchless banking solution for the country’s underbanked.

Saudi Arabia

Winner: Alinma Bank

Though Alinma Bank may be one of Saudi Arabia’s younger lenders– it was founded in 2006 – it has nonetheless emerged as one of the most innovative and dynamic fully sharia-compliant lenders in the country. This is particularly true for the bank’s growth numbers in 2014, with a 25.8% increase in net profits accompanied by a 28.3% rise in sharia-compliant assets. Tier 1 capital, meanwhile, grew by 6.6% over the period. 

“The objective indicators of our success are merely reflections of our unrelenting adherence to our vision, mission, values and identity. So, although we could point to many tangible accomplishments during the past year, our main achievement has been the more intangible success of being fully aligned with all of these fundamentals,” says Abdulmohsen Al-Fares, chief executive of Alinma Bank. 

The judges were impressed with Alinma Bank’s commitment to furthering the growth and harmonisation of the Islamic finance industry through the roll out of its Sukuk Screening Solution. Despite the rapid growth of Islamic finance, globally, the industry remains relatively fragmented. This is true with respect to regulation but also in the context of interpretations of sharia compliance. In the sukuk market, it can be difficult for specific transactions to secure unqualified, across-the-board acceptance from sharia scholars. 

In response to this dilemma, Alinma Bank has partnered with Ideal Ratings to produce a screening solution that enables potential investors to determine the compliance of a particular sukuk issuance. Through an easy-to-use design, investors are able to establish a transaction’s compliance against specific sharia standards, including the Malaysian Securities Commission and Organisation for Islamic Co-operation, among others. In total, the system can screen sukuk based on more than 150 different sharia standards, or even custom sharia guidelines set by the investor.

In the area of home financing, Alinma Bank signed an agreement with the Saudi Arabian Real Estate Development Fund (REDF) in May 2014 to provide an innovative sharia-compliant ‘bridge’ financing option for the bank’s customers. The arrangement extends the short-term nature of traditional bridge financing to cover the longer term requirements of real estate transactions. As such, it ‘bridges’ the difference between the financial support extended by REDF for home ownership and the full cost of the residence.

Turkey

Winner: Al Baraka Turk Participation Bank

Based on numbers alone, Al Baraka Turk Participation Bank enjoyed a successful year in 2014. Sharia-compliant assets grew by 22.68%, while Tier 1 capital increased 

by 8.59%. Non-performing loans continued on their downward trajectory, reaching 2.02% from 2.32% in 2013. The bank’s retail customer base grew by 156,401 over the period, while small and medium-sized enterprise clients increased by 30% to reach 48,000. Despite the bank’s net profits falling by -4.1%, it was nonetheless a positive performance. 

This performance was achieved despite the sometimes volatile nature of the Turkish economy last year. “In 2014, the main challenges faced by the bank were mostly related to the situation in the country, including a slowdown in economic activity [and] exports and volatility of exchange rates. Despite these challenges, we succeeded in maintaining our profitability and sustainable growth,” says Fahrettin Yasi, general manager of Al Baraka Turk Participation Bank. 

Yet, it was the bank’s activities in the sukuk market that distinguished it from the competition. In particular, the execution of a $350m sukuk al-wakala murabaha transaction with a tenor of five years was particularly notable. Not only was the transaction heavily oversubscribed, with $750m-worth of orders, it also secured a geographically diversified investor base of high-quality institutional investors and fund managers. 

Additionally, Al Barak Turk Participation Bank has emerged as Turkey’s leading lender in terms of musharaka (profit-loss sharing) project finance transactions. By the end of 2014, the bank was involved in 12 musharaka projects – all related to projects in the construction sector – and had earned Tl57m ($21.9m) from these activities. 

Maintaining its commitment to pioneering innovation, the bank also established an Islamic private pension system company called Katılım Emeklilik ve Hayat, in partnership with Kuveyt Türk Katılım Bankası. This company will provide customers of Al Barak Turk with access to sharia-compliant pension services, which is a first for the Turkish market. 

In conjunction with these services and product offerings, the bank also invested in its physical presence, opening up 35 new branches in 2014 alone. With the number of total branches at 202, the bank intends to open 10 to 15 new locations every year.

United Arab Emirates

Winner: Abu Dhabi Islamic Bank

For both conventional and sharia-compliant banking, few other markets in the Middle East region are as competitive or as dynamic as the United Arab Emirates. As such, Abu Dhabi Islamic Bank’s (ADIB’s) award for the best Islamic bank in the country for the second year in a row reflects the lender’s status as a key player in the Islamic finance marketplace domestically, regionally and internationally. 

ADIB impressed the judges on a number of fronts. Notably, it was a key player in some of the Islamic finance industry’s defining deals of 2014. These included its position as co-manager for the government of Hong Kong’s sovereign sukuk transaction, the joint lead manager for Goldman Sachs’ $500m sukuk, joint lead manager for Al Hilal’s Tier 1 perpetual sukuk, as well as its position as bookrunner and joint lead manager for the Emaar Malls Group sukuk, among many others. 

Moreover, the bank maintained its track record of achieving remarkable growth numbers. In 2014, net profits surged by 20.7% to reach $476m, while total sharia assets grew 8.5% year on year to hit $30bn. The bank’s net customer financing assets jumped by 18.2% in 2014, while deposits increased by 12.3% over the same period. 

The launch of ADIB’s mobile banking app in 2014 was another significant milestone in the lender’s development. The app allows customers to check their account balance, make local and international payments, check account and card statements, pay utility bills and apply for car, home and personal financing. 

ADIB’s ambitious plans in the wholesale banking sector also showed considerable signs of progress in 2014. With the intention of becoming the most profitable and professional wholesale bank in the UAE, ADIB saw its revenues grow by 26.7% in this sector, while assets and customer deposits soared by 20% and 34%, respectively. 

Finally, the bank’s acquisition of Barclays’ UAE retail banking operations in 2014 have resulted in an additional 110,000 customers joining ADIB’s retail division. In turn, this deal is expected to extend sharia-compliant banking options to a new range of expatriate customers, allowing the bank to serve this market segment more holistically. This is underpinned by ADIB’s network of 88 branches and 683 ATMs.