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The 4 th Biennial International – Business, Banking and Finance Conference

Islamic Retail Banking: The foundation of the Islamic Finance Industry Sultan Choudhury Managing Director Islamic Bank of Britain 24 th June 2011. The 4 th Biennial International – Business, Banking and Finance Conference. Trinidad and Tobago. Agenda.

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The 4 th Biennial International – Business, Banking and Finance Conference

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  1. Islamic Retail Banking: The foundation of the Islamic Finance IndustrySultan ChoudhuryManaging DirectorIslamic Bank of Britain24th June 2011 The 4th Biennial International – Business, Banking and Finance Conference Trinidad and Tobago

  2. Agenda • Why Islamic retail banking is important? • International experience • Factors for growth • SME product solutions • Future developments The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  3. Why Islamic retail banking is important? Retail banking SME / business banking Balance sheet • Productive economic factors: • Labour • Assets Deposits Debt financing Ijara, Murabaha, Salam Liabilities Assets Suppliers of capital Investments Equity financing • Capital • Entrepreneur Mudaraba and Musharaka Profit & loss The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  4. Development Bank: largest pan-OIC financial institutionIndustry Where do you want to be in a growing international market? • Critical mass • Retail customers driving force • Malaysia, GCC – Saudi Arabia, UAE, Bahrain Mainstream Niche • Expanding market • Industry, regulators and customers engaged • UK, Turkey, Pakistan, Indonesia Engaging with regulators • Working groups • Reviewing framework • France, India, West Indies Conceptual • Understanding concepts and impact • China, Central Asia, Australia The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  5. UK is the most mature Western market • Legislative and • regulatory • changes • New entrants 5 standalone Islamic banks • IBB • 50,531 • customers • £188m • deposits • £55m • financing 22 banks Islamic financial services 2011 2000s £1.6bn savings market £3.2bn home finance market The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  6. Converging factors for the growth of Islamic finance Customer demand Economic opportunities Legislation Regulation Capital Harmonisation of standards The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  7. Solutions for SMEs The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  8. Case study – Cab Safe Security • Start up business • Security screens • £25K working capital Murabaha Broker Customer’s Agent £ £ Sell commodity Sell commodity Deferred payment £ IBB Customer Sell commodity The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  9. IBB Case study – Sparkbrook Pharmacy Diminishing Musharaka with Ijara Stage 3 Bank grants the customer the right to occupy its share in the property Identifies the property & agrees the purchase price Bank purchases 80% share in the property Stage 1 Stage 2 Customer purchases 20% share in the property Customer PROFITS Generated through rent payments Stage 4 Customer pays monthly payment over the term of the finance [consists of two parts: Rent payments (variable) + Acquisition payment (fixed)] The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  10. Huge potential for growth • Funds • Estate • planning • Pensions • Long term • savings • Packaged • accounts • Investments Wealth Management • Working • capital • Leasing • Equity based SMEs Retail Islamic Finance Inter bank markets • Sovereign • Corporate • Trading Sukuk • Liquidity • Hedging • FX Education and awareness of consumers, regulators and industry The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

  11. Thank you The 4th Biennial International - Business, Banking and Finance Conference Trinidad and Tobago

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