Second Islamic Retail Banking Conference concluded yesterday

The two-day event featured nine sessions and was attended by prominent personalities in the field of Islamic and traditional banking. Results of the Islamic Finance and Banking awards was announced yesterday. Dubai Islamic Bank won the Best Islamic Bank Award as well as the Best Islamic Retail Bank Award.

The Best Islamic Investment went to Gulf Finance House; Best Islamic Bank For Women to National Commercial Bank; Best New Mortgage Product to Alburaq; Best New Product to Al Tawfeek; Best Takaful Operator to Takaful Malaysia; Best Islamic Index Provider to Al Madar Finance & Investment; Lifetime Achievement Award to Sheikh Saleh Abdullah Kamel, Chairman of Dallah Al-Baraka group; Best Islamic Finance Advisory Firm to Ernst & Young Islamic Finance Services Group. A Special award was also given to Professor Rifaat Abdel Karim, Secretary General of the Islamic Financial Services Board (IFSB) for his contribution to the development of the Islamic finance industry.

Yavar Moini, Senior Manager, Islamic Structured Finance, Dubai Bank spoke about The Changing Face of Retail Banking - Challenges for Islamic Banking at the opening session. He said: "Retail penetration (credit and deposits) in the GCC is still well below international levels. Despite 48 banks, the industry has room to grow. Both retail credit and deposits are expected experience significant growth. Retail credit will experience larger growth with increased credit consumption by customers. Islamic retail banking will define the future success of the industry."

Ahmed Marafi from Al Madar spoke at the first session on promising opportunities in Kuwait and the market outlook. " Nominal GDP recorded a 22% growth during 2004 / 2005 reaching KD 18.6 billion. Non-Oil component of GDP grow by 4.8% during 2004 and 2005 and oil Revenues constituted 92% of total government revenues," he said.

Mr. Marafi added: "The market has tremendous opportunities for both conventional and Islamic players. About 18 new Islamic investment companies have been listed on the KSE, during 2005, and about 12 number of new Islamic funds have been established.

Mudaser Qidwai, Deputy Manager, Asset Management, Al Madar said: "The retail investment field has changed in Kuwait during the last three years. In 2002 Retail Sharia Compliant funds for Kuwaiti equities did not exist in Kuwait. Today we have five Sharia Complaint funds and three Pure Islamic Fund for Kuwaiti equities. Interestingly, majority of the new funds launched in the past few years have been either Sharia Compliant or pure Islamic. Majority of the Sharia Complaint funds use Almadar tools and services."

Sohail Zubairi, Vice President, Shariah Structuring Documentation & Product Development, Dubai Islamic Bank, spoke about "Asset Securitization for an Islamic Mortgage Provider". He said: " Due to its limited capital-base, prohibition under Sharia from borrowing conventionally and the limitation on accepting deposits from the public, the company soon finds itself having used up all its liquidity resources. The lack of liquidity may impact on the company's ability to function efficiently and profitably."

Mohammad Ali Sharif, Head of Islamic Banking, Maybank, spoke during the second session about "The Malaysian Retail Banking Experience, Malaysia's Islamic retail finance industry overview". He said: " Growth registered by the retail sector of Islamic banking was stronger than other sectors. This was attributed by house financing and in later part, car financing. Al-Ijarah Thumma Al Bai (AITAB) came out quite strongly with 23.6% . Recent IB growth has slowed down considerably due to ability of conventional banking to fight back and the low interest rate level."

Waheed Qaiser, UK Islamic Finance Practitioner, spoke during the third session on "Islamic Bank of Britain - first FSA regulated fully fledged Islamic bank - what products are currently been offered and Islamic retail clients look forward to in the UK". He said: "Many challenges face Islamic banking in the West including understanding by clients and regulators, tax issues, trained and skilled Islamic bankers, exchange of surplus liquidity, competition with conventional banks, and clear basic understanding of Islamic contracts."

Rehan Huda, CEO, Salaam Financial, Canada, spoke about "Islamic retail finance in Canada - towards a Canadian Islamic bank" at the fourth session. He explained: " Approximately 800,000 to 1 million Muslims in Canada. Ontario has the largest concentration of Muslims with estimates ranging from 440,000 to 690,000. A recent speech by Foreign Minister Pierre Pettigrew highlighted the following characteristics of Muslim population in Canada; Islam is second most popular and fastest growing faith in Canada; Canadian Muslims among best educated communities in Canada with over 20 percent having post secondary education and 1.5 percent with doctoral degrees; population of Muslims to double within next ten years."

The fifth session featured a presentation by Musadaq El Melik, Head of Islamic Banking, Qatar National Bank, on "Qatar- QNB Al Islami, catering for the demand for Islamic financial services in Qatar". Mr. El Melik explained: "The combination of the gas developments and the surge in oil prices has transformed Qatar's economic fortunes. The oil and gas sector continues to be the strongest performer with its 27.3% growth in 2004 pushing its value to $17.7bn, compared with $13.9bn in 2003. Oil is still a vital earner and production for 2004 rose by some 6.3% to an average of 759,000 barrels per day."

Najm-ul-Hassan, General Manager, Meezan Bank, spoke about "Pakistan - banking sector opportunities for Islamic financial institutions". He stressed that the market has recognized the importance of the Islamic banking sector. "It is no longer just a fractional niche business. Market demand has clearly indicated that Islamic banking can be a profitable area. Significant investment is being made in distribution, systems, and branding. Successful market share will be acquired by those who can meaningfully differentiate themselves and provide a range of products and services the way customers want them, when they want them, and where they want them."

During the sixth session, Anil Kumar, Director, Esquire's Systems, highlighted the Key issues for Islamic institutions in finding robust and Shariah compliant banking systems. " Technology is available to deliver truly Sharia compliant products, lower the cost of doing business, and acquire additional avenues of business. Banks need to adapt to newer Technology architectures to create a nimble Banking Enterprise. As well as, adapt to changes based on a customer orientated philosophy rather than just operational and automation imperatives. Banks should focus on the business of Banking making technology the underlying enabler," he said.

During the seventh session, Khairil Anwuar bin Mohd Noor, Emirates Islamic bank, said that Emirates Islamic Bank recently launched three innovative, worry-free and full-featured Islamic credit cards. " The challenges facing product development are product profitability, customer revolves at Maximum Limit, and system Availability," he said, noting that there are many marketing challenges facing the promotion of Islamic credit cards including the people's understanding of how credit card works.