1. Islamic Finance in Gulf Rehan Pathan Head of International Sales, NCB Capital 10 December 2011

2. Growth of Islamic finance since the 50s  The Experiments (50s and 60s) 1956 : Tabung Hajji (Malaysia) 1963 – 1967 : Mit Ghamr (Egypt) 1970: Organisation of Islamic Countries (OIC) 1973: Oil shocks and the increased price of oil 1974: Islamic Development Bank (IDB) and the Fiqh Academy 1975: Dubai Islamic Bank 1976: First International Conference on Islamic Economics 1979: Pakistan ‘islamicises’ economy ; Iranian Revolution

3. Growth of Islamic finance since the 50s  Changes in Global finance (80s) - Washington Consensus and the deregulation of the markets. - Significant changes in the financial markets - Islamic banks and products enter international markets - Corporate scandals (BCCI)  The Growth (90s – Present Day) - Fall of communism and greater Western influence in MENA - Recognition of Islamic finance by the West (Eddie George) - The success of Malaysia - The economic growth of the Middle East - The problem of terrorism

4. Recent growth of the Industry Strong growth in Islamic banking continues Global Islamic banking assets  The interest for Islamic finance continues to grow even in non-Islamic countries as reflected from the fact that there are over 300 Islamic financial institutions worldwide across 75 countries  Share of GCC: Shari’a compliant assets represent 26% of the total size of global Islamic financial assets  While Islamic banking assets have grown significantly in the past decade, their share of total global banking assets remains marginal  Sukuk Issuance: 17bn of the total issuance in first 9 months, 38% of the total issuance in the year. Corporate Sukuk accounted for 87% of the total issuance ($14.6bn) compared to 77% (44.6bn) in 2010. Source: CIBAFI, Central Bank of Iran, Central Bank of Sudan  Global Islamic banks assets have grown considerably from USD145 bn in 2002 to USD1,033bn in 2010  The global economic crisis negatively impacted the Islamic banking sector  After growing at double-digit pace for number of years, growth in Islamic banking assets slowed down to 9.8% in 2009 before accelerating again to 26% in 2010 CAGR – 28%

5. Sharia Compliant assets compared to total assets

6. Islamic finance assets in GCC: Total Banking Assets $bn Total Islamic banking asset $bn Percentage share of the total assets KSA377131.9535% Kuwait15548.0531% Bahrain4612.4227% Qatar15634.3222% UAE43874.4617% Oman4100% Total1213301.2

7. GCC Profitability; Decrease in Return on Equity & Return on Assets Higher provisions and operating costs have contributed to the steep decline in profitability of Islamic banks

8. Situation is not that bad: Islamic banks are able to generate higher financing margin because of their stronger retail focus Islamic banks in GCC continue to grow their deposit base

9. The biggest business risks faced by Islamic banks

10. Future growth & direction Islamic banking and finance industry is projected to be worth $658bn by 2015 compared to the current that is worth $301bn.

11. Islamic Asset Management – a compelling opportunity Value of GCC funds: $28.5bn, 110 fund management companies and manage 337 funds. The six biggest banks constitute about $10bn of these GCC funds.

12. Islamic Asset Management – room to grow

13. Final thoughts - Key messages for Turkey Today, participation banking assets account for 4% -5% of the total banking assets in Turkey Participation banking is expected to more than double its market share to 10% in the next decade. The Turkish National Assembly in February passed tax and other measures to facilitate the introduction of sukuk in Turkey The core Shari’a sensitive segment constitutes approximately 20% of the bankable Market

14. Thank you