Ernst & Young

EY: Islamic banking growth on the increase across globe

In a recent EY study, titled ‘World Islamic Banking Competitiveness Report 2016’, the firm explores the Islamic Banking landscape. The report is built up from an analysis of 69 participation banks (Islamic Banks) and 45 conventional banks, covering the markets of Bahrain, Qatar, Indonesia, Saudi Arabia, Malaysia, United Arab Emirates, Turkey, Kuwait and Pakistan. The report finds that the markets covered contain 93% of international participant banking industry assets, valued in excess of $920 billion in 2015. The largest part of that value stood in GCC (Gulf Cooperation Council) countries, at $606 billion, followed by ASEAN countries at around $159 billion. The increase in asset value has been impressive between 2010 and 2014, growing with a CAGR of 16%.

Islamic banking assets to reach $1 trillion milestone by end-2015

Global Islamic banking assets are expected to reach $1 trillion by the end of the year as Sharia-compliant financing increases market share in emerging markets, according to the consultancy firm EY. Sharia-compliant assets of commercial banks in Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey are set to exceed $801 billion in 2015, representing 80 per cent of international banking assets. Islamic banking assets are continuing to grow at a rate of 16 per cent per year and by 2020, the global Islamic banking industry profit pool is expected to reach $30.3bn, EY said. Islamic finance is especially picking up in the corporate world, where demand for sukuk has been on the rise in the Middle East in recent years.

Takaful grows faster than conventional insurance

Malaysia’s takaful industry grew at a faster rate than conventional insurance, recording a compound annual growth rate of 12.4% in the last five years and outperforming the conventional insurance’s CAGR of 7.8%. Malaysian Takaful Association chairman Ahmad Rizlan Azman said takaful contributions last year were RM6.3 billion, accounting for a 13% share of the total insurance market.
“With Malaysia’s low insurance penetration rate of 5.2% of gross domestic product (GDP) in 2014 and its young demographics, significant market growth opportunities are yet to be tapped by its insurance and takaful sector,” Ahmad Rizlan said at the launch of the Malaysian Takaful Dynamics report on the sidelines of the 11th World Islamic Economic Forum yesterday.
The jointly developed report by the Malaysian Takaful Association and Ernst & Young (EY) Malaysia is the country’s first central compendium on Islamic insurance.
Ahmad Rizlan said the low penetration rate of takaful in the country is due to a lack of awareness about takaful-related products as well as the issue of affordability, especially among low-income groups.

GCC Pension funds worth US$397 billion: EY

Across the GCC, public pension funds amount to US$397 billion, representing nearly a quarter of GDP and US$15,000 per national. This is according to EY's GCC Wealth and Asset Management 2015 report - "Fast growth, divergent paths". GCC Governments are relooking at existing models of both public and international pension funds to ensure they are sustainable. The size of GCC pension funds is relatively low, compared with employer-provided pension funds in the UK, for example, where these assets are larger than GDP and funds per individual are nearly four times the GCC average. There will be significant changes in the way GCC pension provision is looked at in the coming years because the current system may find it difficult to cope with the needs of GCC residents.

Saudi Arabia accounts for 77% of GCC takaful contribution

EY’s latest report, Global Takaful Insights 2014, forecasts a continued double-digit growth momentum of the global takaful market of approximately 14 percent from 2013 to 2016 and expects the industry to reach $20 billion by 2017. The Gulf Cooperation Council (GCC) countries and Association of Southeast Asian Nations (ASEAN) markets are likely to maintain their current growth path in the next five years, subject to their economic growth. Saudi Arabia will likely remain the core market of Islamic insurance business, commanding approximately half (48 percent) of the global contributions. With strong competition from conventional incumbents, takaful operators are likely to continue their struggle in the medium term, although some will look at alternative customer segments and explore merger options.

Growth of Islamic insurance sector rebounding

Growth of takaful business is rebounding, fuelled by improved economic conditions across its core markets and increased underwriting needs from the broader Islamic banking sector, a study by Ernst & Young showed. In previous years, inefficiency and intense competition have limited the sector's expansion, and growth rates slowed around the turn of the decade. But driven largely by Saudi Arabia and Malaysia, the sector is expected to grow 14.4 percent this year. Key drivers of the recent upward trend include improving economic conditions and a revitalised Islamic banking industry generating assets for takaful operators to underwrite. The sector will also benefit from an upswing in banking penetration rates across its core markets.

Turkey has great potential for Islamic insurance, report says

Turkey has significant potential in the sector of Islamic insurance, according to the Global Islamic Insurance Forecasts Report prepared by Ernst & Young (EY) for the period 2013-2014. The report also stressed that Turkey's high potential for Islamic insurance is based upon its young population, along with ongoing regulatory reforms and a government that is willing to promote financial inclusion through participation banking. However, as only four participation banks currently operate in Turkey, there is a major supply-side constraint, as well as limited legal infrastructure in the Islamic finance sector. Another factor negatively affecting Islamic insurance in Turkey is the problematic pricing of this insurance, which leads prices to remain relatively low in the sector.

Malaysia to lead Asean takaful industry, says E&Y report

Malaysia continues to take the lead in the Asean takaful industry with 71% share of gross takaful contributions, according to a report by Ernst & Young. Malaysia has a largely underinsured population with a low insurance penetration rate and strong government support for the Islamic finance sector. With a proven model and regulatory clarity, the country is set to further build on this leadership position. At present, Malaysia’s takaful sector derives nearly 78% of its net contributions from the family takaful business. However, globally the recent trends suggest an deceleration of the industry. Hence, expansion of the takaful industry is relatively slowing as firms struggle for scale and face growing competition, but the sector is still poised to sustain double-digit growth, said the report in its overall findings.

Takaful industry faces slower growth, unstable returns -study

Expansion of the takaful industry is slowing as firms struggle for scale and face growing competition, according to a report by Ernst & Young. Driven largely by Saudi Arabia and Malaysia, takaful globally is expected to grow by 16 percent annually in coming years compared to an average 22 percent rate between 2007 and 2011. But firms have expanded in narrow product segments such as auto insurance which are saturated by competitors, sparking price competition to gain market share. A shift from general insurance to more profitable life business remains unlikely in the Gulf because of comfortable government-funded safety nets. Geographical expansion is one way out, but this is difficult because of expensive regulatory requirements and the lack of a standard approach to sharia-compliance across the world.

Survey of Corporate Professionals Identifies Motivations and Benefits of Sustainability Reporting

The Boston College Center for Corporate Citizenship and Ernst & Young LLP have released a report – Value of Sustainability Reporting – that offers insights on the benefits of sustainability reporting, assuring sustainability reports, and the risks of not reporting. In today's business environment, sustainability reporting is evolving into a core business practice for companies around the world. Companies have reported a variety of motivations, including transparency, competitive advantage, risk management and stakeholder pressure. Moreover, the survey found that more than two-thirds of respondents indicated to employ the Global Reporting Initiative (GRI) framework in the preparation of their reports. Data-related issues were identified as challenges in the reporting process. The Value of Sustainability Reporting is based on the findings of a comprehensive survey of 579 corporate professionals familiar with their companies’ sustainability disclosures.

Ernst & Young signs pact on Sharia certification

Ernst & Young signed a working agreement with Accounting and Auditing Organization for Islamic Financial Institutions ( AAOIFI ) to assist in Sharia certification of Core Banking Systems (CBS) used by Islamic banks. On the back of this mandate, Ernst & Young is launching its new Advisory Solution, CBS Sharia Assessment, to assist international and regional technology firms. The certification programme will assess CBS services to ensure that they conform to the approved global Sharia and accounting standards.

MENA governments need to engage the private sector to help address the growing crisis of affordable housing: Ernst & Young

In a report titled "The growing crisis of affordable housing in MENA" Ernst & Young explain that the growing crisis of affordable housing can be fought if regional governments involve the private sector in the matter. Even though a number of countries in the MENA region have made commendable efforts, affordable housing is still far from enough and the demand is continuously rising. The government is not able to deal with the issue of supplying affordable housing on its own. That is why both supply-side and demand-side strategies should be used to mobilize the private sector and thus expand government resources.

Senior - Islamic Financial Services Group (IFSG)

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Executes the planning and management of assignments in an effective and efficient manner.
Ensures engagements are executed in accordance with the firm's methodologies, guidance and professional standards.
Reviews work on a timely basis and in a thorough and constructive manner.

Jersey poised to profit from forecast Islamic finance boom

According to Ernst & Young, the strong move Jersey Finance has made into the Gulf region will result in huge benefit to the company due to an expected significant rise in Islamic finance. Estimates predict a growth in sukuk demand from US$300 billion to US$900 billion by year 2017. The leading source of demand is said to be South East Asia and the Middle East. An increase of Jersey's involvement in the Arab world is possible through capitalisation on its strong links with the Arab states.

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IPOs decline 69.3% in Mena region, says report

Ernst & Young's year-end Mena IPO update stated that the regional capital markets have raised $843.9m in 2011, down 69.3% from $2.8bn in the previous year. It seems that the year has closed with IPO funds worth $226.1m raised in the fourth quarter, a decline of 83.5% from $1.4bn raised in the corresponding quarter a year earlier.

CMA to prepare rules for takaful insurance

Capital Market Authority (CMA) is developing a separate set of regulations for Sharia-compliant takaful insurance and Sukuk debt instruments.
Abdulla bin Salem Al Salmi, Acting Executive President of CMA, stated that the new regulations will be ready by the first quarter of next year. CBO, together with Ernst & Young, is currently defining a set of regulation, for Islamic banks.

Oman: Islamic bank rules by month-end: CBO

A new set of rules and regulations for Islamic banks will be ready until the end of this month.
Ernst & Young was appointed in September to advise the apex bank on formulating a separate set of rules for Islamic banking in the country.
Ernst & Young is analyzing aspects like fixing of lending limits, single borrower limit, writing of rule books, procedures for reporting structure for Islamic banks and formation of Sharia board.

Islamic finance assets to hit $1.1 trillion in 2012, says Ernst & Young

It is expected that Islamic finance assets around the world will climb 33 percent from their 2010 levels to 1.1 trillion US dollars by the end of 2012, boosted by the aftermath of the Arab Spring uprisings and dissatisfaction with conventional finance in the wake of the global debt crisis. The statement came from consultants from Ernst & Young.
Growth in the Middle East and North Africa will be particularly strong, with assets rising to a forseen $990 billion by 2015 from $416 billion in 2010, as new countries open up to Islamic finance.


The World Islamic Banking Competitiveness Report 2011/12, expanded in collaboration with Ernst & Young, will be officially launched on November 22 at a top Islamic banking forum in Bahrain.
The 18th annual World Islamic Banking Conference (WIBC 2011) will take place from November 21 to 23 at the Gulf Convention Centre.
More than 1,200 industry leaders from over 50 countries are forseen to cone at WIBC 2011.

E&Y to advise Oman cbank on Islamic banking rules

Ernst & Young was chosen to advise the Central Bank of Oman on formulating a separate set of rules and regulations for Islamic banking institutions. Ernst & Young Islamic banking professionals have already shown up in Muscat and started working on the project.

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