Euromoney Islamic finance awards 2014

Euromoney, February 2014

Chris Wright

Best Islamic Bank in Middle East, Best Islamic Bank in the UAE

WINNER: ADIB

A changing of the guard this year.

Abu Dhabi Islamic Bank is not the biggest Islamic bank in the region – a title still held by Saudi Arabia’s Al Rajhi, our long-time winner – but it deserves recognition this year for its strength, the clarity of its ambition, and its ability to bring innovation to Islamic finance without compromising its values.

It’s not as if ADIB is small: it ranks itself the fourth largest Islamic bank in the world, with total assets of AED96.4 billion ($26 billion). So it already has critical mass, particularly in the United Arab Emirates, where it reaches half a million retail customers through 80 branches. But it’s more the sense of direction that impresses. The bank has doubled its asset base within five years and has long since moved on from being purely an Abu Dhabi institution, with a growing presence in Egypt in particular (75 branches, through its ownership of National Development Bank Egypt) as well as Saudi Arabia, Sudan, Iraq, Qatar and the UK.

But expansion has not come at the expense of the key financial metrics: far from it. Net profits increased 20.4% year on year in the third quarter of 2013, while customers grew 14%. By then net profits had already topped AED1 billion for the year to date, with revenues close to AED3 billion. Capital adequacy as of September 30 was 17.12%, its advances to stable funds ratio was 79%, and customer deposits had grown by 14.7% year on year to AED70.2 billion.

ADIB also stands out for its impressive standing not just as an underwriter but an issuer in the Islamic capital markets. Last year’s Shariah-compliant hybrid tier one sukuk, one of Euromoney’s deals of the year, was a landmark: the first Islamic security of its type and the first publically issued perpetual and tier one instrument from the Gulf in any form. That US$1 billion non-call six-year deal achieved one of the lowest rates ever seen from an Islamic bank.

The innovation of that instrument is reflected across the bank, particularly in retail banking. Its ADIB Ghina savings program aims to promote a savings culture – albeit by automatically entering clients into a cash prize draw, which may not be everyone’s idea of prudent investment – and it offers capital protected notes on gold, silver and oil. There is a successful new children’s account, an innovative cash cover takaful service, co-branded debit and covered cards with Etihad Airways, new ideas in priority banking, and a Smart Money financial education campaign.

Finally, there are the deals. ADIB is turning up on more and more of the transactions that matter most in Islamic finance, including one of our deals of the year, an amortizing sukuk for Emirates, as well as other interesting transactions for GEMS (the first international corporate hybrid sukuk), Gulf Marine Services, the Investment Corporation of Dubai and, in project finance, the EMAL aluminium smelter project.

Best Islamic Bank in Asia, Best Islamic Bank in Malaysia

WINNER: CIMB

Malaysia’s CIMB has held a leadership position in Islamic finance in Asia for many years now, and is not about to relinquish it despite growing strength and sophistication among rivals like Maybank.

CIMB Islamic used to be known just for its investment banking capabilities, but it is an increasingly powerful consumer force too, serving 8 million customers in Malaysia and a growing presence elsewhere in Asean, chiefly Indonesia. It claims to offer the most Islamic consumer products in Malaysia and is certainly the most technologically-driven, targeting the increasing digital awareness of Malaysian customers with products such as the Plug n Play chip-based mobile POS solution, the ‘bank in a briefcase’ approval process, and a paperless system for the sale and approval of cards and personal loans.

Still, it’s the deals that make CIMB stand out, on a global as much as a local stage. During Euromoney’s award period it was on 24.1% of all Malaysian ringgit sukuk issuance, and handled 9.4% of all global sukuk, handling 141 global deals, more than anyone else worldwide. The capital markets strength is supplemented by a securitization and structured finance team, and one of the strongest project finance operations in the region.

Consequently, one finds CIMB on the biggest Islamic deals in the region as a matter of routine. In corporate banking, one would highlight the RM8 billion Islamic syndicated revolving credit facility to finance Malaysia’s mass rapid transit project, part of which is our project finance deal of the year; in Islamic equity capital markets, one could pick Air Asia X’s RM1.1 billion IPO, or the RM2.4 billion offering from UMW Oil & Gas, or another from Sona Petroleum; in debt, one could opt for the RM1.16 billion sukuk programme for Kimanis Power, or the RM3 billion programme for Telekom Malaysia, or the S$600 million exchangeable for Khazanah, also highlighted in our deals section below; and for sheer scale, nothing compares to the RM40 billion Islamic MTN programme for Cagamas.

CIMB is known for its innovation in Islamic structured products too, although the names border on the intimidating, from the Bearish Euro NID-i to the CIMB Islamic Flippable Range Accrual Structural Product-i.

Badlisyah Abdul Ghani and his team have tried to do all this within the right framework; theirs was the first Islamic bank in Malaysia (at least among the offshoots of the commercial banks) to establish a board and appoint an independent Shariah committee, or to undertake a Shariah audit. As ever, these practices in Malaysia will stand it in good stead as it continues to grow in Asean and the Middle East.

Best international Islamic bank

WINNER: STANDARD CHARTERED SAADIQ

Standard Chartered Saadiq retains its title as the best of the international houses in Islamic finance. Following HSBC’s decision to step back from much of its Islamic presence, Stanchart stands apart as the name with the broadest and most integrated operation worldwide, although Citi continues to be a formidable competitor and HSBC remains very strong in the businesses it has remained in.

Stanchart used to be outgunned in the Islamic capital markets, but today it leads syndicated Islamic finance league tables for Europe, the Middle East and Africa, and has raised US$88 billion of Islamic finance for clients since 2004. It is at or near the top of international sukuk league tables, depending on what dates you specify, and turns up on some of the most interesting and important deals. Examples over the last year have included our most innovative deal of the year, the S$600 million equity-linked exchangeable sukuk for Khazanah; and our sukuk of the year, the US$1 billion amortising sukuk for Emirates. Other interesting deals have included an Islamic structured warehouse finance solution for Saudi Arabia’s Al Bahra Cable Company, and a S$1.7 billion perpetual and callable sukuk for Almarai, the first corporate hybrid sukuk from the region.

Aside from the markets, Saadiq has a widely diversified product range. Structured finance, for example, is active in 15 different markets; other country operations have particular strength in wholesale banking or consumer, from cash and trade to mortgages and car loans. Across the board it is a strong risk management house, demonstrated by its Islamic commodity hedging product.

Where others are shrinking, this business is growing, launching Islamic banking in Kenya in 2013.

Best sukuk house

WINNNER: HSBC

Although it is no longer the multi-jurisdiction Islamic finance power it once was, HSBC remains the most successful player in international sukuk. During our period under review HSBC raised the greatest dollar amount of international sukuk, the most by far from the GCC, and the most Islamic bonds overall – $6.609 billion in 109 issues.

However, it’s not just volume that wins HSBC this award, but the quality and innovation of many of the transactions. HSBC was a lead manager on our deal of the year for Saudi Electricity, on the tier one sukuk we highlight in giving Abu Dhabi Islamic Bank the best bank in the Middle East award, and on the Almarai perpetual corporate hybrid that won our local currency award.

Other highlights have included a US$1 billion tier 1 capital sukuk from Dubai Islamic Bank, a dual tranche sukuk from Malaysia’s Sime Darby, a tier two sukuk from Bank Asya, a SAR15.2 billion issue for Saudi Arabia’s General Authority of Civil Aviation – the biggest single tranche sukuk ever issued – and a RM200 million sukuk from Al Bayan Group, the first Saudi issue in ringgit.

Bank capital and Saudi Arabian issues were the hallmark of the year, rather than sovereign deals; but the most recent landmark deals immediately before our review period, Indonesia and Turkey, both featured HSBC.  The bank also excels in cross-border sukuks.

Best Islamic project finance house

WINNER: HSBC

2013 was not a vintage year for project finance, with the vast majority of activity concentrated in just two countries: Malaysia and Saudi Arabia. HSBC, always a leader in project finance anyway, is particularly strong in those markets and was involved in most of the key transactions there.

Over the last 18 months, HSBC has brought eight Islamic project finance deals to financial close. Most involve Saudi petrochemicals: a US$840 million complex called SAMAPCO, using istisna, ijarah and commodity murabaha techniques; a US$1.3 billion refinancing for SEPC; a $3.2 billion expansion of the Kemya complex; a financing for another, Sadara, involving the largest ever project sukuk of US$2 billion; the first polysilicon manufacturing facility in Saudi Arabia, PTC; and a refinancing and expansion of International Diol Company. Also, at the time of writing, HSBC was mandated on three other continuing projects in Saudi: a phosphate project, another chemical project, and a power plant.

In Malaysia, HSBC was a lead arranger on Tenaga Nasional’s power project financing, and another for Teknologi Tenaga Perlis.

Best Islamic leasing house

WINNER: WAFRA

Wafra, a long-time winner of this award, continues to be a leader in Islamic leasing. A period of extraordinary growth in leasing fund assets and commitments, from US$19 million in 2005 to $1.7 billion in 2012, appeared to be plateauing in the middle of 2013, but part of the reason for that is the successful repayment of existing leasing funds. In the last 14 years Wafra has structured, implemented and managed 39 leasing funds and fully repaid 22; all have reached their conclusion not only without default but with the achievement of all targeted returns.

Today, Wafra says it is involved in the management of 17 equipment leasing funds with around $2 billion in capital on a Shariah compliant basis. These fall into two camps: ijara leasing funds, which target investment grade and comparable lessees; and structured leasing funds which target a combination of investment grade and higher yielding lessees. Yields on these funds have varied over the years from 5 to 9%, but always considerably above Treasuries.

Best Islamic assurance and advisory services

WINNER: ERNST & YOUNG

KPMG has won this award for many years given the strength of its relationships to the highest level in Islamic countries, banks and corporations, but this year we wanted to highlight the considerable contribution to the industry that has been made over many years by Ernst & Young’s benchmark research reports.

E&Y’s World Islamic Banking Competitiveness Report has become a closely-watched indicator both of the headline numbers around Islamic banking assets, and the more subtle indicators that matter more – profitability, return on equity, asset quality, governance and performance. There is a thirst for accurate data in Islamic finance, and the Ernst & Young reports generate trust and, consequently, widespread attribution. The reports go beyond provision of data by pointing out challenges the industry faces and ways to remedy them.

Similarly, its Global Takaful Insights report is the most widely cited research on that industry, bringing clarity to a corner of the system that badly needs it.

Naturally, Ernst & Young does the rest of advisory services to a high standard too, with an Islamic Financial Services Advisory team headquartered in Bahrain within the group’s Global Centre of Excellence.  It has close links with regulators across the Islamic financial world and an enviable client list.

Best Islamic legal adviser

WINNER: CLIFFORD CHANCE

No other law firm worldwide appears on a greater range of important Islamic deals than Clifford Chance, and no other firm is consulted by so many of the regulators and standard-setters whose decisions will shape the industry’s development.

Clifford Chance has dedicated Islamic finance teams in London, the Middle East and Asia, and this shows in the geographical range of transactions it appears upon. During our review period, for example, there were roles on the SAR9 billion credit facility for Saudi Arabia’s Ma’aden, the financing of an integrated acrylates complex in Saudi, and a SAR15.2 billion sukuk for Saudi’s General Authority of Civil Aviation; a trade finance deal for Viva Kuwait and a sukuk for the Republic of Turkey; a US$1 billion deal for Malaysia ExImBank; and a new Shariah-compliant trading platform for Emirates Islamic Bank.

The firm was also a key advisor on the development of the ISDA template, a vital measure to bring standardization to Islamic derivatives; is a lead counsel on several IIFM initiatives; and is representing both the Hong Kong FSA and the Auditing and Accounting Organization for Islamic Financial Institutions.

Best Islamic fund manager

WINNER: NCB Capital

NCB Capital’s Al Ahli fund range has long made it the biggest Islamic fund manager in the world, but this award has tended to go elsewhere because we have always felt it could do more – chiefly, by creating a mechanism for non-Saudis to access its funds.

Now, however, it has done so, becoming the first Saudi institution to establish a non-Saudi registered range of funds under the Undertakings for Collective Investment in Transferable Securities (UCITS) framework, registered in Ireland. In putting its first two funds on this new platform – a Saudi Arabian equity fund and a GCC equity fund – it has taken the first steps to making Saudi’s Islamic fund management industry, the biggest in the world, accessible to investors globally.

This is an important step. At the time of writing, the Saudi equity market had a market cap of US$373 billion, equivalent to half of the Gulf, and nine tenths of its turnover. But because of restrictions on investment, foreigners tend to have very little exposure to it. This has always seemed something of a waste, and not something that can last indefinitely; the NCB Capital move will be seen as a pivotal moment in years to come.

The new funds apart, NCB Capital remains a leader in Islamic management anyway, with SAR31.5 billion (US$8.4 billion) under management according to SAMA’s most recent data, including the world’s largest Shariah compliant fund, with around $4 billion in AUM.

Best structured products house

WINNER: Standard Chartered Saadiq

If you believe, in these supposedly reformed times, that a structured products award ought to go to a bank that excels in risk management tools rather than in ways of squeezing yield out of a heavily-structured conceit, then Standard Chartered Saadiq is the best candidate.

It is a leading house in the development of Shariah-compliant products, combining both its extensive geographical range – the structured products business operates in 15 markets, from the UK to the Gulf states, south and southeast Asia to Kenya and Turkey – and its long-standing product development strength.

As all the best institutions do, Saadiq has involved itself in new initiatives and frameworks at a regulatory level, working with the International Islamic Financial Market and ISDA on standardization of product standards. It offers a host of hedging products, including one dedicated to commodity hedging, as well as profit rate and currency swaps, alongside more mainstream FX products. It also offers yield enhancement products, a recent example being a capital protected product linked to a diversified portfolio index structure.

Best takaful house

IKHLAS

Takaful Ikhlas illustrates the professionalism commonly applied to this discipline in Malaysia. It’s not so much the institution’s scale – though its gross earned contribution of RM724.7 million during our year under review, and the 1.8 million individuals and corporations it serves through its 5,000-person distribution channels, are impressive – as its commitment to keep improving and amending and to try new things.

Initiatives in the last 12 months have included a tie-up with Malaysia’s National Heart Institute, a new group hospitalization and surgical product, three new investment products, new regional offices, a partnership with Kolej Al-Hikmah to conduct a takaful diploma programme, and a range of technological initiatives. Ikhlas offers 83 products in Malaysia.

There are early signs of cross-border expansion too. The firm’s marine cargo product is now sold to Malaysian interests in Singapore, India, Pakistan, Sri Lanka and Bangladesh.

Malaysia is one of only two markets in which takaful has critical mass, the other being Saudi Arabia, but the Saudi market is in flux following changes to the treatment of assets in Islamic insurers there. Malaysia once again finds itself in a position of leadership in an arm of Islamic finance.

Islamic finance deal of the year

WINNER: Saudi Electricity US$2 billion 10 and 30-year sukuk issuance (HSBC, Deutsche)

Several deals were worthy candidates for the overall award, but we have opted for one that united three key themes of the last 18 months: increasing tenor, deals from Saudi Arabia, and issues that are from neither sovereigns nor banks.

The two US$1 billion tranches, one of 10 years and one of 30, marked several firsts. This was the first ever 30-year international sukuk, and the largest international debt capital market issue from any Saudi entity. In both respects, it will provide benchmarks for other borrowers to follow.

Saudi Electric is 80% state-owned, but it isn’t the sovereign itself, so the pricing – just 150 basis points over 10-year Treasuries, and 195 bp over 30 years – was impressively tight. Even at these levels, demand was highly impressive, topping US$13 billion in the order book.

The deal was also striking for the range of places it sold to. There was a time when a deal like this would have gone only to the Middle East, but that region made up 49% of the 10-year deal and only 25% of the 30. Instead, Europe, Asia and the US bought heavily into both, with Europe the biggest overall buyer of the 30-year tranche. Both had a healthy split between fund mangers, supras and agencies, private banks and other banks.

The US participation was particularly eye-catching, since the structure is relatively new to that investor base; in opting for a 144a/Reg S format, the lead managers took a chance that American investors were ready for a deal like this, and they were proven correct.

Local currency deal of the year

WINNER: Almarai SAR1.7 billion perpetual corporate hybrid sukuk (HSBC, Standard Chartered, BNP Paribas, Saudi Fransi/Credit Agricole)

This was a year for innovation and scale out of Saudi Arabia, but the Almarai deal was more than just big. The SAR1.7 billion perpetual sukuk, callable in year 5, was a hybrid, the first of its kind from Saudi, and indeed from the MENA region in any currency. It was also the first corporate sukuk to be structured as equity eligible, and receives equity treatment under IFRS/SOCPA standards.

It came about because Almarai needed to raise Shariah-compliant funds without increasing its leverage ratio. It also wanted to diversify its investor base away from local banks. Doing it, through a combination of a mudaraba and a murabaha structure, required completing a deal despite there being no benchmark to price against.

The deal was successful, pricing roughly in line with any other five-year deal, tightening considerably during marketing, and selling to a wider range of investors than the issuer had previously reached, with government-related entities and asset managers comprising 51% of the book.

Best sukuk

WINNER: Emirates Reg S US$1 billion amortizing sukuk (Citi, ADIB)

Dubai’s airline has been busy in the capital markets over the last 12 months, following a US$750 million 144A/RegS amortizing bond in January with a US$1 billion 10-year Reg S senior unsecured sukuk in March.

It’s the amortizing bit that stands out: something that has never been attempted in a sukuk in the international markets before. At a more technical level, it is also the first ever wakala sukuk to be issued based on rights to travel and services relating to passenger routes. It works like this: Emirates sells rights and services to an SPV out of its total available capacity. The SPV then appoints Emirates as its service agent to sell passenger tickets corresponding to those rights to travel.

The deal was roadshowed globally, and eventually brought in 129 investor accounts for a three-time oversubscription. It priced during marketing and ended up yielding a profit rate of 3.875% a year, making economic funding even as the airline diversified its funding sources both by structure and geography.

Best project finance deal

WINNER: DanaInfra RM300 million exchange traded sukuk (CIMB sole advisor; books on sukuk are AmBank, CIMB, Maybank, RHB Capital)

DanaInfra is the fundraising vehicle behind Malaysia’s national infrastructure projects, owned by the Ministry of Finance. In particular, it is responsible for the funding of the mass rapid transit project in Malaysia’s Klang Valley, a key infrastructure initiative for the country.

The financing for a large part of that was a RM8 billion Islamic syndicated revolving credit facility, but it’s a particular part of the financing we reward here. DanaInfra launched a RM300 million 10-year exchange-traded sukuk, and in doing so created a whole new asset class for retail investors. They were issued in February alongside RM1.2 billon of sukuk for institutional investors in more traditional OTC form.

The process of getting the deal together, spearheaded by CIMB, was complicated. Since this was a new listed asset class, it involved Bursa Malaysia, the central bank and the Securities Commission, not just for regulatory approval but in order to create a whole framework for this and future similar issues. It also required a solicitation exercise to all existing DanaInfra sukuk holders in order to amend the terms of the Islamic commercial paper and MTN programme under which the new deal was launched. Investor education was required, and a grass-roots marketing campaign, while secondary market commitment was required after the launch. You wouldn’t say it flew out the door – the number of retail subscriptions ran into the thousands, not the tens of thousands – but the implications for infrastructure funding through retail are potentially considerable.

Best real estate deal

WINNER: Park Crescent West (Amiri Capital, Norton Rose, King & Spalding)

It was not a vintage year for Islamic real estate transactions, but this one in London was a good example of the way Islamic finance is becoming increasingly active in high-end UK property as Gulf institutions invest more and more in this market.

The transaction involved PCW Property, a private company created by alternative asset manager Amiri Capital, buying the Park Crescent West building in Regents Park from Great Capital Partnership. This is a high-prestige location: a grand crescent comprising commercial, court and residential property with a tenant list including the Royal Institute of British Architects and the Secretary of State for the Environment.

Part of the £105 million cost was funded through a Shariah-compliant financing from ABC International Bank, part of the Bahrain-based banking group. They will now redevelop their purchase into 170,000 square feet of floor space, including 80 luxury flats selling at £4-5 million apiece.

Gulf money finding its way into London luxury residential redevelopment is nothing new, but it is interesting to find Islamic financings becoming routine for these ventures.

Most innovative deal

WINNER: Khazanah S$600 million exchangeable sukuk into IHH (Deutsche, Standard Chartered, CIMB)

There were many things that rendered this deal innovative. While Khazanah has conducted exchangeables in the past, none looked quite like this: a Malaysian quasi-sovereign selling a Singapore dollar-denominated exchangeable into a Malaysia-listed healthcare company, with full Shariah compliance. On top of that, as well as being the first Sing-dollar exchangeable sukuk, it was the first to offer exposure to Asian healthcare, and the first exchangeable to be structured as a sukuk al wakalah with commodity murabaha investment.

Aside from the technical firsts, the deal was also very good for the issuer. It priced at a top-of-the-range exchange premium of 17%, and sold to 110 accounts in Asia and Europe, with a mixture of multi-strategy funds and long-only accounts represented. In fact, it was enormously popular, with the books covered within 40 minutes of launch and a 5.5 times oversubscription level after two and a half hours. The deal was the latest in several successful efforts by Khazanah to monetize their stakes in key holdings through exchangeables, and it would be no surprise to see more.

Best Islamic bank in Bahrain

WINNER: AL BARAKA

The Bahrain business is the heart and home base of the ever-growing Al Baraka Group which now covers 12 markets worldwide from Indonesia and Pakistan to Sudan, Turkey and South Africa.

Expansion suits it well. Net income of the Al Baraka Banking Group – the Bahrain-based institution – increased 16% in the first half of 2013 to US$140 million, while total assets, financing and deposits all increased steadily. All told, the global operation run out of Bahrain had 427 branches at the time of the last results announcement, with particular strength in Pakistan and Turkey. Total assets stood at US$19.5 billion at the end of June 2013, and total group deposits at US$16.4 billion.

Bahrain these days is a relatively insignificant part of overall group performance, reflecting its modest size, but Al Baraka is considered the strongest of the Islamic banks at home, offering a good service in retail, corporate, treasury and investment banking.

Kuwait

WINNER: KFH

KFH has had some difficult times in recent years, just like Kuwait itself, but a new strategy to revamp the bank is starting to bear fruit. In the nine months to September 30, every key metric moved in the right direction year on year: net profit up 17%, earnings per share up 12%, total assets up 10%, deposits 11%, and shareholder equity 31%.

These are the results of a strategy – developed with Booz & Company and implemented in 2011 – to lower expenses, maintain asset quality, improve returns through entering new markets, and cement KFH’s share in its subsidiaries. Along the way KFH has grown in retail and made a priority of taking part in government projects involving the private sector.  It has also increased its capital in order to finance expansion plans.

KFH was always big, and today has 295 branches worldwide. But it also has started to reappear on some interesting deals. Examples last year included US$500 million of ijara facilities for Sharjah Electricity and Water Authority to fund infrastructure projects, a financing for Bahrain’s Foulath Holding Company, a US$1.5 billion sukuk for the Turkish sovereign, and a project finance facility with Banader Hotels in Bahrain. At the retail level, KFH has also shown a focus on the little things: accepting investment deposits through Kuwaiti ATMs, launching a gold account, developing a video conferencing service centre in Turkey and upgrading services in Malaysia, Bahrain and Saudi Arabia. It is good to have this bank pointing in the right direction again.

Qatar

Qatar Islamic Bank

By far the biggest Islamic bank in Qatar, QIB’s QR73.2 billion of assets give it a 35% slice of the national Islamic sector and 9% of its overall banking market. Its 32 branches cover the whole peninsular. “QIB aims to be a bank of the people, for the people,” the bank’s rhetoric goes, and it certainly reaches them all.

2013 was a good year for the bank, with financing activities up 13.7% year on year in the third quarter, and customer deposits up 14.1% to QR 45.6 billion. Performance has been impressive across the board from wholesale and SME banking to personal, with particular improvement in mobile banking. New products over the last months have included structured treasury and payroll solution launches, travel and auto takaful, sukuk trading and debit cards.

It’s also at the heart of Qatari corporate life with a client list befitting its state ownership. In 2013 big murabaha financings were completed for Gulf Cement, Al Mana and Gulf Trading Company, and an ijara for Hama Ghanem Al Hudfi. As Qatar’s infrastructure development increases towards the World Cup, we can expect QIB to be closely involved in project financing too; in 2013 it provided QE952 million of a QR3.7 billion financing for the Qatar Railway’s Red Line North. This is a very good time to be a bank with infrastructure finance experience in Qatar.

Saudi

WINNER: Al Rajhi

The biggest Islamic bank in the world, with assets of SR273 billion (US$72 billion), Al Rajhi is clearly still the heavyweight in Saudi Arabia.

Aside from size, it is performing well too. By the half-year result in 2013, the bank had made SR4.174 billion in net profit year to date, with an 8% year on year increase in total shareholder’s equity to SR37.4 billion and a 15% increase in total assets. Deposits are growing faster still, with customer balances standing at S$224 billion, up 17% year on year, when last disclosed. Return on equity is an excellent 23%, earnings per share are growing, and the bank has been sufficiently happy with performance and provisions to pay healthy dividends.

It has managed this through characteristic prudence, lending heavily but wisely, and avoiding extravagant new business in favour of continuing to do well what it has always done well.

That said, its more daring Al Rajhi Capital business is an important part of the overall business, active in asset management (it was managing over US$6 billion of assets by September 30), brokerage, investment banking advisory and research. It has some of the top-ranked funds in the country, particularly in multi-asset and commodities; is a leader in real estate investment; and has a sophisticated fund-of-funds presence.

Indonesia

WINNER: Bank Syariah Mandiri

While nobody has quite yet made the best of the huge opportunity in Islamic finance in Indonesia, Bank Syariah Mandiri is the one closest to critical mass. It operates out of 796 offices in 33 Indonesian provinces, thanks to the might of its Mandiri parent; company literature said it employed more than 16,000 people by May 2013.

In March 2013, President Director Yuslam Fauzi said the bank aimed to increase its profit by 50% in the course of 2013, from Rp800 billion in 2012 to Rp1.2 trillion ($123.7 million); at the time of writing it was not yet clear if it had succeeded, but this is the sort of ambition one would expect given increasing individual wealth in Indonesia and its huge Muslim population.

UK

WINNER: BLME

Bank of London and the Middle East is the best of the Shariah institutions to have sprung up in London. Having received its FSA banking licence in 2007, it can now claim to be the biggest Islamic bank in Europe.

BLME has been structured sensibly with a diversified presence: corporate banking, treasury and wealth management, with both private banking and asset management offered. BLME is, ultimately, a play on London’s role as an Islamic financial centre, and on the interaction between the Middle East and Europe, and these are the business areas that will benefit from those themes.

By June 30, the bank’s total consolidated assets stood at £1.14 billion, a huge increase from £799 million the previous year. That increase in the balance sheet has come alongside a slide in profitability in a difficult market, with operating profit before impairment charges dropping year on year to just £2.47 million for the first six months of 2013, but it looks well placed for recovery and is still expanding, opening an office in Dubai during the year.

So far corporate banking appears to be the bank’s engine, but there is great potential for the other areas of the business to grow.

Rising star:

Winner: Boubyan

Boubyan Bank has tended to be overshadowed by its larger neighbour KFH, but it is increasingly demanding attention in its own right. Badly hit in the financial crisis, it was restructured in 2009 with NBK as a major shareholder, and since then has gone from strength to strength.

Today, Boubyan is four years into a five-year strategy devised under the new executive management that came in when the bank was restructured. It returned to profitability in 2012, and was able to distribute profits to long-suffering shareholders.

It managed this by returning to what it was good at: core banking. It galvanized retail and corporate services, boosted capital, and sought to make itself the bank of choice for affluent Kuwaitis (which is, one would imagine, most of them). Along the way, other areas of the business have gained traction, including asset management and brokerage, structured finance and syndication, and sukuk investments.

Next comes a new five-year plan to take the bank through to 2020, which will be characterized by further growth domestically and expansion overseas too. It will be interesting to watch its progress.