Survivor of Financial Crisis Or Savior of Financial Crisis ? 4 th May 2011 Islamic Finance

First Islamic Bank established in Egypt Islamic Development Bank (IDB) established to foster the economic development and social progress of member countries and Muslim communities. IDB participates in equity capital and grant loans for projects in member countries Islamic Development Bank (IDB) established to foster the economic development and social progress of member countries and Muslim communities. IDB participates in equity capital and grant loans for projects in member countries Malaysia passes comprehensive legislation on Islamic Finance Fiqh Council of the OIC declares Takaful as fully Islamic paving the way for Islamic Insurance to flourish Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) established. The Institute acts as a nodal body advising on standards to be followed by Islamic institutions worldwide Dubai Islamic Bank established under special law pioneering Islamic Banking in the region Dubai Islamic Bank established under special law pioneering Islamic Banking in the region Islamic Financial Services Board (IFSB) established in Malaysia. The organization enhances stability of the industry by issuing standards IFSB introduces ‘Standards’ on Basel II compliance for Islamic institutions Total Islamic assets aggregate to USD 300 billion, growing at the rate of 10-15% over past 10 years Islamic assets expected to grow at 15% and exceed USD 1 trillion Evolution of Institutional Framework

1970’s Retail Banking Commercial Banking 1980’s Commercial Banking with extended coverage of products and services Project finance and syndications 1990’s Commercial Banking Project finance and syndications Equity Ijarah (leasing ) Investment banking 2000’s Commercial Banking Project finance and syndications Equity & Funds Ijarah (leasing) Sukuk (Bonds) Structured alternative assets Commercial Banking Project finance and syndications Equity & Funds Ijarah (leasing) Sukuk (Bonds) Structured alternative assets Liquidity management tools Over the years the complexity and innovation of products and services has increased Evolution of Products & Services

Segments Product Covered partly through conventional banksPotential GapsRemarks Private Banking Relationship Portfolio management Advisory Financing Wealth Management Islamic products and solutions High growth & profits Competitive Edge for Sharia compliant solutions Asset Management Real estate funds Distressed asset fund GCC equity funds Global equity funds Sharia’a liquidity funds Exotic equity fund Sukuk fund Commodity fund RE / REITs fund Hedge funds Portfolio management High growth Under served Low competition Private Equity Venture Cap. Fund P.E. funds Proprietary investments Family specific funds Venture capital Proprietary funds in specialized industry Growth financing Acquisitions Room for selective RE funds. Focus on buy-out & infrastructure funds Corporate Banking Corporate & Trade Finance & Advisory services Project financing Commercial Lending Mortgages Securitization Project & Debt Advisory High growth Under served Market Gaps – Potential Opportunities

Objective of Islamic banking is to be Sharia'a compliant Sharia'a concepts Fiqh al-Muamlaat Dealing with civic Matters Fiqh Al-Ibadat Dealing with religious matters such as Tauheed, prayer, Zakat, Hajj, Fasting Holy Quran - Holy book for the mankind Ijtehad Reasoning applied by Scholars Ijmaa Consensus of Ummah Sunnah Practices and sayings of Prophet (pbuh) Qiyas Analytical comparison Sharia'a derived from Component Of Sharia’a & Sharia’a Concepts

Has Islamic Finance been affected by the financial crisis? Part of Global Economic System – not immune to the recession Islamic Banking – provides stable growth Prudent risk management practices Real Assets - can get sick but will not die Risk sharing No Speculation or uncertainty Inflation control Unhurt by Toxic Assets? 1

Huge Opportunity for Islamic Finance Islamic Banking – provides stable growth Revival of centuries old system – faith based Helps control inflation Based on themes of community & ethical Banking Ethical and Socially Responsible Investments Socio-economic justice Filling - market gap 2

Cooperation between IFI & CFI Build a more robust global financial system Combining credit assessment and risk management disciplines Marrying up inherent strengths and stability of the Islamic banking model Build and strengthen the Islamic investment banking model Competitive and solid platform Islamic Instruments are more resilient Authorization of new Islamic Financial Institutions Tax reforms; changes in constitution and receptive approaches 3

Lessons provided by Islamic Finance Islamic finance products can enhance the financial system's stability Deal in real economy – Constructive trading activity Conservative Leverage No Greed and Exploitation Risk Management tools Investment Ethos Sound and systematic alternative banking system 4

Islamic Finance and Asia Asia was in better shape and less affected Corporate, trade and infrastructure financing Over 60% of the Muslim population from Asia Recession has been an eye opener Conventional sufferers are moving into IF model and they are roaring to take a slide in the more robust Asian markets IF provide immense opportunities in the CIS Kazakhstan has potential for a well capitalised wholesale bank 5

Challenges Transparency and Liquidity Immaturity of the sector and complexity size and shortage in skilled human capital lack in innovative products Contracts and documentation risk Sharia’a compliance throughout the lifecycle of the product Long termism – visionary approach Capacity building Liquidity management – supply side challenges Trade-ability of assets – secondary markets Governance Standards has to grow further Economic Dynamics 6

Waheed Qaiser Vice Chairman Maxim Corporate Finance LLP 55 Old Broad Street London United Kingdom EC2M 1RX Tel Thank you