turkey islamic finance report 2014: fundamentals and the promise of growth
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Thomson Reuters, Islamic Research and Training Institute (IRTI), General Council for Islamic Banks and Financial Institutions (CIBAFI), bring you the Turkey Islamic Finance Report, which provides substantive due diligence on the opportunities for Islamic financial services in the republic. To download your complimentary copy http://www.zawya.com/middle-east/landinglead/turkey/TRANSCRIPT
Turkey today has very limited local participation banking activity — the country is home to four participation banks representing approximately 5.1% of total financial assets. However, growth within the participation banking sector outpaced the conventional financial sector in 2012, with the former increasing its assets by 25% as opposed to the latter’s 13%.
FUNDAMENTALS AND THE PROMISE OF GROWTH
TURKEY PARTICIPATION FINANCE REPORT 2014:
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SUBSCRIBE TO THE ISLAMIC FINANCE GATEWAY COMMUNITY:online.thomsonreuters.com/ifg
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THE REPORT INCLUDES:
• Political environment
• Macro-economic Environment
• Financial Market Landscape and trends
• Participation Finance demand and potential
• Participation Investment scenarios
It gives you the overall economic and financial due diligence you need to broadly navigate investment directions. More significantly, unique to this report is an assessment of the participation finance potential in Turkey. This assessment is based on three key studies:
1. National survey with a focus on retail participation finance
2. Interviews with nine industry stakeholders
3. Data analysis of Turkey’s participation finance sector
A MEMBER OF
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STRATEGIC PARTNER
Our estimation is that the market share for participation banks will reach 15% in 2023, and this is in line with the govern-ment’s estimation.— Participation Banks Association of Turkey
SWOT Analysis Strengths: Weakness:
• Turkish banks are well-capitalized post 2000/2001
• Well-established monetary policy
• Enhanced banking regu-lations and supervision
• Banking supervi-sion needs further improvement
• National savingis considered tobe low
Opportunities: Threats:
• Relatively unbanked market
• Strong demand for SME sector financing
• Banking sectoris vulnerable toshocks from theEU
• Political instability• Recent deprecia-
tion of Turkish Lira
DEMAND AND POTENTIAL
• 4 participation banks, 5.1% market share• 2 more participation banks soon to be opened• Sector assets expected to triple within next
5 years
INVESTMENT SCENARIOS
Participation Investment consideration and key challenges:Opportunities:• Sukuk issuance maturity expected• Retail banking market set to expand• Domestic halal food and tourism sector
opportunities• Under-penetrated takaful sector opportunities• Nascent Islamic funds sector
Challenges:• Big gap in educating consumers about
participation finance• Existing socio-political climate could
affect rapid improvements in regulatoryenvironment
• Can the sector stimulate demand anddeepen offering?
Key insights from the survey concluded four main points:• Strong SME customer base but low 18-24 age
group customer base• A retail banking environment full of
opportunities• Major interest in participation banking with
key expectation around adherence to Islamicrules
• Target audience seeking better education onparticipation banking
MACRO-ECONOMIC
FUNDAMENTALS
The report summary Findings:• Strategic location• Learning from crises• Knocking on EU’s door• Impressive GDP growth• Diverse economy
Transport,Storage and
communication14.9% Wholesale and
Retail Trade12.6%
Agriculture, Hunting and
Forestry 14.3%
Manufacturing15.7%
Hotels and Restaurants 3.7%
Construction4.4%
Electricity,Gas andWater2.4%
Fishing0.1%
Mining and Quarrying1.9%
Other services 1.7%Health and Social Work 1.5%
Education 3.3%Public Administration andDefense; CompulsorySocial Security 4.5%
Real Estate3.9%
Ownership &Dwelling
10.0%
FinancialIntermediation5.0%
Source: Central Bank of Turkey – EDDS
DiverseEconomy—2012Q3—%ofGDPBYBRANCHOFECONOMICACTIVITY
FINANCIAL MARKETS
LANDSCAPE AND TRENDS
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