The Banker

🌍 The Islamic banking sector in 2024 reveals striking contrasts: Middle Eastern banks achieved an 11% asset growth, driven by Saudi Arabia and the UAE, while Asia-Pacific grew only 3% amid headwinds in Malaysia and Bangladesh. 📈 In The Banker’s Top Islamic Financial Institutions ranking, fully Islamic banks saw pre-tax profits rise by 16% on average, with Kuwait Finance House leading with a remarkable 55% growth. Meanwhile, Al Rajhi Bank maintained its position as the world’s largest Islamic lender, though faced slower growth in retail mortgages. 📊 Asia-Pacific’s resilience is evident, with Indonesia’s sharia-compliant assets rising 14% — the strongest growth among major markets — buoyed by Bank Syariah Indonesia and strategic government support for sector expansion. Read more here: https://lnkd.in/eMkgF46P

📈 The Dominican Republic’s banking sector is thriving, with a 2.5% return on tangible assets as of June 2024, the highest in central America. Moody’s credits robust consumer activity and disciplined capitalisation for this standout performance. 🌱 Growth areas like renewable energy and logistics are expanding, highlighting the sector’s adaptability. Banesco’s recent $10mn cross-border repo underscores this market sophistication, while climate-focused initiatives mark a push toward sustainability. ⚠️ However, challenges remain. Rising money laundering risks and climate-related vulnerabilities could strain asset quality over time. Backed by strong regulation and diversified lending, Dominican banks are poised to manage these risks while pursuing further growth. With comment from Susana Almeida Martínez, Daniel Baeza, Alexandria Valerio and Christopher Hernandez-Roy Read more here: https://lnkd.in/eH2_Xatk

🔍 Starting in November, European banks will face heightened interest rate risk reporting requirements from the European Banking Authority, aiming to manage the impact of rate volatility on lenders’ stability. 📊 The EBA will mandate standardised quarterly reporting for all EU banks on interest rate risk in the banking book, or IRRBB. This shift to more granular, product-level reporting challenges banks, especially smaller institutions, who may need to reconfigure systems to capture the required detail. ⚠️ For those with large floating-rate portfolios, such as banks in Cyprus, Sweden, Finland or Poland, staying aligned with these new standards is critical to avoiding added regulatory attention. Barbara Pianese spoke to Tim Breitenstein, Jeroen Van Doorsselaere, Andreas Bohn and Monsur Hussain Read more here: https://lnkd.in/euH5TMJA

🤖 North American banks continue to dominate AI talent acquisition, according to Evident’s latest AI Index, with JPMorgan, Capital One, Royal Bank of Canada and Wells Fargo leading. A 20% rise in AI hires across the top 50 global banks reflects the sector’s evolving focus on talent. 🧑💻 The index’s talent pillar — 45% of a bank’s AI maturity score — tracks AI expertise, density, and academic background of AI and data employees. In this year’s index, HSBC becomes the first UK bank to break into the top 10, with a 29% growth in AI talent. ⚡ As leading banks prioritise AI-specific implementation and model risk talent, Europe and Asia-Pacific institutions like HSBC, UBS and CommBank are emerging challengers. However, lagging banks face mounting pressures, as the talent gap could soon become insurmountable. Aliya Shibli spoke to Alexandra Mousavizadeh and Ian Glasner Read more here: https://lnkd.in/d565uEAX

📊 UK banks have delivered solid Q3 results, with Barclays, Lloyds, NatWest, and HSBC exceeding forecasts despite a complex interest rate environment. Strategic use of structural hedges helped offset rate cuts, maintaining net interest margin resilience. 📈 Notably, Barclays and NatWest raised profit forecasts, with Barclays’ £1.6bn in Q3 profits outperforming estimates. NatWest’s robust loan growth and interest margin expansion have analysts particularly bullish. ⚖️ Yet, other pressures loom large in the shape of a court ruling on “secret” commissions in motor finance, which could expose banks to substantial compensation costs. For this, Lloyds has set aside £450mn, while Close Brothers intends to take an appeal to the Supreme Court. With comment from Andrew Stimpson and others Read more here: https://lnkd.in/eRNGy_8b Sally H. reports

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📈 As private credit lending rises, smaller banks could face heightened credit risk compared to larger peers. A recent Moody’s survey reveals that banks loaned $525bn to private credit firms from 2021-2023, growing by 18% annually — outpacing total loan growth of 6%. 🌍 North American banks led this trend with a 23% increase, compared to 17% in Asia-Pacific and 12% in Europe. Smaller banks with weaker risk structures may be exposed, particularly those pursuing aggressive expansion in private credit. ⚠️ Moody’s warns that rapid growth in complex areas like private credit requires robust risk management. Banks with $100bn-$500bn in assets saw the fastest growth, but those with lower credit strength may face greater risk. With comment from Fadi Abdel Massih, CFA Read more here: https://lnkd.in/eThGS_tS Aliya Shibli reports

🌍 Banks are struggling to define concrete net zero transition plans, with concerns about greenwashing and accountability rising. While major players like Citi and HSBC have made strides, experts argue that most transition strategies remain vague or lack enforceable actions. 🌱 Environmental groups are critical of banks’ ongoing financing of high-emission industries like fossil fuels, even as they pledge to reach net zero by 2050. The debate centres on whether banks are genuinely driving a climate transition or simply managing short-term pressures. 🔍 As transition plans come under increasing regulatory scrutiny, investors and stakeholders are asking tough questions: Are banks aligning their actions with their targets? And what happens when clients fail to transition? 🔄 The path to net zero remains long and complex, but as regulators and investors demand greater transparency, banks face growing pressure to deliver credible, actionable plans. Anita Hawser and Elizabeth Meager spoke to Alex Lombos, Paul Schreiber, Andrew Harper, Leonard Ng, Dana Barsky, Simon Bishop, Rhian-Mari Thomas and Anne-Sophie Castelnau Read the full story here: https://lnkd.in/eubwgSBr

🌱 Finance leaders are pushing back on government demands for the private sector to drive the low-carbon transition, citing a lack of economic incentives. 💬 Hisham Ezz Al-Arab, chief executive of Egypt’s CIB, criticised the absence of guarantees to support banks’ role in financing the transition, warning that the private sector cannot be used to fulfil political agendas. ❓Cezary Stypułkowski, chief executive of Bank Pekao in Poland, echoed these concerns, questioning how banks can deliver returns while shouldering disproportionate responsibility. 💡 They argued that governments must rethink their policies to enable the financial sector to drive the investment needed for net zero. Anita Hawser reports from Washington DC Read more here: https://lnkd.in/emXPEDCT