Data Analytics for Islamic Finance

Who Should Attend?


Duration: 4 Days

Since its modern inception in the 1970s, Islamic finance has emerged as one of the fastest growing segments of the global financial system. As the volume of the data continue to expand, the possibilities that this raw data materializes in the form of opportunities lean towards limitlessness. Organizations such as financial institutions must be vigilant of the prospects that such data can reveal and the extend of leverage that they can exercise to build insights for their consumers, products, and services. Data analytics have become the driving force for digital innovations and transformation of banks. With the explosion of the amount of data that has been generated in the last decade alone encompasses enough insights that empowers banks to predict the future behavior of its consumers with more reliability. Hence the current needs in this industry is analytical tools based on protocols and standards that synthesize strands of data to determine community needs.

  • Address production challenges:
    • Yield ramp-up
    • Waste reduction
    • Throughput optimization
  • Address analytical challenges:
    • Equipment and process complexity
    • Process dynamics
    • Data quality
  • Perform all common data preparations
  • Build sophisticated predictive models
  • Evaluate model quality with respect to different criteria
  • Deploy analytical predictive models
Part A: Financial Modelling for Islamic FIs
  1. Short Synopsis of the Business Models of Islamic FIs
    • Overview of the financial intermediation activities of Islamic FIs
    • Understanding the big picture
    • Balance sheet assets and funding sources
    • On balance sheet sources and applications of funds
    • Sukuk and their tie back to the balance sheets of Islamic FIs
    • What are the main differences with conventional banks?
  2. Brief Overview of Financial Products in Islamic FIs
    • Financing versus Investment
      • Murabaha
      • Ijara
      • Istisna
      • Mudharaba
      • Musharaka
      • Sukuk
      • Risk sharing versus “guaranteed” returns
      • Interest versus Profit
  3. Why Islamic Financial Modelling and What’s Different about Islamic FIs?
    • What is the purpose of financial modelling?
      • Pricing and Valuation
      • Risk measurement and management
    • What is the lifecycle of a financial model?
    • Financial modelling in an Islamic banking context
      • Opportunity cost of capital >> Time Value of Money
      • Net Present Value
      • Internal Rate of return
    • How to quantify uncertainty in the timing and amounts of cash cows
Part B: Financial Modelling in Islamic Commercial Banks
  1. Financial Modelling of Islamic Banking Funding Sources
    • Current and Savings Accounts
    • Profit Sharing Investment Accounts
      • Profit distribution methodologies
        • Weighted Average Return
        • Profit Sharing Ratio Method
      • Displaced commercial risk:
        • What is DCR and how does it arise?
        • How to quantify DCR: Example of repricing risk
      • Risk-based pricing of Sukuk with repurchase undertaking
  2. Financial Modelling of Islamic Banking Assets
    • Islamic working capital financing
    • Islamic Mortgage Products
      • Musharaka
    • Istisna and Project Finance
      • Construction period financial modelling
      • Repayment period financial modeling
      • Ijarah Muntaheea Bittamleek
      • Diminishing
  3. Financial Modelling of Embedded Options in Islamic Banking Products
    • Which Islamic financial products have embedded options?
    • The difference between Structural and Behavioral modelling
    • How can embedded options be financially modelled?
    • Financial modelling in an Islamic banking context
      • Receivables: Prepayment Option
      • PSIAs: Early Withdrawal Option
    • Can Islamic FIs have a different return benchmark to conventional banks?
Part C: Financial Modelling in Islamic Investment Banks
  1. Investment in Private Equity
    • Valuation approaches: DCF versus Multiples
    • Challenges in each approach
    • Calculating Risk in Private Equity • Which risk drivers do we need to capture? • Which output indicators are most useful? • How do we calculate risk?
  2. Investment in Cash-cow Generating Real Estate
    • Application of the Gordon growth model to value income generating real estate
    • How to go from real estate valuation to real estate risk?
  3. Investment in Development Real Estate
    • What is the modelling difference between income generating and development real estate?
    • Building out the base case financial projection
    • Which risk drivers do we need to include to calculate risk

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