Against this backdrop, FX services have been gaining ground on companies’ balance sheets over the past few years, currently driving an average 50% of corporate value allocation, according to recent research by the market structure and technology research team at Coalition Greenwich.

FX trading volumes have been on a consistent uptrend since the pandemic, hitting a daily record of over $7.5 trillion this year, according to J.P. Morgan. Now, Market Data Forecast projects a 7.14% yearly compounded growth rate into 2032 for the global FX market.

The evolving scenario has prompted banks to rethink the status of their FX divisions, positioning them not just as an ancillary part of the corporate banking operation but as a core component of the overall strategy. On the clients’ side, the trend has significantly increased the demand for tailor-made FX offerings that cater to a client’s unique geographical reach and risk-exposure needs.

“Banks are creating personalized solutions like customized currency hedges or swaps. These tailored strategies help businesses manage currency risks in ways that suit their specific needs,” explains Swapnil Shinde, CEO and co-founder of Zeni, a corporate bookkeeping platform powered by artificial intelligence (AI).

“We also attribute this changing scenario to our corporate clients having a better understanding of the markets, thus managing foreign exchange and interest rate exposures over the short, medium, and long term with greater sophistication,” says Francisco Fernández Silva, managing director and head of the FX sales desk at Chile’s Banco de Credito e Inversiones (BCI).

With sophisticated demand from treasurers and CFOs growing and increased competition from peers, banks have been racing to deploy technological solutions that promise to bring better results and lower operational costs.

“The corporate FX market is undergoing a transformation driven by technological advancements that enhance efficiency, improve risk management, and democratize access for businesses of all sizes,” says Luis Martins, head of Global Macro at BBVA. “As companies increasingly adopt these innovations, they stand to gain a competitive edge in managing their foreign exchange activities effectively.”

However, the market’s most significant shift has occurred at the FX sales desk. Tools such as algorithms and machine learning models have been helping to automate the FX hedging process and other often-complex and highly volatile activities, bringing more-stable results.

BCI’s Fernández Silva also highlights the importance of AI in this revolution. “Breaking technologies, including artificial intelligence, are redefining offerings in the foreign exchange market by incorporating new participants, reducing information asymmetries, and increasing competitiveness,” he says.

Daisy-May Andrew, in interest rates and FX corporate rates sales at BNP Paribas, wrote in a company blog post that, in the current environment, companies must bulk up their currency hedging game with better, faster, automated solutions. “With the right automation tools in place, clients can add systematic hedging checks, which should, in theory, be able to search for the same red flags that one would do manually, albeit without the added concern of human error.”

According to recent research by FX-as-a-service provider MillTechFX, 86% of North American corporations planned to increase their FX hedging activity before the US presidential election, despite 73% noting increased hedging costs. This was due to concern about increased market volatility, among other factors.

Despite the significant numbers, Stephen Bruel, senior analyst at Coalition Greenwich, notes there’s still much ground to gain in FX trading. “Corporates should be encouraging their desks to adopt more advanced tools; the more electronic the trading, the better the data available to analyze execution quality and optimize results,” he added in a prepared statement.

High currency volatility is not alone in preying on corporates’ minds; Russian sanctions, the unwinding of the yen carry trade after 30 years of negative interest rates in Japan, the rise of the Chinese renminbi as an alternative reserve to the dollar, and the growth in alternative investments such as cryptocurrencies also play a role. These concerns have forced the market to increase its focus on currencies other than those of the Group of Five (G5) on the liquidity and product sides.

“Banks have adjusted their product range, offering solutions that include the opening of cash accounts and increased agility in global transactions services,” explains BCI’s Fernández Silva. “In some cases, having the opportunity to trade in different currencies gives clients the chance to realize cost advantages.”

In an October report, J.P. Morgan notes that the advancement of current trade-liberalization efforts across emerging markets, an increase in intranational trading driven by rising domestic customer demand, and these economies’ growing service focus are driving a decline in the proportion of FX reserves held in US dollars.

The trend is more pronounced in commodity markets, where the disruption in energy trade and the People’s Bank of China’s gold-buying spree—which resumed in November after a six-month pause—have prompted a significant change to currency reserves.

Such is the importance of the topic that US President-elect Donald Trump in November threatened to impose a 100% tariff on the nine BRICS countries should they “create a new BRICS currency, nor back any other currency to replace the mighty US dollar.”

Despite the warning signs, J.P. Morgan analysts do not see “de-dollarization” as an imminent threat, but as an important factor for corporations and banks to consider in particular business areas.

“FX reserves offer an incomplete picture of foreign asset accumulation. The rise in EM [emerging market] dollar-denominated bank deposits, sovereign wealth funds, and private foreign assets more than offsets the decline in overall dollar share of EM FX reserves,” says Saad Siddiqui, EM fixed-income strategist at J.P. Morgan, as quoted in the October report.

Zeni’s Shinde agrees that opportunities abound for the non-G5 currency market but notes that corporates and banks should be aware of the risks associated. “Businesses are looking at currencies beyond the traditional G5 to spread their risks. Still, they need to consider factors like stability and ease of trading before using them.”

Along with the myriad technological tools hitting the FX market over the past few years, leading banks have also been investing heavily in improving their research and advisory teams.

Against an FX market driven by central bank decisions and carry trade due to the global pivot to lower interest rates, these teams proved particularly important to corporate customers looking to stay one step ahead of the market.

In keeping with this trend, banks have been digging deep into their pockets to hire new talent. Recently, Citi, Deutsche Bank, Barclays, ING, Nomura, and Saxo Bank, and others, have made strategic additions to their FX departments.

BCI’s Fernández Silva explains the importance of balancing technology with first-class human talent: “In a landscape where central bank decisions and carry trade play a central role in global foreign exchange markets, financial institutions can offer unique value to their corporate clients through analysis of rate movements, economic variables, and exchange rate impacts, thus helping them capture value from carry trade and interest rate movements.”

BBVA’s Martins also highlights the key role of relationship management with clients and dealers. “Being able to offer best-in-class services in today’s foreign exchange markets requires a combination of strong relationships with clients and other dealers, along with top-level technology and data management,” he concludes.

—Thomas Monteiro

Global Finance selects its award winners based on objective factors such as transaction volume, market share, breadth of offerings, and global coverage, as detailed in public company documents and media reports.

Our criteria include subjective factors such as reputation, thought leadership, customer service, and technological innovation. We use input from industry analysts, surveys, corporate executives, and others. Although entries are not required in order to win, submissions that provide additional insight may inform decision-making.

Upon completing its megamerger with failing Credit Suisse in May 2024, Swiss banking giant UBS leveraged its already best-in-class corporate banking and foreign exchange (FX) capabilities and product offerings for a record-breaking year on several counts. Not only did the bank’s global operation more than double analysts’ expectations in the third quarter of 2024, booking a massive $1.4 billion in net income, but it did so with significant gains from its corporate banking division, which saw revenue jump by more than 8% year over year (YoY).

Those numbers received a massive boost from UBS’s thriving FX operation, which averaged over $125 billion in daily electronic FX trades during the year, with more than 2,500 active global clients.

The bank also posted substantial growth across several geographies and currency pairs. Among the highlights: solid profitability growth in Middle Eastern and Northern African currencies and a massive 40% market-share increase in Scandinavian currencies.

In Asia, the bank’s continued effort to improve its already top-tier suite of electronic FX capabilities paid off handsomely in China and Singapore, where it doubled down on its data center improvement efforts this year.

On the technology front, UBS kept expanding the limits of the global FX market, in July hosting the world’s first intraday FX swap in a regulated venue. The bank also recently launched its blockchain-based multicurrency payment solution, UBS Digital Cash. This addition to its’ digital offerings, processed through its flagship FX Engine Room, enhances the bank’s overall offering.            —Thomas Monteiro

Central banks were the star of the show in FX markets in 2024, bringing high volatility amid a global pivot in monetary stance that shifted interest rate differentials between the G5 countries and developing-market currencies. Corporate clients worldwide found a haven in Investec’s team of top FX experts, who led the way in research, analysis, and execution, ensuring that customers stay one step ahead of the competition in spotting the most important market trends.

In addition, the bank’s Investec ix digital platform proved a key differentiator by providing real-time rate visibility, allowing clients to secure competitive rates at a glance amid the shifting macroeconomic environment. Additional features like easy trade execution and payment on the same page were also important to leverage during the year.

Whether clients are individual corporates, small or midsize companies, or large institutions, Investec’s dedicated FX dealers, robust trading desk capabilities, and best-in-breed app guarantee the combination of a tailored approach with global capabilities when it matters most. As a result, the bank has continued to gain significant market share in the global FX world, more than tripling its presence over the past five years.    —TM

One of the largest FX providers in Latin America, Itaú Unibanco kept pushing the boundaries of what it means to provide excellence in trading of emerging market currencies in 2024. From July 2023 through June 2024, the Brazilian banking giant served over 326,000 clients in more than 1.9 million FX transactions in Latin America alone, with a notional amount totaling $225 billion.

Amid growing exports in the region, bolstered by a strong US dollar, an increase in nearshoring initiatives, and geopolitical uncertainty in the breadbasket Black Sea region, the bank leveraged its leadership to provide superior service, handling over $92.7 billion in trade deals during the same period.

To capitalize on the growing demand, the bank has expanded its dedicated FX team, increasing employee numbers by more than 10% from 2021 to 2024. The bank is also boosting investment in technology, increasing tech spending to nearly $20 million in 2024, an 8% rise over the prior two years.

The massive sum supports system modernization and enhances digital service delivery, allowing about 73% of transactions to be executed electronically. The bank’s trading platforms provide real-time pricing linked to market-makers’ books, ensuring competitive and efficient deals for clients.          —TM

BBVA’s market positioning across several geographies, including emerging and developed markets, has proved the key to success for corporate clients seeking to take advantage of the fast-paced interest rate environment of 2024.

The bank’s centralized core pricing engine is key to leveraging its FX capabilities to the next level, providing consistent and competitive FX rates globally. As the backbone for processing and executing FX transactions, the engine ensures that pricing is optimized and dependable. The bank also shines brightly through its unrivaled suite of fast-execution digital channels, with offerings such as BBVA Net Cash, which aligns FX goals with corporate clients’ business requirements; and BBVA eMarkets, which integrates FX with broader investment banking needs.

These tools ensure solid and instant liquidity in markets from Latin America to Turkey. They offer streamlined access to one of the most diverse ranges of FX products in the market, including spot, swaps, forwards, and more-complex structured products like options and exotics.

Due to top-level execution, the Spanish behemoth reached all-time highs in monthly electronic FX business volumes last year, boasting one-fifth of the market share in derivative volumes in 2024: a significant milestone.         —TM

The winner of the global Best FX Market Maker award is J.P. Morgan, reflecting its strong market position, deep resources, and technological prowess. These attributes allow the bank to provide exceptional scale and market access while efficiently handling high volumes of FX transactions.

One such solution is the bank’s Execute platform, which offers corporate and institutional clients full-service macro trading from a single platform. The benefits include diverse liquidity access, trade transparency, and competitive pricing for streamlined FX execution, as well as the ability to execute trades across over 300 currency pairs with efficient order routing across multiple electronic communication networks. The platform also provides enhanced functionality through various channels, including the web, application programming interfaces, and desktop or mobile devices, along with real-time analytics to access market insights from J.P. Morgan traders and analysts. Execute also includes a customizable alert feature to capture market movements. The Execute Mobile component provides transaction efficiency through one-touch trade execution, the ability to view historical trades, and a market monitor for FX rates.

The bank has also expanded its capabilities for FX options with an integrated platform that allows clients to transact a range of vanilla, exotic, structured, or multileg instruments. Additional features include the ability to view the market with multicurrency volatility grids and live insights from the bank’s options traders.           —David Sanders

Nordea’s undisputed positioning in the global FX environmental, social, and governance (ESG) market goes far beyond the bank’s extensive suite of investment products. ESG principles are a core part of the bank’s operation, providing unique market knowledge and opportunities for small and large companies.

The Nordic bank’s customers enjoy a full holistic sustainable-finance advisory that helps them allocate resources efficiently and protect against risks in the sector, particularly as the global ESG market stages a rebound thanks to 2024’s currency volatility.

Moreover, the bank’s extensive FX Algo Suite, which covers the full spectrum of FX transaction needs, from passive to aggressive market positionings, has proven a game-changer for those assessing market risks. It is further supported by the bank’s proprietary model of ESG accountability, which provides customers with another layer of confidence when making ESG-related investments on and off the FX spectrum.

This outstanding ESG offering is complemented by top-tier FX market research and financial advisory that allows clients to tailor market opportunities and financial planning to their needs and goals.     —TM

By offering first-class, tailor-made solutions for importing and exporting FX-related products, BTG Pactual, Latin America’s largest investment bank, rode the positive wave in Latin American commodities to a record-beating third quarter.

Although the Brazilian giant’s investment banking operation faced some macro headwinds, primarily due to underperformance in its home stock market, its corporate lending and business operation more than compensated, notching a phenomenal 29% YoY revenue growth as of the third quarter.

Against a backdrop of increasing export-related profitability and high currency volatility due to a devaluating Brazilian real, BTG helped clients in all areas of the commodity market by providing a combination of fast execution, excellent financial advisory, and top-grade hedging products.

The bank also continued expanding its FX funds offering last year, allowing clients based in Latin America to adopt more-sophisticated foreign currency holdings and hedging solutions. This allowed clients to benefit from a thriving global market.

BTG’s superior offering and financial planning helped commodity clients, in particular, weather growing supply costs due to the devaluating local currencies in Latin America. —TM

Adjudged the best bank for foreign exchange (FX) in Africa, Standard Bank continues to service the cross-border payment and funding needs of its corporate, investment, and individual clients despite the currency volatility and devaluation challenges that many African countries face. Standard Bank has an FX transactions market share of 30% in the African countries in which it operates. At the same time, it is one of the top finance institutions for FX needs in countries such as South Africa, Angola, and Zimbabwe.

Accounting for a larger market share “allows us to make, maintain, and manage a live, active, and tradable market price,” says a bank spokesperson. Standard Bank has more than 100 employees dedicated to its FX business, covering sales, trading, and operations. There are three dedicated FX trading desks: spots, forwards, and futures.

With 1.6 million trades per year and $1.7 trillion in overall turnover, Standard Bank signed an agreement in November with the World Bank’s International Finance Corporation on cross-currency swaps and derivatives for Africa. FX and local currency liquidity can be challenging in Africa, where some market reforms and attractive returns increasingly bring in more global investors, raising FX needs and transactions.

“There is growing interest in sub-Saharan countries, with investors recognizing the continent’s potential,” said Kayode Solola, head of global markets for Africa at Standard Bank Group, in comments accompanying the announcement.

The bank’s FX professionals “have the skills to support a diversified international and domestic client base trading in all G10 as well as 40 African currencies,” says the bank.

Winning the Best FX Bank awards in Africa and Angola represents international recognition of Standard Bank’s capabilities in meeting clients’ foreign currency demands.               —Tawanda Karombo

South Korean–based Hana Bank has established itself as a regional leader in the Asian financial markets, particularly in providing FX services. The bank has grown from a local financial institution into one of the most significant players in the global banking industry, and is currently boasting total assets of $400 billion.

“Hana Bank’s success in the foreign exchange market is built on our unwavering commitment to innovation and customer-centric solutions,” says CEO Lee Seung-lyul, the first CEO of Hana Bank with a background in foreign exchange. “We continually invest in cutting-edge technology and strive to offer the industry’s most efficient and secure FX services.”

This demonstrated expertise enables the bank to offer tailored solutions that meet the specific needs of its clients, whether they are looking to hedge against currency risk, make international payments, or engage in speculative trading.

This award recognizes Hana Bank’s outstanding performance and innovation in the FX market and underscores its position as a trusted and influential player in FX services.           —Simon Littlewood

This year’s winner for Central and Eastern Europe (CEE) is OTP Bank. Privatized in the 1990s and formerly the National Savings Bank of Hungary, OTP Bank is now a familiar name across the 11 countries in CEE and the Central Asia region where it has a presence. It sold its operations in Romania to Banca Transilvania because local regulations prevented it from further expansion. OTP is renowned for its innovative yet flexible service.

OTP Bank runs a centralized FX operation out of its Budapest headquarters. Ten traders and 25 salespeople conduct transactions for the main and regional subsidiary banks, offering pricing for 100 currency pairs.

The bank has started an internal digitalization project to simplify and accelerate the workflow for FX transactions. It operates a groupwide internet-based platform where clients of six subsidiaries can conclude FX transactions and convert funds into more than 40 currencies. The system already operates in Russia, Bulgaria, Serbia, Montenegro, Slovenia, and Croatia. Management is keen to introduce it to other subsidiaries and add new currency pairs to improve service and market coverage.

In November 2024, OTP contracted Integral Development, a leading currency-technology provider based in Palo Alto, California, to improve and automate foreign exchange pricing and distribution to the bank’s clients in FX spots, forwards, and swaps. According to Integral, its systems offer “liquidity aggregation, pricing engine, trading, and risk management solutions to deliver the highest pricing accuracy and reliability to its clients. … The flexible architecture ensures that OTP Bank can easily scale and adapt its FX infrastructure to meet evolving client needs” across the CEE region.            —Justin Keay

Despite already occupying a leading position in Latin America’s FX market, the Brazilian behemoth Itaú Unibanco kept expanding its offerings and robust geographical presence to notch another year of sustained growth in volume and profitability.

From July 2023 to June 2024, Itaú executed over 1.9 million FX transactions, with a total notional amount of $225 billion. The bank served over 326,000 clients during the period, demonstrating its extensive reach and expertise in managing substantial transaction volumes and liquidity.

Amid the region’s increasingly competitive market, the powerhouse accelerated its technological investment. This jumped from approximately $15.9 million in 2022 to nearly $17.2 million in 2024, mainly focused on improving the bank’s cloud platforms and microservices architecture.

The bank also added generative artificial intelligence to its offerings, thus enhancing efficiency and scalability in client operations. This endeavor has already generated significant results, with Itaú increasing its automation rate from 25% to 44% in 2024.

Despite its growing investment in technology, the bank continued to support its team of FX professionals. The team boasts around 350 best-in-class employees across several functions including sales specialists, support specialists, sales traders, and market-makers.         —Thomas Monteiro

Qatar National Bank (QNB) is the largest bank in the Middle East by assets. It operates in 28 countries, including 14 in the region. Its leading FX business, capitalizing on its strong credit rating, which reflects its financial strength and partial state ownership. A solid custody business aids FX operations.

The bank has significantly increased its market share of inflows to Qatar and international markets. QNB has broad access to the region, global financial hubs, and a broad network across Asia. The bank has rolled out a new cash management platform and ramped up business and operational capabilities. QNB has strengthened its offering as an integrated payment provider for cross-border transactions.

QNB has launched programs for exporters as well as cross-selling initiatives based on its trade finance and cash management capabilities. International payments have increased due to a new remittance system and enhancements to the bank’s correspondent account management and treasury transaction services. QNB successfully onboarded the first clients into its application programming interface (API) platform. Clients can now increase their internal financial accuracy and eliminate manual processes by accessing daily FX rates through API functions.

The FX desk has continued to perform well. The bank has improved its client service due to investment in stronger FX capabilities, allowing it to capture market opportunities.      —Darren Stubing

With its comprehensive suite of FX services, J.P. Morgan (JPM) has earned our award as Best FX Bank in North America. Through its Execute and Transact platforms, the bank offers institutional clients innovative solutions with an integrated approach to FX execution, including commodities and rates trading capabilities.

JPM’s Execute provides exceptional liquidity access, efficient execution, and trade transparency through robust market-analytics features, real-time data for trade optimization, and live support from traders and analysts to streamline workflows. The platform is accessible through multiple channels, including the web, APIs, and desktop or mobile devices. Execute Mobile provides market data and one-touch trading ability.

With FX Algos on Execute, clients can customize algorithmic trading strategies for greater efficiency, enhanced trade transparency and performance, and integrated pre-trade and post-trade analytics tools. Through JPM’s Transact digital platform, clients benefit from robust FX hedging and settlement solutions to manage cross-border exposure covering over 100 currencies. These offerings are integrated with treasury and cash management functions, contributing to a more efficient workflow.

Innovative new developments include advancements in blockchain technology through the Kinexys platform, which facilitates cross-border transfers. Integration with JPM’s FX services is expected in early 2025, enabling clients to execute and settle FX transactions with greater flexibility and efficiency and reduced settlement risk. —David Sanders

In a year when volatility was the norm across Western European markets, with several central banks pivoting their monetary stances, BBVA’s best-in-breed FX management and comprehensive suite of technological offerings gave the bank’s users a significant edge.

By leveraging its knowledge and presence across different geographies, the Spanish banking giant managed to post positive numbers in most of the region’s currencies, including the euro, British pound, Norwegian krone, Swedish krona, Danish krone, and Swiss franc. The secret behind BBVA’s outstanding performance is a combination of local-market expertise and a powerful, user-friendly app that allows users to instantly access and execute products such as FX spots, forwards, swaps, options, and structured notes, at the click of a button, with the best insights in the market.

Our Best FX Bank in Spain, BBVA also doubled down on its efforts to support growth in Western Europe by focusing on products that cater to the specific needs of the region’s small and midsize enterprises (SMEs). Through its flagship Net Cash app, the bank enables SMEs to hedge their FX exposure, order international transfers, and configure FX market alerts, all through a user-friendly interface tailored to their habits and needs.        —TM

Qatar is looking to become a regional model for high-value financial services and a hub for investments and business. This year thus far has been a watershed, as the emirate’s debt capital markets have grown to around $130 billion, making Qatar the third largest DCM in the region, ranking behind Saudi Arabia and the United Arab Emirates; the variety of Qatari bond issues continues to expand as well.

“We continue to see strong development and sustainable traction in the local DCM space,” summarizes Aadil Nastar, head of treasury and markets at QInvest, a leading Qatari investment bank, “especially as Qatari institutions continue to capitalize on global demand for conventional bonds and sukuk, backed by Qatar’s high credit ratings and stable fiscal position. This has been reflected in recent local-currency, corporate listed issuance and strong issuance parameters from recent US dollar issuances, both senior and tier 1, predominantly sukuk.” 

The surge in debt issuance has set new benchmarks, both for Qatari sovereign debt and offerings by companies based in the emirate.

In May, the state issued green bonds amounting to $2.5 billion, the first issuance of its kind in the region, consistent with the government’s focus on developing a domestic sustainable finance sector. Priced at the lowest spread recorded by any country in the Middle East North Africa region, the bonds were divided into two tranches: $1 billion with a five-year maturity priced at a 30-basis-point spread over US Treasuries and $1.5 billion with a 10-year maturity priced at a 40-basis-point spread. Subscription demand reached $14 billion, reflecting confidence in the sovereign green financing framework established by the Ministry of Finance.

In October, Ooredoo, a Qatari multinational telecommunications company, issued a 10-year, $500 million bond through its subsidiary, Ooredoo International Finance Ltd.  The notes were issued under an existing $5 billion global medium-term notes program on the Irish Stock Exchange. Priced at 4.625%, the bond’s spread of 88 basis points over 10-year US Treasuries was the tightest ever for Ooredoo as well as one of the lowest for an emerging-market corporate issuer and the lowest for a global telecommunications company on a 10-year bond since 2020.

The offering snagged investors from the US, the UK, Europe, Asia, and MENA.

In the first half, Qatar National Bank Group, the region’s largest bank, completed a Formosa bond issuance under its Euro Medium Term Note (EMTN) program and listed on the Taipei Stock Exchange. A $1 billion bond with a five-year maturity, the offering is part of QNB Group’s strategy to diversify funding from new markets.

Qatar has grown strongly as a center for sukuk, or Islamic bond, issuance this year as well, more than doubling its dollar value in the sector in the first nine months. Estithmar Holding, a large, diversified Qatari public listed company focused on health care, services, ventures, and contracting, successfully issued the first sukuk-denominated corporate bond in Qatari Riyal, listed on the London Stock Exchange. The QAR500 million (US$137 million) issue is the inaugural tranche in a QAR3.4 billion Estithmar sukuk program. 

“This issuance demonstrates confidence in Qatar’s robust economy,” says Estithmar CEO Mohammed bin Badr Al-Sada, “and highlights the ability of the Qatari private sector to expand both domestically and internationally with support from government initiatives that create an environment where companies can develop and thrive.”

Other recent issuers have included Qatar Islamic Bank ($750 million sukuk) and Qatar International Islamic Bank ($300 million Additional Tier 1 Capital Certificates). The QIIB transaction, completed in October, was more than eight times oversubscribed, with a total order book exceeding $2.5 billion, and followed the bank’s $500 million sustainable sukuk issue in January and a similar $250 million offering in July. Qatar Islamic Bank’s five-year unsecured sukuk was priced at 4.485%, 100 basis points over US Treasuries; the order book reached $2.2 billion, indicating the strength and diversity of investors interested in Qatari paper.

In September, The Commercial Bank of Qatar issued its inaugural green bond denominated in Swiss francs as part of its Sustainable Finance Framework, supporting green projects in the emirate. The offering is the largest-ever Swiss-franc green bond issued in Qatar, the largest such offering from Qatar since 2013, and the largest such offering out of Central and Eastern Europe, the Middle East and Africa since 2021. Significant demand resulted in a 120-basis-points spread, with a final value of CHF225 million.

The flow of new bank offerings should continue as issuers replace upcoming maturities and banks strive to diversify their funding base, Bashar Al-Natoor, managing director at Fitch Ratings Ltd, predicts. In the first half of this year, sukuk issuance more than doubled year-on-year, he notes, while conventional bond issuance increased by 59% to $12.4 billion. The Qatar Central Bank (QCB) regularly issues Treasury bills and sukuk, giving domestic banks a venue to invest their excess liquidity. Early this year, Fitch upgraded Qatar’s bond rating to AA with a stable outlook, the highest credit rating among the Gulf Cooperation Council states.

The diversity of Qatar’s issuance, including its debut sovereign green bonds and domestic Qatari riyal corporate sukuk, has solidified its appeal among global and regional investors seeking conventional bonds, sukuk, and sustainable finance options, says Nastar. Post-issuance performance has been strong, and this positions Qatar’s DCM market well for next year, he adds.

The next stage in attracting wider international participation, Nastar says, will likely accompany further development in Qatar’s swaps and derivatives market. Regulatory support from the QCB for sustainable finance has helped broaden the investor audience, enhancing Qatar’s position as one of the region’s leaders in DCM.

“There is indeed traction in Qatar’s DCM, both in sukuk and conventional bonds,” says Al-Natoor. “The regulator has taken steps to advance the still-developing market in recent years. However, limitations remain, such as the nascent riyal-DCM market, the concentration of the investor base in banks, and corporates generally preferring bank financing over bonds or sukuk.”

At the end of the first half, when the QCB published its ESG and sustainability strategy for the financial sector, it announced its aim to boost sustainable finance and develop ESG sukuk and bonds: another initiative geared to appeal to a section of the global investor audience. ESG debt in Qatar was then $3.8 billion, according to Fitch, with sukuk amounting to 19.5% of the total.

Private banking in the Middle East continues to thrive, outpacing most other global regions; and the prospects remain positive in dedicated banking and wealth management despite increased geopolitical risk in the area. Boosted by solid economic and business growth in key countries, including Saudi Arabia, the United Arab Emirates (UAE), and Qatar, the number of high net worth individuals (HNWIs) and ultrahigh net worth individuals (UHNWIs) continues to rise.

Regional financial institutions and international players are dedicating more resources to capitalize on private banking in the Middle East. Knight Frank research shows that global UHNWIs rose by 4.2% in 2023, with growth led by North America (up by 7.2%) followed by the Middle East (up by 6.2%). Younger HNWIs are also increasing their numbers in the Middle East. Private banking clients seek a dedicated, personalized, technology-driven service with access to broad investment opportunities. Indeed, the winners of the Best Private Banks awards for the Middle East provide first-class private banking products and services supported by advanced technology.

Supported by the financial strength of Qatar National Bank, the region’s biggest bank, QNB Private provides superior, innovative, and bespoke financial offerings to its large and growing client base. Over the past year, QNB Private’s strategic investment approach has significantly increased return on investment, reflecting its commitment to maximizing client value while maintaining prudent risk management practices. QNB Private manages a substantial portfolio, with assets under management reflecting a steady increase year on year and an expanding market share.

The private bank offers a comprehensive service suite of traditional banking and modern financial solutions. The client base predominantly consists of HNWIs and UHNWIs concentrated in Qatar and the broader Middle East and North Africa region, backed by QNB’s presence in London, Paris, and Geneva. QNB Group’s dedicated subsidiary in Switzerland, QNB (Suisse), is its private banking offshore services hub, which acts as a conduit for investment products and services, including advisory services.

The National Bank of Kuwait (NBK) has a long and successful history of private banking. Over recent years, it has developed a strong private banking sustainable investment program and service. Early in 2024, NBK’s private banking offering was strengthened by the launch of NBK Wealth, consolidating private banking and asset management businesses under one leadership. The division provides HNWIs, UHNWIs, and institutional accounts with a client-centric offering that includes all private banking products and investment solutions.

NBK Private Banking has integrated environmental, social, and governance (ESG) components into its offerings and selection process for clients with an ESG preference, reflecting the bank’s commitment to sustainable investment practices. NBK has a well-followed ESG strategy, outlining key targets and commitments. One of the most significant achievements was the drive behind sustainable lending. NBK Wealth’s operating model focuses on providing solution-based services, including advisory services, to increase its local, regional, and international clients’ share of wallet.

The second-largest bank in the UAE, Emirates NBD, is a leading banking brand in the Middle East. Its private banking business line’s total income grew strongly in 2023 due to growth in its geographic footprint, leading to greater client acquisition and product penetration. The bank’s accelerated investment in digital and mobile banking was also a major contributor to its 2023 private banking performance.

Emirates NBD has always been at the forefront of digital innovation in the region, with 97% of its transactions conducted outside traditional branches. Electronic banking, combined with advances in artificial intelligence, has played a significant role in Emirates NBD’s business. The bank launched its Digital Wealth platform in the autumn of 2023, wherein customers can quickly establish investment accounts and start trading in global and UAE equities from a single application for all banking needs.

HSBC acted as custodian and agent-lender while QNB Financial Services (QNBFS) acted as the borrower. The QSE worked with Edaa, the licensed service provider under the Qatar Financial Market Authority that provides a range of essential services related to securities and financial instruments.

Hussein Fakhreddine, CEO at Qatari investment bank QInvest, said, “The transaction marks a milestone under the Financial Strategic Plan, which is part of the Qatar National Vision 2030, allowing more sophisticated investment strategies and unlocking a significant liquidity pool.”

QNBFS plans to offer this service to qualified investor clients that can benefit from new trading strategies on the QSE that were not possible before, according to Maha Al Sulaiti, Acting CEO at QNBFS. When demand for such transactions increase, it expects a commensurate growth in market volumes and liquidity.

QNBFS Chairman Adel Abdulaziz Khashabi said, “It’s important to note that SLB is one part of several key initiatives championed by the QSE to enhance the size and liquidity of Qatar’s equity market. Such initiatives include encouraging new listings via IPOs and direct listings, the most recent example being the successful listing of Techno Q on the Venture Market. We expect further IPOs and listings to stimulate demand and market activity. Going forward, introduction of a derivatives market should further stimulate market activity and bolster our appeal to institutional investors.”

QInvest is also looking to boost its activities and has aligned its investment banking advisory services consistent with Qatar’s 2030 vision for the financial sector. Fakhreddine said, “We are, and will continue to be, active in the securities market in the form of active mergers and acquisitions, as well as equity and debt capital market transactions.”

The Qatar Investment Authority has allocated QAR1 billion ($275 million) for a permanent market-making program at the QSE. Fakhreddine said, “This program aims to enhance market liquidity, improve price discovery, and diversify capital markets, thus attracting more foreign investments and boosting investor confidence.” The initiative is set to run for the next five years.

The development of SLB activities alongside other market initiatives will provide traders and investors with access to more sophisticated investment strategies, hedging mechanisms and securities financing. It is likely to attract new investors in the Qatari market and deepen the investment pool.

Last year was a strong year for Islamic financial institutions [IFIs], with banks and their management capitalizing on investment in technology and digital capabilities to boost growth and gain customers. Progress in digital banking has helped to keep costs under control. It has led to increased customer drift from conventional banks to Shariah-compliant institutions, particularly among the younger generation. Retail banking remains a cornerstone of most IFIs, but many are strengthening their commercial banking products.

Despite rising interest rates over the past few years, which has in the past been challenging for Islamic banks, most IFIs were able to widen their margins in 2023 through better repricing of financing assets. The Islamic banking sector enjoyed better return on assets in 2023, rising to 1.8% from 1.6% in 2022.

Islamic banks’ balance sheets advanced by around 8% last year, slightly below the prior year’s growth, but remaining higher than conventional banks’ asset growth. The overall health of Islamic banks remains very good, with an average capital to risk-weighted assets ratio of 19% and nonperforming loan ratio around 3%.

The winners of Global Finance’s 2024 World’s Best Islamic Financial Institution Awards are banks that have excelled in product innovation, range and service quality; recorded good financial results, with sound balance sheets and have good governance. Award winners continue to innovate in delivery and access, strengthening their franchise and market position.

Our winner for the Middle East is Al Rajhi Bank, the largest Islamic bank globally. Al Rajhi Bank has posted consistently strong performance, supported by leading-edge technology and a strong brand. Loan growth was very good in 2023. Abdullah bin Sulaiman Al Rajhi, chairman of the bank’s board of directors, says, “The bank continued its selective growth across businesses to achieve its strategic goals while maintaining its lead in customer experience and best-in-class digital solutions.”

Malaysia’s Maybank Islamic Bank wins the award for the best IFI in Asia. With a strong capital base and good returns, Maybank is frequently a first mover in bringing innovative Shariah-compliant financial products to the market. In its home market of Malaysia, it controls one-third of Islamic assets, but its activities extend across other Asian countries.

Kuwait Finance House (KFH) earned its recognition as Best Islamic Financial Institution worldwide thanks to innovation in Islamic financing, a wide geographical footprint and strong operations. KFH is the second-largest Islamic bank globally, providing services to customers in the Middle East, Asia and Europe through extensive distribution channels. It has subsidiaries in Kuwait, Turkey, Egypt, Bahrain, Iraq, Malaysia, the UK and Germany.

Last year was KFH’s first full year of integration following its 2022 acquisition of Ahli United Bank of Bahrain. Total assets stood at $124 billion at end 2023 as net profit jumped to $2.2 billion from $1.4 billion, for a return on average assets of 1.8%. The firm’s overall financial profile is solid, supported by good capitalization and liquidity. Its Islamic banking products and services cover commercial, retail and corporate banking as well as real estate, trade finance and investments.

During 2023, KFH launched Tam Digital Bank, Kuwait’s first shariah-compliant digital bank. It was also at the forefront in launching several digital services, including detecting biometric facial features in branches, instant printing for all types of cards, its Zaheb digital platform and KFHonline for corporates, digital portfolios to facilitate e-payment and a D-POS device for instant opening of bank accounts.

KFH maintains a leading position in Islamic corporate banking. Last year, the group successfully led and arranged sukuk issuances exceeding $4 billion for a diversified issuer clientele, embracing sovereign and corporate offerings across multiple sectors and geographies. Highlights included a $3 billion club financing deal for Saudi Electricity Company and a syndicated transaction for Ras Laffan Petrochemicals Company totaling $4.4 billion. KFH also participated in a $1.6 billion syndicated transaction for Dubai Aerospace Enterprise Funding.

KFH Treasury chalked up $38 billion worth of foreign exchange transactions in 2023 and onboarded several new corporate clients; the bank is also active in FX spot and Islamic derivatives hedging instruments. The group treasury executed sukuk transactions worth more than $13 billion during the year. 

Al Rajhi Bank is a pioneer in provision of Islamic retail banking services, offering significant expertise in shariah consumer banking.  It takes the award for Best Islamic Retail Bank based on its strong retail performance and innovation and the size of its retail franchise. 

Al Rajhi is the world’s largest Islamic bank globally, with $216 billion in assets and equity of $28 billion. Along with its base in Saudi Arabia, it has operations in Jordan, Kuwait and Malaysia. It remains a profitable institution, with a 2.1% return on assets and 16.1% return on equity. It dominates the retail financing market in Saudi Arabia with a 41% share, handling over 800 million transactions and the largest share of remittances per month. Also rolled out in 2023 were new mobile applications, giving non-Al Rajhi Bank customers the ability to access its digital services as guests.

Boubyan Bank distinguishes itself for the breadth of its commitment to corporate social responsibility; rather than applying a set of CSR performance standards to one or two departments or branches, all parts of the bank are considered key participants.

Areas of focus in 2023 included significant staff training, human capital management, customer advocacy, client empowerment, and the safety and wellbeing of all stakeholders. Social initiatives include youth development, female-focused product development, and embedding of social KPIs in employee performance evaluations. The bank is active in humanitarian and charitable causes, including initiatives such as the Noor Boubyan Campaign, which has succeeded in restoring the eyesight of thousands in many African countries. Domestically, the bank runs a successful e-waste collection operation.

ADIB maintained its MSCI ESG (environmental, social and governance) rating of “A” in 2023, retained its position on the MSCI ESG Leaders index, and earned an upgrade to its Sustainalytics ESG risk score. As one of the world’s leading Islamic financial institutions, it continued to play a crucial role in boosting sustainable finance in the Persian Gulf region, facilitating some $1.5 billion of sustainable projects in 2023. 

Qatar’s Dukhan Bank’s Private Banking proposition emphasizes innovative customer-focused services supported by robust technology across an end-to-end portfolio of financing, banking and investment products and services for high-net-worth and ultrahigh-net-worth individuals. The bank’s focus on enhanced digital transformation is targeted particularly at capturing a larger and younger generation of clients.

Wealth management assets grew by 17% last year and helped Dukhan increase its market share in the local market, where it is the third-largest bank.  It launched online/mobile access modules for the wealth management last year and continued to enhance product sourcing capabilities.

Leading the league tables for both global sukuk and ASEAN local currency bonds, Malaysia’s CIMB is also actively integrating sustainability practices into its business. The bank commands a nearly 13% market share in global sukuk and a 28% market share in ringgit sukuk. Last year, it successfully launched the largest US-dollar sukuk issue by an Asian sovereign. It also achieved the tightest five- and 10-year spreads at issuance by an ASEAN sovereign for the second year in a row. 

CIMB also led the pack as the largest Malaysian ringgit sukuk arranger in 2023. Notable issues in which it played a role included a $2 billion global sukuk for the Republic of Indonesia that included a $1 billion green tranche; a $750 million sukuk issued by Khazanah Nasional that was over six times oversubscribed; and a RM1.5 billion state guaranteed sukuk for Johor Corporation, the first-ever state-guaranteed transaction in the Malaysian ringgit debt capital market.

Based in Bahrain, GFH Financial Group stands out for its product development and placement, registering a string of successful deals in 2023, including a placement for the Healian regional health-care platform. Funds include GCC Logistics and US Opportunistic, the latter focused on inflation-hedged commercial real estate, REITs and structured equity in the US.

GFH expanded its global presence significantly last year. Its acquisition of Big Sky Asset Management, a major player in US health-care real estate, exemplifies GFH’s thematic focus on attractive and defensive markets. Big Sky marked the third international asset manager that GFH has acquired in recent years, after Roebuck Asset Management and SQ Asset Management, which capitalize on strong opportunities in European logistics and US student housing, respectively.

GFH also partnered last year with UK-based investment manager Equitix to invest in Aurora Infrastructure, which operates two major electricity networks in Finland. The investment was in line with several global new-energy-economy megatrends, including electrification, national grid infrastructure revitalization, and energy diversification. Complementing its Aurora Infrastructure stake, GFH co-invested in Saber Power, a profitable, high-growth supplier of electrical infrastructure services based in Houston.

A leading alternative Shariah-compliant asset manager, Saudi Arabia’s Sidra Capital launched a series of new enterprises in 2023, including its maiden Singapore-domiciled variable capital company, Sidra Asian Opportunities. The VCC focuses on facilitating cross-border commodity supply chains via fully funded irrevocable letters of credit, specifically targeting high demand for solid fuel produced by select Indonesian producers.

At home, Sidra Capital specializes in creating innovative private-finance investment solutions; its portfolio includes a range of Shariah-compliant private finance investment products. Last year, it acquired the Eurocap industrial and trade park in northern France, a property adjacent to the Eurotunnel rail terminus and comprising 23 buildings on a 130-acre site, providing a wide range of property options for occupiers. Sidra also acquired London Square, an office building in Guildford, UK, for just over £40 million.

Malaysia’s Maybank Islamic offers a “halal ecosystem” for small to midsize enterprises (SMEs), delivered through a digital, values-driven platform. It supports business growth via Islamic supply chain solutions that meet the needs of principal customers as well as their suppliers and buyers. The bank launched a Digital Supplier Financing Program in the fall to facilitate financing access for suppliers in the ecosystem and promote business growth abroad.

Maybank’s SME financing, as a result, has grown solidly over the past few years. Income uplift has occurred through Halal4wards, a Shariah-compliant financial solution that bundles product solutions for SME and business banking customers within targeted halal sectors. The bank also recently introduced a bespoke term fund for nonretail clients.

Al Rajhi Capital has exploited its link with parent company Al Rajhi Bank to establish a dominant position by value and market share as a trader in Saudi Arabia’s main stock market (Tadawul) as well as its alternative market (Nomu). In 2023, Tadawul chose it as the first market maker in the main stock market.

Al Rajhi REIT Fund made the largest secondary offering in Saudi Arabia last year, and its parent also plays a crucial role in issuance of sustainable Sukuk bonds. It offers a range of innovative investment solutions across all major asset classes including equities, real estate, money market, fixed income and multi-asset. The firm is also expanding its global outreach, which now encompasses 38 markets worldwide.

Maybank Islamic’s trade finance business provides leading products for both SME and corporate trade finance clients. This includes both import- and export-focused products, from standard letters of credit to onshore foreign currency financing and export credit refinancing. The bank has achieved good expansion: Islamic financing grew 7% last year and trade financing volumes further expanded. Maybank Islamic has formulated its own Sustainable Product Framework to enable greater development of green, social and sustainable products; it is committed to mobilizing around $16 billion in sustainable finance by 2025, of which trade finance will be an important element.

A unit of Maybank Group, Etiqa Islamic Berhad offers a range of general and family Takaful plans across multiple distribution channels in Malaysia, Singapore, the Philippines, Indonesia and Cambodia. It reports over 11 million customers, gross written premium assets of around $2 billion and total assets of $11 billion. Last year, Etiqa became the first insurance and Takaful company in Malaysia to become a signatory of the UN Principles for Sustainable Insurance.

Locally, KFH acts as lead arranger on many syndicated project finance transactions, but it continues to expand its trade relations with core corporate clients in all sectors and throughout the MENA region for both SMEs and large companies. Besides last year’s club financing for Saudi Electricity Company, other major deals that KFH participated in included a $4 billion-plus syndicated offer for Ras Laffan Petrochemicals Company that will fund construction, development and operations of a petrochemicals project in Qatar and a $1.6 billion syndicated transaction for Dubai Aerospace Enterprise Funding.

With $73 billion in assets and a financing portfolio of $56 billion, Maybank Islamic is the largest Islamic bank in ASEAN and the fifth-biggest globally. With a strong capital base and good returns, it is frequently a first mover in bringing innovative Shariah-compliant financial products to the market. In its home market of Malaysia, it controls one-third of Islamic assets and 29% of the important Malaysian Islamic banking market. Its activities extend across other Asian countries; it ranks fourth in the global sukuk market, and its share of financing in Maybank Group’s consolidated loan portfolio continues to rise.

A key player in Islamic banking, Al Rajhi Bank has posted consistently strong performance, supported by good management, a clear strategy and leading-edge technology. The largest Islamic bank worldwide by both assets and market capitalization and with a strong brand image, Al Rajhi ranks No. 1 in Saudi Arabia for remittances, transactions and customers. It also offers the largest distribution network in the Middle East, ranked by number of branches, POS, ATMs and remittance centers.

A subsidiary of Arab Banking Corporation, Bank ABC Islamic provides a wide portfolio of Shariah-compliant products and services, supported by good technology and the backing of its parent. Bank ABC Islamic caters to retail customers through alburaq’—an exclusively digital Islamic banking portal—that ABC made available last year through its ila Bank subsidiary.

Bank Islam Brunei Darussalam is the sultanate’s largest Islamic bank, with $9 billion in assets, good capital backing and a wide product range, including its mobile banking NexGen Wallet and the first Shariah-compliant ESG mutual fund in Brunei.

A domestic Islamic finance market leader, Abu Dhabi Islamic Bank Egypt continued to build its franchise and market position in 2023, posting a 31% rise in net profit to $152 million. In addition to mainstream Islamic financing, ADIB Egypt, which has $5.2 billion in assets, offers investment banking, leasing, asset management and microfinance.

The country’s largest Islamic bank, and its seventh-largest bank overall with assets of $23 billion, Bank Syariah Indonesia boosted its balance sheet strongly in 2023, led by Islamic financing. The field is growing rapidly in the Muslim-majority nation, and BSI has established itself as a strong competitor to the country’s conventional domestic banks.

Jordan Islamic Bank, which already controls nearly half of the kingdom’s Islamic banking market, boasts a growing 9% of Jordan’s total banking sector assets. Loans and deposits grew last year, along with accounts, supported by a high capital adequacy ratio. Islami Digital, JIB’s digital self-service offering, expanded in 2023, and the bank carried out further development and modernization in areas of banking technology. JIB continued to expand its menu of new services through its channels and platforms, including via mobile phone.

Focused on retail banking and technology, Boubyan Bank is increasing its market share against both conventional and Islamic banks in Kuwait, aided by its focus on creating innovative digital products and services for its customers. Widely regarded as an innovator with a strong brand and excellent customer service, it has established itself as a leader in catering to the under-30 bracket. That helped the $27 billion-in-assets institution to boost net profits by 44% to $254 million last year. It continues to look for new ways to tap its information resources; Boubyan’s data group in 2023 augmented its ability to merge external and internal customer data through the App Store sentiment analysis dashboard, leveraging customer feedback from In-App, iOS Store, and Google Play Store. 

Maybank Islamic is Malaysia’s flagship Islamic institution, with a market share of 30% in assets and loans. Product innovation is strong, including its “myImpact Card”—the first card in the market that enables a tangible, positive impact through responsible and ESG-friendly spending. It also incorporates a built-in Carbon Footprint tracker and provides the ability to offset carbon footprints. It also launched Malaysia’s first EV financing solution. In nearly all Islamic financing areas, it holds a dominant market position.

Established in 2017, Umnia was Morocco’s first Islamic bank. Shareholders include Qatar International Islamic Bank, CIH Bank (Credit Immobilier et Hotelier) and CDG (Caisse de depot et de gestion). With 50 branches, it remains the country’s largest Islamic banking network as well as its largest by total assets, with a 50% market share in financings and a 40% market share in deposits. Payment apps were introduced last year, including Apple Pay.

The fastest-growing Islamic bank in Oman, Bank Nizwa’s expansion in retail and corporate banking is supported by product innovation and its use of electronic channels. The bank recently launched a suite of Islamic green financing solutions for home, automotive and personal finance. Bank Nizwa also enhanced its retail platform by teaming up with Avanza Unison Ace and tapping its state-of-the-art digital platform. Net profit increased to $44 million in 2023 and total assets reached $4.1 billion, giving Bank Nizwa an approximately 25% share of the sultanate’s Islamic banking sector.

With an asset base of $11 billion, Meezan is Pakistan’s largest Islamic bank. Its range of products and services targeted at the retail sector and mid-tier and premium banking customers helped it to nearly double its net profit last year to $306 million.

The product of the successful merger of Barwa Bank and International Bank of Qatar in 2019, Dukhan is enjoying growth in assets, customers and net profit with help from good infrastructure and technology-led solutions. Dukhan recently launched its “Himyan” prepaid card, the first Qatari prepaid card, enabling customers to make secure payments. Dukhan also unveiled Apple Pay, Samsung Wallet and Google Pay services, operating via its contactless payment platform. Total assets at year-end stood at $31 billion, with net profit of $358 million.

A pioneer in Islamic retail banking services, Al Rajhi has substantial expertise in Shariah banking—including a strong home mortgage financing franchise—supported by innovative technology. It remains a profitable bank with good margins, strong risk metrics and high capitalization.

Founded in 2009, Amana Bank was the first licensed commercial bank in Sri Lanka to conduct all its operations under the principles of Islamic banking. Today, while still a small player in the island’s financial landscape, it is growing on the back of a full spectrum of retail, SME and corporate banking, and treasury and trade finance services.

A unit of Bahrain’s Al Baraka Banking Group, Al Baraka Bank Tunisia offers a range of Islamic banking products and services in the North African country, including the Masken Al Baraka (a savings product for home financing), Sayarat Al Baraka (car financing), and Yasmine Pack (designed for Tunisians residing abroad).

The largest Islamic bank in Turkey with $24 billion in assets and $1.8 billion in equity, KTKB operates throughout the country, supported by a relatively large branch network. An office in Bahrain serves as a bridge between Turkey and the Gulf Cooperation Council states, supported by parent bank KFH. KTKB also operates an Islamic bank in Germany under the label KT Bank. Net profit rose by 37% in 2023 to $1.3 billion and return on average assets was a very high 5.2%.

ADIB’s digital drive enabled it to grow market share by attracting over 200,000 new customers last year, helping boost total assets to $53 billion, and digital remains at the heart of the bank’s 2025 strategy. The bank’s contingent of digitally active customers increased steadily in 2023, and currently 80% are digitally active. Its mobile app is very well regarded, and 50 new features were added last year.

All of which helped ADIB post robust 2023 financial results. Net profit jumped 45% to $1.4 billion on the back of strong revenue growth, an increase in transaction volumes and improved margins, while return on equity reached a very high 27%.

While Qatar strives to bolster its global leadership in the oil and gas sector, it also aims to boost the growth of its non-hydrocarbon economy. The goal is to reach average per-annum real non-hydrocarbon growth of 4% through 2030, focusing on expanding manufacturing, tourism, logistics, education, health, food and agriculture, financial services, and information technology and digital services in addition to future clusters around critical technologies and national assets.

The third phase revolves around creating an investor-friendly business environment, fostering entrepreneurship and boosting local companies’ competitiveness while enticing foreign investment: $100 billion (compared to $76 billion in 2022 according to the World Bank, the most recently available data) in net foreign direct investments, based on official releases.

Qatar’s economy has seen good progress toward diversification. Its successful hosting of the FIFA World Cup in 2022 was one of its biggest achievements in the non-oil economy; tourism received a considerable boost, with visitor numbers increasing to over four million last year from just 600,000 in 2021 while the event created more business and employment opportunities for Qataris. The kingdom has since hosted several more international sporting events.

Non-oil GDP is now growing faster than oil GDP, notes Junaid Ansari, director of Investment Strategy and Research at asset management company Kamco, and the focus industries under the “growth” clusters, including tourism, logistics and manufacturing, have all seen significant progress.

“We expect Qatar to be one of the fastest-growing economies in the Gulf Cooperation Council as well as globally over the medium term,’ says Ansari. Through 2030, the non-oil project pipeline is over $150 billion, comments Ansari.

The government is not moving away from the energy sector, however. S&P Global Market Intelligence forecasts real GDP growth in Qatar at an average of 4.4% over the medium term (2026-30), higher than the near-term (2024-25) projections mostly due to the expected surge in gas exports, almost all of which has “a ready market, as the demand for liquified natural gas [LNG] for electricity generation is increasing globally,” according to Ansari. This, and the diversification of the economy in collaboration with a strong private sector, the government hopes will make Qatar one of the world’s top investor destinations.

“We believe that the country’s hydrocarbons sector will remain predominant in the foreseeable future,” says Jamil Naayem, associate director of MENA Economics at S&P Global Market Intelligence. “In particular, the North Field development in two phases is likely to translate into a massive increase in gas production capacity, from 77 million metric tons per annum to 142 before the end of 2030.”

Qatar recently announced that a further 16 million metric ton boost to its gas expansion plans amid likely strong demand from Asia and Europe as they seek to diversify their energy sources. S&P Global Market Intelligence forecasts average real GDP growth for Qatar of 4.4% over the medium term—2026 to 2030—primarily due to the expected surge in gas exports.

Qatar’s development targets for financial services are ambitious but achievable, Ansari argues, given the growing importance of Persian Gulf economies like Qatar as part of the global emerging markets universe. The government sees finance and banking as a key support for the economic diversification project, particularly in fintech, and as a means of attracting more foreign capital.

The Qatar Financial Centre (QFC) recently signed a memorandum of understanding with Partior, which provides a tech-driven global unified ledger market infrastructure for clearing and settlement, to help drive the kingom’s financial market.

“The signing reflects the QFC’s commitment to form strategic partnerships with global industry leaders to develop a secure and sustainable financial infrastructure in Qatar,” Yousuf Mohamed Al Jaida, CEO of the QFC, said in a statement. “We aim to enhance innovation and provide an enabling ecosystem for the growth and development of the fintech sector and companies in this industry.”

Last year, in line with Qatar National Vision 2030, the Qatar Central Bank (QCB) launched its Qatar FinTech Strategy 2023. The aim is to develop and diversify the financial services sector and increase competitiveness and is based on four main axes: establishing a pioneering infrastructure, prioritizing innovation and growth in fintech, empowering companies through fintech offerings, and making Qatar a fintech hub.

Qatar FinTech Hub (QFTH), supported by Qatar Development Bank (QDB), is a critical element of the QBC’s fintech strategy. Its primary objective is to foster development of a fintech industry by collaborating with key stakeholders such as financial institutions, technology providers, payment networks, global fintech hubs and regulators. Supporting the program is a $100 million venture capital fund managed by QDB.

The development push is about incubating new enterprises alongside existing and foreign-based businesses.

In February, the Qatar Investment Authority (QIA) announced a significant initiative to revolutionize the kingdom’s startup ecosystem, introducing its first venture capital fund of funds (FOF) with a $1 billion-plus commitment. Designed to boost innovation within the Gulf region and attract global venture capital, the FOF (yet to have an official name) will be complemented by the newly launched Startup Qatar platform, which aims to support new ventures and position Qatar as a significant player in the global startup scene. QInvest, the leading Qatar-based investment bank, will support these initiatives through financial intermediary and advisory services. The bank is also considering a direct participation in the FOF.

A pivotal aspect of the National Development Strategy is privatizing some businesses and enhancing public-private partnerships. PPPs facilitate economic diversification and support creation of a knowledge-based economy by encouraging innovation and competitiveness across all industries. By participating in or facilitating PPPs, QInvest and other banks expect to benefit from seeding new investment opportunities, particularly in emerging sectors and specialized economic clusters.

QInvest expects an uptick in capital market activity across equity and debt capital markets in 2024. This includes developing an active debt market, attracting institutional investors—aided by the planned introduction of sophisticated market features such as short selling and securities lending and providing incentives for local investors to improve asset allocation and help retain capital within the country.

Qatar is also enhancing its equity capital market through strategic initiatives to attract investors and increase market liquidity, including developing a new derivatives market. Last year, QInvest led the successful closing of the first-ever book-building subscription on the Qatar Stock Exchange for the IPO of Meeza QSTP, a managed IT services and solutions provider.

Much of the growth of Qatar’s financial sector is driven by Qatar National Bank (QNB), the region’s largest bank. In 2023, QNB supported the North Field Expansion project to increase Qatar’s LNG production over the next several years. QNB financed the subcontracting value chain for the project along with assisting in several other major projects in associated sectors.

The bank expects to see clients pursue emerging opportunities in the LNG space, attracting local and international investment while the NFE project generates ancillary benefits across other industries, including petrochemicals and heavy manufacturing.

Since 2022, the dramatic rise of the US dollar against virtually every other world currency has wreaked havoc on the profits of US multinationals as the value of their foreign earnings plummeted. In the second quarter of 2023 alone, the average hit to earnings for publicly traded North American companies was a whopping $0.05 per share, according to the Quarterly Currency Impact Report conducted by consulting firm Kyriba. Currency volatility has moderated somewhat in 2023, but shifting expectations for inflation and future interest rates have made the environment no less challenging for finance executives.

“The US dollar has been meandering this year, and that still causes headaches for treasurers because of the peaks and valleys,” says Andrew Gage, senior vice president at Kyriba.

Gage’s firm tracks the impact of currency fluctuations on the financial results of 1,700 public companies, half in North America and half in Europe. In the second quarter of 2023, companies disclosed a combined $29.14 billion in currency impacts on their financial results. The actual numbers are far larger for the whole group, as most companies do not quantify the impact of currency movements on their results. The trend, however, is clear. FX volatility remains high, and the pain is felt across global markets as the US dollar fluctuates.

“Currency volatility is like Jupiter’s Red Spot: It moves around a lot,” says Gage. “We saw some of that in European results for the second quarter, and I think companies in Europe may experience more [currency] headwinds than those in the US through the end of this fiscal quarter.”

Corporate reactions to the increased volatility in FX markets vary. A survey of 245 corporate treasury departments worldwide conducted in 2022 by Deloitte & Touche found that 76% were using derivatives to hedge their currency exposures, while 24% reported other preferences. A large plurality of respondents, 45%, ranked FX volatility as one of the top five challenges for their organization. “The volatility has come down from last year, but a lot of organizations are just beginning to come to terms with it,” says Erik Smolders, a managing director at Deloitte’s Treasury Advisory Services. “Some companies want to eliminate their FX exposures; others see it as a cost of doing business and are willing to take some of it on the chin.”

Invariably, those taking it on the chin emphasize the results of their foreign operations in nominal numbers without adjusting for changes in currency prices, hoping that investors will look through currency fluctuations and focus on underlying business trends. “It depends on how companies have been talking to their investors over the years,” says Smolders.

However, the increase in volatility has upped the ante for corporate finance executives, and many are now looking for more-effective ways to manage their FX risks. “I’ve had many more companies ask for assessments of their hedging programs in the last 12 months,” says Smolders. “They want to know how to handle their exposures better and manage costs.”

US and Asian multinationals, typically less inclined to hedge currency risks than their European counterparts, are increasingly looking for solutions to manage risks in a more volatile environment. Netflix is a case in point. As a global leader in video streaming services, Netflix has exposure to more than 45 currencies in its operations and has historically tolerated the swings in reported earnings due to currency movements. However, 2022 was a tipping point for the company. CFO Spence Neumann revealed in a 2022 third-quarter earnings call with analysts that “there’s about 2.5 points of FX drag in our margin. That equates to about—it’s about $1 billion of revenue drag.”

In 2023, the company implemented an FX risk management program to limit the impact of short-term currency movements and reduce the need to raise prices or cut costs in response to them. Netflix disclosed it would use standard forward contracts to hedge some—but not all—of its currency risks.

When managing currency risks, the solution can sometimes be as painful as the problem. With the heightened volatility in currency markets, the cost of hedging risks has risen dramatically for companies since the US Federal Reserve began raising interest rates in early 2022. Treasury executives now need to decide when the higher costs of hedging risk outweigh its benefits.

“The responsibility of the treasury department to manage currency risk isn’t only about hedging. It’s also about managing the cost of hedging,” says Kyriba’s Gage. “A lot of corporate risk management programs were established in low interest rate environments. Now that rates are back up, companies need to think differently about them.”

Deloitte’s Smolders also advises his clients to take a measured approach to identifying foreign currency exposures before deciding if and how they should be hedged. He recommends that companies take steps before considering what derivative instruments to use for hedging purposes.

First, companies should determine if they must take on a currency risk or if they can offload it to suppliers or customers and avoid worrying about currency price fluctuations.

Second, larger companies can reduce the amount they need to hedge by netting their currency exposures in costs and revenues across their organizations.

Third, intercompany hedging activities have tax issues. If a company can hedge its net currency exposure, it should consult with tax advisers about where and in what markets to undertake the hedge.

Finally, accounting for hedges remains an issue in currency-risk management. Most companies use simple forward currency contracts for hedging because they are simple and likely to qualify for favorable hedge accounting treatment. When derivative hedges are deemed ineffective, which requires complicated calculations, the results must be recognized in the income statement.

The key to good currency risk management is having good data from which to make decisions. For many large companies, producing that data is challenging, since different parts of their organization still operate in silos.

“Companies need to have confidence with their currency exposures, and they need the ability to analyze them across their organizations,” says Gage. “They need the right data at the right time.”

That remains an elusive goal for most large companies. In the 2022 Deloitte survey, the largest number of respondents (83%) cited the lack of visibility into their currency exposures and the reliability of their forecasts as a key challenge they faced in managing FX risks. The second most-cited challenge (71%) was the manual identification and capture process for those exposures.

“Getting good data out of enterprise resource planning systems is a consistent challenge for companies,” says Smolders. “Companies operating with more than one system have more problems.”

The renewed volatility of the currency markets in the past two years is a powerful motivator for companies to accelerate the digitalization of their treasury function. This can provide the data they need to make better decisions about their overseas investments and operations. Global financial executives will struggle to control them effectively without an accurate big-picture view of companywide currency and financial exposures.

The volatility is not likely to decrease anytime soon. Wars, inflation, supply chain crises, and divergent central bank monetary policies will likely continue to make FX markets more treacherous for global corporations.

“Companies have had to navigate through sustained crises for about four years now, and I don’t see that changing,” says Gage. “Currency volatility is now a front-burner issue for them.”

Global Finance selects its award winners based on objective factors such as trans-action volume, market share, breadth of offerings, and global coverage, as detailed in public company documents and media reports.

Our criteria also include subjective factors such as reputation, thought leadership, customer service, and technology innovation, using input from industry analysts, surveys, corporate executives, and others. Although entries are not required in order to win, decision-making can be informed by submissions that provide additional insight.

Last year was nothing short of historic for our Best Global Foreign Exchange Bank, UBS. Between the takeover of its longtime rival, Credit Suisse, in what analysts call the most important banking M&A in history, and the substantial growth of its foreign exchange (FX) operation in developing markets, the behemoth bank has done it all with unrivaled excellence.

The takeover of its rival’s operation led to substantial growth in clientele and traded volume in European markets, resulting in solid profitability growth. It also led to key additions to UBS’ FX team, further expanding the bank’s knowledge.

At the same time, UBS teams in Asia, the Middle East, and Latin America have kept working relentlessly to improve the bank’s digital offering for emerging market currencies.

As a result of this unmatched year, the Swiss-based giant now ranks as one of the largest private wealth managers in the world, with undisputed market share in Europe. It has also watched its emerging markets FX operation mount into one of the world’s largest, expanding the bank’s offerings to its clients worldwide.

Among the bank’s most significant global technological breakthroughs is UBS’ FX Engine Room, with which the bank can place all analytics in one place for use by its global sales force, thus broadening the footprint of its operations to clients looking to trade currencies on a global scale.    —Thomas Monteiro

Driven by constant strategic investments and rock-solid market positioning, BBVA takes home our award as the Best FX Bank for Corporates in 2023.

With a global presence covering key markets such as the US, Mexico, Colombia, Peru, Argentina, and Europe; adherence to the Bank for International Settlement’s FX Global Code; and a commitment to compliance, BBVA offers a comprehensive FX-services suite that caters to both the broader and the most specific needs of corporates worldwide.

The Spanish-based bank has maintained its core principles, providing world-class strategy and research-tailored insights while investing in cutting-edge technology.

Notable innovations have included improved onboarding with eMarkets and dynamic FX pricing in Colombia, 24-hour FX trading, and a customized mobile app for small and midsize enterprises across the network.

BBVA’s accomplishments among corporates helped the bank strengthen its leadership in Mexico, Peru, Colombia, Spain, and Turkey. The bank improved its position in Argentina, where it increased its share in the corporate FX spot market and sustained leadership in imports and exports.          —TM

With solid growth in key emerging markets and an increasing foothold in both the US and Europe, Santander reaffirmed in 2023 its status as a pivotal institution for corporations operating in some of the globe’s fastest-moving markets.

By providing extensive coverage with over 50 currency pairs; an unmatched clientele; and knowledge of the market in countries such as Brazil, Mexico, Argentina, and Spain, the bank can guarantee that its clients stay ahead of the curve amid the intrinsic difficulties associated with emerging market currency trading.

In a year in which currency volatility proved a challenge for those based in both developed and developing markets, Santander’s comprehensive trading platform offers diverse options for trading across various channels. It includes streaming capabilities for online pricing in spot, forwards, swaps, non-deliverable forwards, FX options, and structured product trading.

The Spanish-based giant also provided top-of-line global research, market updates, strategies, and FX publications to its clients, ensuring an edge over the competition.

Moreover, with a dedicated team of expert trading and sales professionals based in several key markets for emerging markets currencies, Santander’s clients were able to navigate the complex FX landscape confidently and efficiently.            —TM

Liquidity concerns spilled over in 2023 into some of the world’s key markets due to the failures of historical powerhouses such as Credit Suisse and Silicon Valley Bank. Farther south, in Brazil, Itaú Unibanco not only weathered the challenges but also achieved outstanding performance metrics.

These numbers ensured the top-line stability of the bank’s reserves and liquidity offerings, showcasing Itaú’s resilience in the face of global economic uncertainties.

In 2023, the Brazilian financial giant posted an impressive net income of $6.3 billion and a loan portfolio amounting to a robust $224.5 billion. Backed by solid reserves and growing profitability, Itaú’s FX operation thrived, showcasing an above-average return on equity of over 21%.

This trend was also backed by the bank’s continuing investments in technology. Via an impressive compound annual growth rate of 43.5% since 2020, these helped guarantee speed and ease whenever clients needed large sums of foreign currency.

As a result of the bank’s best-in-breed liquidity offering, it effortlessly operated some of the largest FX transactions of its history, such as a $1.2 billion dividend payment for a prominent global beverage company and a single-tranche transaction totaling $1.3 billion for a client in the energy sector.      —TM

Bank of New York Mellon (BNY Mellon) won the Best FX Market Maker award due to its market position, excellent client service, financial performance, and continued technological development. BNY Mellon is one of the top five global US dollar payment clearers. Its client franchise includes 97 of the top 100 banks worldwide and 89 of the top 100 investment managers.

BNY Mellon Treasury Services added new business across strategic payment solutions and liquidity products. It drove higher payment volumes while generating traction as it built its digital payments and related FX and trade businesses. FX revenue has increased, primarily driven by the volume of client transactions, including hedging activities. The bank is a leading provider of global payments, liquidity management, and trade finance services. The bank has extensive experience providing trade and cash services to financial institutions and central banks outside the US.

In emerging markets, the bank is active with custody, global payments, and issuer services. BNY Mellon is a full-service global provider of FX services, actively trading in over 100 of the world’s currencies. It serves clients from trading desks in Europe, Asia, and North America.     —Darren Stubing

The 2023 global leader in sustainable finance, Societe Generale (SocGen) once again proved its core commitment to meeting the diverse demands within the broad environmental, social, and governance (ESG) spectrum.

The global sustainability markets’ recovery from the challenges of 2022 is expected to propel full-year 2023 green, social, sustainable, and sustainability-linked bond issuances to between $900 billion and $1 trillion, according to S&P Global. SocGen’s customers were able to enjoy best-in-breed market positioning, gaining a significant edge over the competition.

The French powerhouse’s FX team helped support its ESG products for customers worldwide, including the bank’s flagship ESG benchmarks, sustainability swaps, sustainability options, and sustainability-related derivatives.

The bank also stepped on the gas by providing hybrid trade financing offerings to its customers, linking traditional finance to sustainability goals, thus helping to fuel ESG investments the world over.

Additionally, in November, SocGen launched its first-ever digital green bond, registered directly on the Ethereum public blockchain. This strategic move aims to enhance transparency and traceability in ESG data and broaden the bank’s currency-related sustainable offerings.     —TM

JP Morgan was awarded Best FX Commodity Trading Bank, as its well-executed strategy consolidated its FX commodity trading activities, capitalizing on its top ranking in fees and market share in investment banking.

The bank is the top ranked in research, underpinning its strength in FX commodity trading. It has a longstanding leadership position in energy, power and renewables. It has made significant investments in the low-carbon energy transition. From local production to worldwide trading, JP Morgan has a strong presence in the metals and mining industry, including key areas in the Americas, Europe, the Middle East, Africa, and Asia-Pacific; and the bank has deepened its footprint in Australia and India.

JP Morgan has achieved excellence in FX commodity trading execution, aided by technology and analytics. Its FX and commodities trading platform provides access to fast and reliable electronic market-making and order placement across every commodity class—including base metals, precious metals, energy, agriculture, and commodity indexes—with tradeable prices in multiple currencies. Its platform can send over 120 currencies and receive more than 40 across 200 countries.  —DS

FirstRand, the operator of the Rand Merchant Bank (RMB) corporate investment bank and of the retail and commercial lender First National Bank (FNB), for South Africa and the region, is this year’s award winner as Global Finance’s Best Foreign Exchange Bank for Africa. This top African financial institution has been rewarded for carefully marshaling its foreign exchange (FX) business and its mobile and online offerings.

Offering FX solutions from personal travel to corporate, remittance partnerships with international companies such as PayPal and MoneyGram, and an FX clearing hub for African banks, FirstRand has been a trailblazer in the African FX market over the past year.

The company says its mobile application and online enhancements for FX are a “continuous focus for individuals and commercial clients,” adding that “smart messaging such as SMS, emails, and [app push notification] are in progress” for 2024.

Straight-through processing enhancements have made a difference in getting clients to move away from manual payments to platform transactions, with the FNB banking application bringing FX transactions to a readily accessible mobile platform.

FNB and RMB are also building a foothold in the world of cryptocurrency transactions and FX blockchain payments. With an FX staff complement of 599, FirstRand accounts for approximately 33% of all banking sector FX volume in its primary market of South Africa.

A further presence across Africa in countries such as Mozambique, Zambia, Botswana, Namibia, Nigeria, and Ghana saw FirstRand’s regional FX profits grow in 2023 by 15% over the previous year. In August 2023, RMB launched a foreign currency clearing solution for African banks.      

—Tawanda Karombo

DBS Bank is the largest bank in Southeast Asia, with global operations across 19 markets. With its vital FX centers in London, Tokyo, and Singapore, the bank presents itself as a seamless connectivity and liquidity provider with FX products, including nondeliverable forwards, FX swaps, and precious metals. As of 2023, DBS’ one-stop global cross-border payment solution has covered 132 currencies across 190 countries.

The bank’s FX business supports large corporations, multinational corporations, and small and midsize enterprises (SMEs) by offering a spectrum of services, such as sophisticated FX payment with integrated, competitive, and committed FX rates—as well as access to transparent pricing and analytical tools. Regardless of size, corporate clients all have access to efficient and secured FX and forward transaction platforms that safeguard against currency fluctuations.

DBS’ commitment to the FX business is also reflected by the increasing number of employees who have dedicated themselves to it over the years and by the bank’s ongoing effort to build global distribution channels with new technology investments and initiatives.

—Lyndsey Zhang

Raiffeisen Bank International (RBI) has long been a significant player in the Central and Eastern Europe (CEE) banking market—it founded its first CEE subsidiary in Hungary back in 1986—and is today active across 12 countries in the region, with almost 18 million customers and some 45,000 employees.

FX is a large part of the bank’s business, and RBI is actively trading in the currencies of most countries of the region, offering a comprehensive product portfolio with competitive pricing and reasonable rates for more than 100 currency pairs. It has been at the forefront of digital innovation, using cutting-edge systems to speed trading, improve accuracy, and reduce trading costs.

Two years ago, RBI established partnerships with AxeTrading, a fixed-income-trading software company, and with Integral, a leading FX tech provider, to provide real-time streaming of FX prices into bond trading. Since 2021, it has also been rolling R-Flex, a digital solution for FX conversion, across CEE, starting in Romania before RBI in Croatia and Hungary adopted what it describes as a simple yet secure user-friendly platform that prioritizes clients’ needs. The plan is to extend R-Flex across RBI’s operations in other CEE countries, giving customers access to a state-of-the-art system that simplifies and speeds FX trading.

—Justin Keay

Amid the volatile FX landscape of 2023, BBVA managed to secure the top market position in several key markets across Latin America, thus providing its customers with unmatched opportunities and products.

In addition to its unique market knowledge, one of the main secrets behind BBVA’s success throughout the year was its relentless dedication to boosting its award-winning technological capabilities. The Spanish-based bank’s FX operations underwent significant enhancements, showcasing this dedication to innovation and client-focused services.

The onboarding process for eMarkets clients saw substantial improvements, incorporating DocuSign for streamlined and efficient client interactions. The introduction of direct market access marked a pivotal moment, providing FX spot clients with a new algorithmic execution service. Real-time FX application programming interface offerings for external clients, encompassing FX and payments, strengthened the bank’s connectivity.

BBVA further implemented dynamic pricing in Colombia and introduced FX SBP (single bank platform); and BBVA eMarkets in Argentina, covering spot and nondeliverable forwards. Enhancements in FX online services for enterprises in Colombia allow for payments from accounts held in other banks.

These strategic improvements earned BBVA recognition in the Global Finance awards and position the bank as a leading force in the dynamic landscape of FX operations in Latin America.

—Thomas Monteiro

The winner as the Best Foreign Exchange Bank in the Middle East, Saudi Arabia’s Al Rajhi Bank is the largest Islamic bank worldwide and has a dominant franchise in the Gulf Cooperation Council’s biggest banking market. Al Rajhi is ranked as the No. 1 bank in the Middle East for remittances by payment value.

The bank’s FX performance has been boosted by digital transformation. Retail, SME, and corporate businesses have expanded, with escrow accounts growing substantially. Its FX franchise has strengthened, with an increasing number of global counterparties and an extensive peer network of banking and financial institutions, further developing its treasury capability to deal in large FX trades. Al Rajhi’s Treasury Group has increased interbank FX counterparties to improve price and FX flow coverage and to access new markets and currencies. Onboard banknote and bullion interbank counterparties have been introduced to enhance supply, storage, and price economies. Several new module enhancements have been carried out on the core treasury management system to onboard new products.      
—Darren Stubing

Like all global banks, JP Morgan has invested heavily in its IT infrastructure and trading networks over the past decade. Headquartered in New York, the bank is in all major world financial centers. It provides corporate clients with everything from FX trading services to international payment processing, cash flow, and working capital management.

In a more volatile environment for global currencies, size matters. JP Morgan, UBS, and Deutsche Bank are the three largest players in the FX trading markets, accounting for roughly 30% of global FX transactions. The bank has an enormous pool of liquidity, with millions of customers across its consumer, commercial, and investment banking operations. It can execute large spot trades in up to 300 currency pairs internally by matching up customers, or it can work complicated orders across multiple external electronic markets. It is also one of the largest providers of FX derivatives contracts globally.

Technology is a significant selling point for JP Morgan. It employs artificial intelligence to enhance its FX trading algorithms that optimize execution services in all market conditions. It also helps companies to fully digitalize their treasury functions across global operations to give them a clearer picture of their FX and risk management needs.

—Andrew Osterland

Already a powerhouse in the European market, UBS skillfully took advantage of Credit Suisse’s March collapse to achieve once-in-a-lifetime boost to customer growth.

By combining its former rival’s market shares with its own, the bank was able to gather unrivaled positioning, which should remain for years to come, in the continent’s FX market.

Naturally, the M&A came with challenges, as UBS faced the need to regain confidence among former Credit Suisse clients and to onboard its rival’s top-line staff. This process led to a challenging yet rewarding second half of 2023, as customer satisfaction grew while FX margins temporarily compressed.

But despite the intricacies of the merger, the bank has continued to invest in deepening its already best-in-class suite of technological offerings for FX.

With significant improvement across the currency-trading spectrum, from FX swaps with its Neo STIR Analytics platform to improved FX liquidity algorithms with a new smart order router, UBS’ European-based customers enjoy a unique combination of unrivaled market positioning and knowledge with state-of-the-art technological FX products.

—TM

The performance of Islamic financial institutions (IFIs) continued to strengthen in 2022 despite challenging conditions in most markets as economies weakened, supply chains got squeezed and interest rates rose. Most Islamic banks benefited from their focused strategies on domestic markets, mainly retail and commercial banking.

Profitability rose for IFIs in 2022, with net profit increasing by 26% thanks to strong asset and loan growth. Islamic bank assets grew by 13% last year, again outpacing conventional banks. As a result, net financing (interest) income for Islamic banks accelerated, and margins widened. Impairment charges were also lower as banks maintained good financing asset quality. Islamic banks continued to experience growth in mortgage financing, particularly in the fast-growing market of Saudi Arabia.

This year’s winners of Global Finance’s Islamic Finance Awards are banks that have delivered good financial performance and maintained prudent balance sheets while investing heavily in technology and innovation and launching new products and services. In addition, award winners have recognized the importance of corporate and social responsibility and environmental factors as part of their strategies.

Kuwait Finance House (KFH) is named Global Finance’s World’s Best Islamic Financial Institution. KFH has a market reach across the Middle East, Turkey, Asia and Europe. In 2022, KFH successfully acquired Ahli United Bank. The acquisition makes KFH the second-largest Islamic bank worldwide, giving it a strong presence throughout the GCC as well as Turkey, Egypt, Iraq, Malaysia, the UK and Germany. KFH’s performance was strong in 2022.

 “While our products have demonstrated real economic value, KFH has succeeded in achieving a balance between promoting innovation and digitization while considering social, environmental and corporate governance standards,” says KFH chairman Hamad Abdulmohsen Al Marzouq.  “Accordingly, KFH reflects a true picture of the best future for Islamic banks.”

Al Rajhi Bank, the world’s largest Islamic bank and award winner of the Best Saudi IFI, also had a strong year in 2022, with high growth and profitability.

“Mortgage financing increased by 30% and financing for SMEs increased by 61%, coupled with increased activities in digital banking transactions,” notes Abdullah bin Sulaiman Al Rajhi, chairman of Al Rajhi Bank. “Continuing our focus on enhancing our digital framework to integrate our digital financial ecosystem further, the bank maintained its pioneering innovation of new digital products and services, such as digital letters of guarantee,” he adds.

Islamic banks generally remain in good financial condition overall. They are primarily funded by stable domestic customer deposits, and most have limited external funding exposure. As a result, further growth is expected this year in critical Islamic banking markets.

Economies and institutions in the Middle East are placing increasing emphasis on sustainability. This may seem contradictory, as the region produces over 25% of the world’s oil, has four of the top five oil-producing member countries of  OPEC+ (the Organization of Petroleum Exporting Countries plus Russia and several others who align with OPEC) and has one of the largest exporters of liquified natural gas in Qatar. Both oil and gas reserves in the region are substantial. However, regional countries acknowledge they cannot rely on hydrocarbons indefinitely; and most have introduced diversification and sustainability strategies. The sustainability focus in the region is gathering pace leading up to the UN’s COP28 climate change conference in 2023, hosted by the United Arab Emirates (UAE).

The Gulf Cooperation Council (GCC) countries aim to decrease use of fossil fuels for generating electricity and intend to raise the capacity of renewable energy to meet local electricity demand. Plans also include increasing participation of the private sector and reducing the role of the public sector. In addition, participants believe that the climate agenda could provide opportunities to further diversify GCC economies in growth sectors, such as the oil and gas industry, for the energy transition.

“There is an excellent and timely opportunity to diversify the economy further, using a green growth strategy and playing a leading role in the global transition to low-carbon economies,” says Issam Abousleiman, World Bank regional director for the GCC, the Middle East and North Africa (MENA). “The region could use the green growth transition to focus policies on developing green technologies that would reverse trends in productivity and enable the region to grow faster.”

GCC countries’ total GDP was estimated at around $2 trillion in 2022. According to the World Bank, their combined GDP could grow to an expected $6 trillion by 2050 if they operate as usual. However, suppose the GCC countries implemented a green growth strategy that would help accelerate their economic diversification. In that case, the World Bank says their GDP could potentially grow by 2050 to over $13 trillion.

Private Investment Speeds Transformation

Increasing private sector investment will be necessary to boost sustainability and the energy transition. Green finance is critical for new investments in renewable energy, sustainable transport and water management. In part, the lack of sustainable finance has resulted from a lack of investable projects. Sometimes, these have not made the necessary hurdles regarding transparency, institutional framework and policy. The region has many potential developments in solar energy and in green and blue hydrogen. In its fall 2022 Gulf Economic Update, the World Bank says that it is “important that GCC governments and sovereign wealth funds play a role in crowding in private sector investments and putting more emphasis on equity rather than debt financing.”

The UAE has initiated many projects and actions—particularly within the financial sector and sustainable finance—focusing on introducing systems to deliver funds from private finance to unlock necessary infrastructure investment and meet net-zero targets. Abu Dhabi is becoming a central commercial hub for nature-based carbon credits.

Financial institutions in the region are becoming more active in sustainable finance and want to increase activity. For example, following its green bond issue of $3 billion in 2022, Saudi Arabia’s Public Investment Fund (PIF), the kingdom’s sovereign fund, raised a further $5.5 billion in green bonds in February 2023. In three tranches up to 30 years in tenor, the issue was oversubscribed six times with strong demand from international investors. This is part of PIF’s strategy to invest over $10 billion in green projects over the next three years. It also diversifies PIF’s debt funding strategy.

Head of the Global Capital Finance division at PIF, Fahad AlSaif, says, “PIF’s second green bond issuance underlines the role PIF is playing in supporting Saudi Arabia’s green agenda as well as diversifying the local economy and unlocking new and sustainable sectors. PIF has a specific Green Finance Framework with a sustainable investment program including projects in renewable energy, clean transportation, energy efficiency, pollution prevention, green buildings and sustainable water management.”

Green Financing Takes Root

First Abu Dhabi Bank (FAB), the largest bank in the UAE and one of the pioneers in sustainable banking in the region, has committed to the region’s energy transition and sustainability targets. In 2022, FAB facilitated more than $9 billion of sustainability projects in green sectors. In addition, the bank aims to provide $75 billion in green financing for 2022-2030. It has long been active in green bond issuance.

“In 2022, we executed around half of our bond issuance in a green format [$1.5 billion], including three public benchmark transactions, including the [then] largest-ever [$700 million] green issuance from a MENA bank,” says the bank’s Chief Sustainability Officer Shargiil Bashir.

FAB is also active in advising on and structuring sustainability-linked loans for clients, linked to performance indicators, with periodic sustainability performance targets, incentivizing the client to meet sustainability targets over the financing period.

As the world’s largest integrated oil and gas company, Saudi Aramco has a pivotal role in sustainability, as do domestic capital markets in the region within a challenging global financial environment. Aramco’s president and CEO, Amin H. Nasser, believes a balance must be followed between oil and gas investment; capital markets; and environmental, social and governance (ESG) considerations. Nasser believes an increased focus on ESG is positive. Nonetheless, if ESG-driven policies are followed with an automatic bias against conventional energy projects, the subsequent underinvestment could have implications for the global economy, energy affordability and energy security. According to Nasser, oil and gas projects’ cost of capital has risen due to a higher perceived risk, and capital scarcity is a common phenomenon driven by ESG.

Investment in the oil and gas sector has decreased sharply, with upstream investment in 2022 of around $400 billion. “Proponents of the popular energy transition narrative paint a picture of a utopian world where alternatives are ready to replace oil and gas almost overnight,” Nasser told the Saudi Capital Markets Forum in February, “Likewise, they assume the massive global energy system—including less-than-reliable electric grids in many developing countries—can be transformed instantly. Unfortunately, too many participants in capital markets believe this rhetoric rather than seeing the reality. As the energy crisis in Europe has demonstrated, alternatives are not ready to shoulder the heavy burden of global demand. Indeed, the world will continue to depend on oil and gas for the foreseeable future. … For a less-risky global energy transition, everyone—including capital markets—must take a more realistic view of how the global energy transition will unfold.” The main challenge for capital markets connected to the energy transition, he added, is striking the right balance between financing new energy sources and continuing to support conventional energy and decarbonization.

In October, Aramco announced the creation of a $1.5 billion sustainability-focused venture capital fund that aims to “invest in technology that can support a stable and inclusive energy transition.” Managed by the venture capital arm of Aramco, “The fund is an extension of the company’s efforts to meet the world’s growing energy demand with lower greenhouse gas emissions. The fund plans to invest in technologies supporting the company’s announced net-zero 2050 ambition for its wholly owned operational assets as well as development of new lower-carbon fuels.” Other initial focus areas will include carbon capture and storage, energy efficiency, nature-based climate solutions, digital sustainability, hydrogen, ammonia and synthetic fuels. “The fund will target investments globally.”

In 2022, green bonds and sukuk in the GCC region amounted to a record $8.5 billion involving 15 issues, up substantially from the previous year. Moreover, green and sustainability bonds and sukuk are expected to grow higher in 2023 in MENA as banks focus on financing sustainability projects and as demand by international investors grows for these investment instruments. Supporting this, in February 2023, Dubai Islamic Bank issued a $1 billion 5.5-year sustainable sukuk, the largest sustainable issuance by a Middle East bank since June 2021.

The UAE’s COP28 president-designate, Ahmed Sultan Al Jaber, group CEO of the Abu Dhabi National Oil Company (Adnoc) and chairman of Masdar, a UAE state-owned renewable energy company, stresses the need for partnerships. However, he acknowledges that much still needs to be done and that the path to net zero represents a huge transformation. Adnoc recently allocated $15 billion for decarbonization projects by 2030, including carbon capture, electrification, new carbon dioxide absorption technology and enhanced investments in hydrogen and renewables. It is part of a multiyear plan to meet Adnoc’s Net Zero by 2050 ambition.