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Wednesday 16 June 2021
HomeWorldGrowing popularity of Islamic finance underlined

Growing popularity of Islamic finance underlined

Dubai Chamber of Commerce and Industry underlined the growing popularity of Islamic finance over the conventional sector in a preparatory report for the 10th World Islamic Economic Forum (WIEF) to be held in Dubai from October 28-30.

The report, based on a recent study by Ernst and Young, said that global Islamic banking assets have registered cumulative annual growth rate of about 16 per cent during the period 2008-2012, reflecting the radical shift from conventional financial system in favour of Islamic finance.

As the emphasis on low risk product alternatives kept the sector insulated from the financial meltdown, Islamic banking products and services have consistently gained market share in recent times, growing up to 50 per cent faster than the traditional banking sector in some markets.

The 10th WIEF, organised by Dubai Chamber and the WIEF Foundation, is set to give a new direction to the Islamic finance industry, and help consolidate efforts, share knowledge and experiences to leverage the emerging opportunities in the changing dynamics of the global economy.

The Dubai Chamber report states that there are 38 million Islamic banking customers around the world with two thirds of them in Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey (QISMUT). This group was the fastest growing markets for Islamic banking in 2012, with total Islamic banking assets commanded by the QISMUT reaching about $567 billion and registering CAGR of about 16.4 per cent over the period 2008-2012.

Among these six prominent Islamic finance countries, Saudi Arabia is the biggest market in terms of Islamic banking assets with estimated value of $285 billion in 2013 compared to $245 billion in 2012. The research note shows that Saudi Arabia represents about 43 per cent of the total Islamic banking assets in all the six countries.

The UAE is emerging as another serious player in this sector with total Islamic banking assets growing to about $95 billion in 2013 compared to $83 billion in 2012 while assets in Qatar grew from $55 billion to $68 billion during the same period.

The Dubai Chamber research also shows that, globally, Islamic banking profit pool is projected to reach $30.5 billion by 2018 driven mainly by higher retail focus. In 2012, QISMUT Islamic banking profit pool was estimated at $9.4 billion and it is expected to reach $26.4 billion by 2018.

According to Kuwait Finance House 2013 estimates, the Mena, excluding the GCC states, remains the focal market for Islamic finance, with $599.4 billion in total assets, followed by GCC with $536.9 billion assets. Interestingly, Islamic finance is also gaining ground in North America and Europe with banking assets worth $59.8 billion and total assets reaching $71.6 billion in 2013, reflecting the industry success in transcending barriers to gain greater market share in new areas.

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