Islamic banking grows
Assets of Islamic banks operating in the UAE grew 6.7 per cent to Dh565 billion by the end of first half 2018, up Dh35.5 billion over the corresponding 2017 period as the global size of Islamic finance assets is projected to grow by nearly 72 per cent to Dh13.87 trillion by 2022.
DUBAI — Assets of Islamic banks operating in the UAE grew 6.7 per cent to Dh565 billion by the end of first half 2018, up Dh35.5 billion over the corresponding 2017 period as the global size of Islamic finance assets is projected to grow by nearly 72 per cent to Dh13.87 trillion by 2022.
Data provided by the UAE Central Bank shows that the noticeable growth in Shariah-compliant financial operations in the country mirror the significant development of this kind of banking products which have been enjoying impressive growth across the region over the past few years, with their assets accounting for 20.55 per cent of total bank assets in UAE, valued at Dh2.749 trillion, by the end of June 2018.
The total size of the global Islamic finance assets is projected to grow by nearly 72 per cent to Dh13.87 trillion by 2022 from Dh8 trillion in 2017 as Islamic countries seek to improve education and regulations about the industry and host industry-focused seminars and conferences, according to a new report.
According to the Islamic Finance Development Report and Indicator, Malaysia topped in Islamic banking assets followed by Bahrain, the UAE, Oman, Pakistan, Kuwait, Saudi Arabia, Jordan and Brunei in terms of industry growth.
The report, prepared and released by Thomson Reuters and the Islamic Corporation for the Development of the Private Sec- tor, ranked the UAE 6th in quantitative development and sukuk sub-indicators; 10th in Islamic Banking and other Islamic financial institutions; and 9th in takaful category.
According to CBUAE figures, the value of credit provided by Islamic banks during the first half of the year surged to Dh367 billion, a growth of five per cent against the same period in 2017. Loans and credit facilities provided by Islamic banks make up 22.6 per cent of total loans provided by the entire banking system in the country, valued at Dh1.621 trillion by the end of June.
Up to Dh292.1 billion of loans were provided by Shariah-compliant banks in the country to the private sector and Dh32.6 billion to the public sector in addition to banking facilities worth Dh11.7 billion to the government, during the monitored period.
Deposits held by Islamic banks amounted to Dh392.4 billion, making up 23.3 per cent of total deposits held by UAE banks, estimated at around Dh1.7 trillion by the end of June.
Rapid growth markets (RGMs) Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey, known as “QISMUT”, are expected to see their collective Islamic banking assets reach an estimated $1.6 trillion in 2018, according to EY’s latest report “World Islamic Banking Competitiveness Report 2013 — 14: The transition begins.”
With expanding economies and a fast-growing customer base for financial services, QISMUT is fast becoming an attractive prospect for any bank looking to grow its revenues, having commanded 78 per cent of the international Islamic banking assets in 2012 and growing at a five-year CAGR of 16.4 per cent.
By 2018, these RGMs are also envisaged to represent GDP of $ 4.8 trillion with a mostly young population of around 419 million, making them the drivers of the next wave of development for the industry.
“These markets are vital to the future globalization of the Islamic banking industry. They’re home to 17 of the top 20 Islamic banks and to the global standard-setting bodies. They also hold the largest pool of financial and intellectual capital that will drive development across Islamic banking’s existing and new markets,” says Ashar Nazim, Global Islamic Banking Centre Leader at EY.
Of the 78 per cent of the total international Islamic banking assets, Malaysia contributed 22 per cent or $125 billion worth of Islamic assets with a 20 per cent market share and is further expected to grow to more than $390 billion by 2018.