Islamic finance to grow in the Gulf despite uncertainty in oil market
MUSCAT: Islamic banking profit pool in the Gulf Cooperation Council (GCC) region crossed $12 billion for the first time in 2014, with expectations that the sector will continue to grow amid regional economic uncertainty, says a report.
Key strategic imperatives for the Islamic finance industry were discussed at a press conference held by the World Islamic Banking Conference (WIBC) and Ernest and Young in Bahrain on November 1.
Held one month ahead of the 22nd Annual WIBC, the press conference was an opportunity for EY to highlight key strategic insights from the much-awaited EY World Islamic Banking Competitiveness Report 2015-2016, which will be launched at WIBC 2015 on December 2.
Speaking at the press conference, Nazim, partner - global Islamic finance leader at EY, said that the key findings of the report provide some groundbreaking revelations.
Digitalisation
“Innovations in technology and digitalisation call for transformation of customers’ banking experience across channels and all touch points and this transformation can help banks anticipate the changing needs of customer,” he noted. According to the report, there are expectations that the sector will continue to grow amid regional economic uncertainty.
Nine core markets are currently the growth engines for the global Islamic finance industry. The report identifies a group of 40 banks across these nine core markets that are systemically important to the future progress of the industry. Out of the 40 banks, over 50 per cent have an equity base of $1 billion or more.
“The growth of the Islamic banking industry in the Gulf Cooperation Council, specifically in Saudi Arabia, in the past few years can be attributed to the increased public sector spending on the back of oil revenues. It will be interesting to see how banks are affected as governments draw their reserves from the banking sector to narrow the gap on budget deficits due to the drop in the global oil price,” said Muzammil Kasbati, director, global Islamic banking center, at EY.
The UAE’s Islamic banking sector in particular has been gaining momentum backed by its innovation and growing digital footprint, thus putting it on par with Malaysia in terms of global market share.
WIBC 2015 is a three-day gathering of the industry’s leaders taking place on December 1, 2 and 3 in Manama.