Corporate and treasury & investment assets take center stage (By IFN)

Corporate and treasury & investment assets take center stage

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GLOBAL: Non-retail Islamic banking assets are on a positive growth trajectory as the Sukuk market continues to develop, said the Ernst & Young World Islamic Banking Competitiveness Report 2013. The firm expects to see a rapid rise in both corporate and treasury & investment assets particularly in major markets such as Malaysia, Saudi Arabia, the UAE and Turkey. The study, which compared the markets’ conventional and Islamic banking sectors showed a relatively competitive trend in asset allocation between both sectors in the areas of retail, corporate and treasury & investment. Malaysia’s Islamic banking sector showed a market breakdown of 36% for retail banking assets, 23% for corporate banking assets, and 41% for treasury & investment assets, while Saudi Arabia demonstrated a market breakdown of 36% for retail banking, 32% for corporate banking, and 32% on the treasury & investments side for 2012. Turkey, which showed the most asset allocation in the corporate banking side at 61% for Islamic banking, demonstrated 37% in assets for the same sector on the conventional banking side. The UAE demonstrated a more even breakdown between the three sectors in its Islamic banking sphere, with 30% in retail, 43% asset allocation in corporate banking and 28% in treasury & investment; rivalling the 20% in treasury & investment on the conventional side. The report also added that the demand for Sukuk instruments will continue to grow, “outpacing global supply and providing opportunities for banks to establish and grow their fixed-income advisory platforms.” However, it also said that there has to be better risk management and corporate governance to improve asset quality.