Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey to herald future industry developments - IFN

Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey to herald future industry developments

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GLOBAL: In the EY ‘World Islamic Banking Competitiveness Report 2013-14’ released yesterday, the professional services firm projects that global Islamic banking assets with commercial banks will surpass US$1.7 trillion for the year 2013. The assessment indicates a US$180 billion increase compared to US$1.54 trillion recorded last year. Despite an exceptional average annual growth rate of 17.6% over the past four years, the report suggests that the future of Islamic banks will be primarily measured by the quality of growth as opposed to asset accretion. EY reveals that excluding Iran, rapid growth markets such as Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey represent 78% of international Islamic banking assets held with commercial banks. According to Gordon Bennie, a partner and the MENA financial services leader at EY, trade patterns are shifting decisively in favor of rapid growth markets and these six countries will be the major beneficiaries thereof. Holding the largest pool of financial and intellectual capital of the industry, the six markets are expected to drive the next wave of development across existing and new markets. Commenting on future prospects Ashar Nazim, a partner at EY’s Global Islamic Banking Center, said: “We expect Islamic banking to grow at a compound annual growth rate of 19.7% across Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey to reach US$1.6 trillion by 2018 compared to US$567 billion in 2012. Speaking at a recent Islamic banking conference Dr Mohammad Y Al Hashel, the governor of the Central Bank of Kuwait, pointed out that despite the promising growth forecasts, flaws still exist in the industry. “Although such developments are encouraging, they remain short of what we aspire [to], with regards to the ambition to make more progress and growth in the Islamic financing industry and bolster this sector competitive status at the international level,” he said. He further noted that Islamic funding remains a tiny overall proportion of overall global assets; accounting for an estimated 1% of the world’s total financing statistics.