Shariah compliant assets expected to hit US$2.1 trillion by the end of 2014

Shariah compliant assets expected to hit US$2.1 trillion by the end of 2014

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GLOBAL: In a recent report released by KFH Research, global Islamic finance assets are projected to record a double-digit growth, reaching US$2.1 trillion by the end of 2014. Assets in the Islamic banking sector are expected to increase to US$1.6 trillion, boosted by a surge in the global Sukuk market. The industry’s assets are said to have recorded a 16% year-on-year growth, reaching an estimated US$1.8 trillion as of the end of last year. The factors driving the industry’s development include the stronger demand for Shariah compliant or ethical financing solutions as well as staunch support from multilateral organizations and regulatory bodies. A major growth area for Islamic finance is the banking sector, representing an 80% share of the global Islamic finance assets in 2013. The largest Islamic banking jurisdiction is Saudi Arabia, capturing 18% of the global Islamic banking assets: followed by Malaysia at 13%, the UAE at 7%, Kuwait at 6% and Qatar at 4%. In its 2014 forecast, KFH expects the GCC and Asian regions to progress in terms of product offerings and regulatory advancements. According to the report, the Sukuk market managed to exceed US$100 billion in 2013 with a total of US$119.7 billion in new issuances. The momentum is expected to pick up in light of the upcoming sovereign issuances from the UK, Ireland, South Africa, Tunisia, Mauritania, Senegal, Luxembourg and Oman; as well as international organizations such as the Asian Development Bank and the IDB. As for Takaful, the KFH research report suggests that gross contributions from the global Takaful industry will surpass the US$20 billion mark this year. At a compound annual growth rate of 18.1% from 2007-12, its progress is underpinned by economic, financial and socio-demographic trends.