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 |  Subject: Islamic Banks Enjoy Double-digit Growth  Fri Nov 06, 2009 7:33 pm | |
| | Islamic Banks Enjoy Double-digit Growth | Rocel Felix
| | 7 November 2009 [/size] | </FONT>DUBAI — Islamic banks continue to boost their investments and other assets, while at the same time avoiding mistakes that have bedeviled some of the world’s biggest conventional banks in the wake of the global financial crisis, a joint survey by HSBC Amanah and The Banker Magazine showed.
The survey ranked over 600 retail, commercial and investment banks, insurance companies and asset managers with Shariah-compliant assets.
Assets held by Islamic banks and conventional banks with Islamic windows rose by 29 per cent to $822 billion, from $639 billion in 2008.
This is in stark contrast to a similar survey of The Banker on ‘Top 1,000 World Bank Rankings’ in July, which showed that the annual asset growth of conventional banks stood at a measly 6.8 per cent.
The Banker noted that at a time when asset growth in conventional banks slumped to 6.8 per cent from 21.6 per cent in the previous year, Islamic institutions were able to maintain the 28 per cent annual growth rate achieved in the past three years.
The survey said the Islamic finance industry continues to build a strong track record, and is expected to sustain its 28 per cent annual growth, with assets forecast to hit $1.033 billion in 2010. “A conservative approach to risk and a close link between the financial sector and real assets has helped shield the sector from the worst of the credit crisis. But finding improved ways to manage liquidity at Islamic banks, as well as harmonising Shariah and prudential compliance between institutions and markets, remain significant hurdles,” said Brian Caplen, editor of The Banker Magazine.
The Gulf Cooperation Council states remained the dominant segment of Islamic finance, with $353.2 billion or 42.9 per cent of the total global aggregate. Iran remains the largest single market for Shariah-compliant assets, accounting for 35.6 per cent of the global aggregate. Outside the Middle East, Malaysia remains by far the largest player, accounting for 10.5 per cent of the global aggregate, but other markets are expanding rapidly. The United Kingdom now accounts for just under 2.5 per cent of global Shariah-compliant assets, and the Syrian Islamic finance market expanded an eye-catching 500 per cent.
Despite the growth, the Shariah-compliant aggregate asset total is less than 1 per cent of the Top 1,000 World Banks aggregate asset total.
And while its risk-sharing philosophy and asset-linked strategy provide many attractions to both Muslims and non-Muslims alike, its core structure still raises concerns, The Banker said in its
July survey.
It said the benefits of a non-speculative approach are being offset by deficiencies in the standardisation of products, the secondary market in financial instruments, transparent pricing and effective liquidity management.
“It is important that the Islamic Finance industry continues to analyse its growth critically if it is to become a truly credible alternative to conventional banking in a significant number of markets,” HSBC Amanah Deputy Chief Executive Officer, David Dew.
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http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/business/2009/November/business_November174.xml§ion=business |
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