Still finding its way onto the broader global stage, Islamic finance is expanding its reach and rising to new heights in delivering added value to consumer and business markets alike
In researching this year’s awards, found that Islamic financial institutions performed better overall than their conventional counterparts in many markets, with above-average rates of growth in assets and profit. Standard & Poor’s estimates that Islamic finance assets have surpassed $2 trillion worldwide and are likely to rise to $3 trillion in the next decade. “Islamic finance stakeholders’ efforts and the industry’s contribution to development of the real economy will likely fuel growth,” said S&P’s global head of Islamic Finance, Mohamed Damak.
However, growth in Islamic banking assets tends to be concentrated in a handful of markets, namely Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey, which EY denotes as the Qismut countries. Despite talk of Islamic finance flourishing in regions such as North Africa, some markets, like Tunisia, Morocco and Egypt, have yet to fully embrace it by drafting a comprehensive set of laws and regulations that will deepen Islamic financial markets. In Asean, growth in Islamic finance is still concentrated in markets such as Indonesia and Malaysia, and, to a lesser extent, Singapore.
In Europe the appetite for attracting investors from the Middle East and Asia using Islamic financial instruments such as sukuk is still low. The relatively sparse interest may be attributed to a number of factors, including a lack of political and regulatory will to support Islamic finance and a lack of knowledge about how to benefit from Islamic instruments. The weak appetite, however, does not overshadow the potential for Islamic finance to grow in Europe if the right regulatory conditions are met.