Global Islamic finance industry to sustain double-digit growth in medium term – S&P

By bne IntelliNews November 28, 2013

The global Islamic finance industry, whose assets are estimated at USD 1.4tn, will sustain a double-digit growth in the coming two to three years, Standard & Poor’s said on Nov 28.

The industry’s growth has remained strong in 2013 despite the uncertain recovery elsewhere in the world's financial markets, S&P noted.

After more than a decade of strong growth, the Islamic finance industry “is still in a formative stage,” the ratings agency said. It is a matter of time, however, before the industry “achieves critical mass, as the pool of assets broadens and deepens, and enhances liquidity.”  

Islamic finance remains a demand-driven market with scarce supply, S&P said. The industry remains dented by a limited range of Islamic financial centres and their various regulatory frameworks. The expansion and enhancement of existing centres, coupled with a more transparent regulatory environment, could build the momentum for the growth needed to break into the mainstream, S&P underscored.

Such a scenario will likely take centre stage in 2014. S&P commended the fact that newcomers in the industry such as Oman, Turkey and Nigeria, have started to trace the footsteps of fast-growing pioneers, such as Malaysia. Several countries, mainly in Africa, are also seeking to boost their Islamic finance industry, according to S&P.

The gradual set up of local and regional regulatory frameworks and establishment of standards will minimise the barriers that are preventing the industry from achieving its full potential, S&P said. The two regional Islamic finance centres, Asia (mainly Malaysia) and the GCC, are set to lead the way. Ambitious regional powerhouses like Turkey may also help foster a more systematic approach to channelling and shaping growth in Islamic finance, S&P noted.

Related Articles

Lebanon becomes European Bank for Reconstruction and Development shareholder

Lebanon has become the fifth member country from the Southern and Eastern Mediterranean (SEMED) region to join the European Bank for Reconstruction and Development (EBRD), becoming a shareholder with ... more

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

US lifts laptop ban on Turkish Airlines flights as of July 5

Passengers boarding an early morning July 5 Turkish Airlines (THY) flight to John F Kennedy International Airport in New York were allowed to include laptops and electronic devices larger than a ... more