November 15,2009

Islamic Banking Bucks the Trend

By CSC staff, Shanghai

Islamic banking continues to see strong growth while conventional banking has stagnated, according to the 2009 Top 500 Islamic Financial Institutions in The Banker magazine's November issue.


The assets held by fully sharia-compliant banks or Islamic banking windows of conventional banks rose by 28.6% to $822bn in 2009, from $639bn in 2008. This is a striking contrast to The Banker's 2009 Top 1000 World Banks survey in July, which showed annual asset growth of just 6.8% at conventional banks. Islamic finance as an industry is building a solid track record: the compound annual growth rate for 2006-2009 is 27.86%, with assets forecast to hit $1033bn in 2010.


"A conservative approach to risk and close links between the financial sector and real assets has helped shield the sector from the worst of the credit crisis. Finding improved ways to manage liquidity at Islamic banks, as well harmonising sharia and prudential compliance between institutions and markets, remain significant hurdles, but transparency and financial reporting remain challenges for the Islamic banking industry," said Brian Caplen, editor of The Banker.


The Gulf Cooperation Council (GCC) states remained the dominant segment of Islamic finance, with $353.2bn or 42.9% of the total global aggregate. Iran remains the largest single market for sharia-compliant assets, accounting for 35.6% of the global aggregate. Outside the Middle East, Malaysia remains by far the largest player, accounting for 10.5% of the global aggregate, but other markets are expanding rapidly. The UK now accounts for just under 2.5% of global sharia-compliant assets, and the Syrian Islamic finance market expanded an eye-catching 500%.


Now in its third year, The Banker's Top 500 Islamic Financial Institutions ranks retail, commercial and investment banks, insurance companies and asset managers according to their sharia-compliant assets.


Delegates at this year's Islamic Financial Intelligence Summit, the physical event of the Top 500 Report, received copies of the report and industry professionals discussed the findings of the rankings and research report. In addition to the published report, The Banker's Top 500 Islamic Financial Institution rankings data is also available online as a research tool.


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