Islamic banking sector assets to reach USD1.6 tln


08/02/2014 10:35 AST

KFH-Research, a subsidiary of Kuwait Finance House Group KFH-Group stated that the Islamic finance industry will continue to grow driven by both demand and supply factors, and further facilitated by government agencies and financial regulators. The report, which focuses on 2014 Islamic finance expectations, forecasts that Islamic finance industry will continue to draw tremendous double digit growth rates across all sectors. Moreover, the report forecasts that the total Islamic finance assets to reach $2.1 trillion by the end of 2014, and the total asset of Islamic banking sector to reach $1.6 trillion, the details are as follows:

The industry will continue to grow driven by both demand and supply factors, and further facilitated by government agencies and financial regulators.

In a newly released report “Islamic Finance Outlook 2014” by Kuwait Finance House Research Limited (KFHR), the Islamic finance industry is forecasted to continue to chart tremendous double digit growth rates across all sectors, with total industry assets estimated to reach approximately $2.1tln as at end-2014. Over the next few years, KFHR foresee the industry’s focus in four key spectrums that will take the industry to greater heights:

1) Strengthening of financial stability and enhancement in inter-linkages between Islamic finance jurisdictions

2) Tapping into potential real sector economic activities to expand market share for e.g. by supporting the financing needs of the infrastructural development programmes in GCC and Malaysia

3) Expanding the range of product offerings to appeal a wider customer base e.g. Islamic wealth management products for high net-worth individuals (HNWs) and Islamic trade financing solutions for corporates

4) Enhancing talent, education and research development to improve on the industry’s efficiency and innovative capabilities.

The Islamic finance industry’s assets are estimated to have amounted to $1.8tln as at end-2013, recording an over 16% y-o-y growth. Leading the growth has been the Islamic banking sector which represented an almost 80% share of the global Islamic banking assets in 2013. Among the largest global Islamic banking jurisdictions (excluding Iran) in 2013 are Saudi Arabia which captured 18% of global Islamic banking assets, followed by Malaysia (13%), UAE (7%), Kuwait (6%), and Qatar (4%). In 2014, the Islamic banking sector’s assets are expected to reach $1.6tln. Advanced Islamic banking markets in the GCC and Asian regions are expected to evolve in greater sophistication in terms of products offerings, as well as from the aspect of regulatory advancement by the financial regulators. On the demand side, Shari’a compliant investments and financing products have been dominantly fuelled by a promising economic outlook in the GCC and abundant liquidity flows.

Breach

In 2013, the sukuk market, managed to once again breach the $100bln mark in terms of new sukuk issuances to close the year with a total of $119.7bln. However the amount fell 8.77% short of the recorded amount in year 2012. Malaysia once again led the 2013 new sukuk with a 69% share of total issuances, followed by Saudi Arabia at 12%, United Arab Emirates (6%), Indonesia (5%) and Turkey (3%).

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