Global Islamic finance market until 2026: GCC is strongly


Dublin, November 04, 2021 (GLOBE NEWSWIRE) – The report “Islamic Finance Market – Growth, Trends, Covid-19 Impact and Forecast (2021 – 2026)” has been added to offer.

The factors that are driving the growth of the Islamic finance market are directing investments towards the huge growth opportunities in promising Islamic sectors.

The total industry value, according to major industry stakeholder organizations, in its three major sectors (banking, capital markets and TAKAFUL), global Islamic finance assets grew in double digits from a year over year for a total of 2019. Global Islamic banking is the largest contributor to this market and is worth $ 1.99 trillion, growing 14%. The Islamic bank holds a 6 percent share of global banking assets.

Global SUKUK’s outstanding amount stood at $ 538 billion, according to industry sources, thanks to strong sovereign and multilateral issuance in major Islamic finance markets to support respective budget spending. This included the first entries into the sovereign SUKUK market by Saudi Arabia and Nigeria, as well as the pan-African multilateral development finance institution, Africa Finance Corporation.

The pandemic has slowed the growth of the Islamic finance market. Sukuk is one of the hardest hit segments and will be in the doldrums of the slow trend. The main reason being Sukuk’s longer regularization process, many have chosen regular bonds to raise funds during the pandemic.

The Covid-19 pandemic and falling oil prices are hampering Sukuk’s growth. The first two quarters of 2020 saw high levels of volatility in global markets as the Covid-19 pandemic took hold and oil prices plummeted. Some of the largest sukuk issuers, often from oil-exporting countries, refrained from issuing sukuk in the first quarter amid market turmoil.

Key market trends

Islamic banking is the largest segment

Islamic banking is the largest sector of the Islamic finance industry, contributing 69%, or USD 1,992 trillion, of the industry’s assets. The sector is supported by a variety of commercial, wholesale and other types of banks. However, commercial banking remains the main contributor to the growth of the sector. There were 526 Islamic banks in 2019. However, the number of players is not necessarily indicative of the size of the industry, in terms of assets. The top 3 markets of Iran, Saudi Arabia and Malaysia contribute 63% of global Islamic banking assets, and Morocco is the fastest growing market for Islamic banking assets, where assets have doubled in 2019.

Growth in the sector is expected to be moderate in 2020 as Islamic banks around the world strive to preserve their capital bases rather than expand operations as they grapple with the economic fallout from Covid-19. Although the results of Islamic banks in major markets have been affected during the pandemic, this will be countered by injections of cash from government bailouts. As the world’s economies recover over the next five years, Islamic banking assets are expected to reach $ 2.44 trillion by 2024.

Islamic banking is generally considered to have two advantages over conventional banking. The first is the perception that Islamic banks are tied to a higher moral standard. They won’t take irresponsible risks and pay outsized bonuses to their top bankers. The second is that profits come from identifiable assets, not from opaque combinations of derivatives and securities. Because Islamic banks cannot make money from interest, they rely on ties to tangible assets, such as real estate and equity, charging “rent” instead of interest.

GCC and MENA contribute 70% of global Islamic finance assets

Sharia-compliant assets represent a significant portion of the GCC’s total banking assets. While in the Middle East and North Africa (MENA) region, Islamic banking assets represent 14% of total banking assets. In the GCC, the market share of Islamic banking has crossed the 25% threshold, which suggests that Islamic banks have become consistently important in these countries.

The asset class grew by 30% in 2019, in the GCC, with new launches of Islamic exchange-traded funds (ETFs) in a number of countries and ESG-related investment assets released. available through digital media which appeal to millennials in particular.

GCC Islamic financial assets reached $ 1,253 billion in 2019, or 44% of all assets, followed by MENA at $ 755 billion and 26.3 percent Southeast Asia at 24 percent, Europe, Asia, America and Africa for the rest. Islamic banking has acquired systemic proportions in Kuwait, Saudi Arabia and the United Arab Emirates, in accordance with the IFSB’s definition of systemic, at least 15% of banking system assets. Islamic retail banking in Bahrain has reached systemic proportions with a 27 percent asset share in retail banking and 13 percent asset share in total retail and wholesale banks. Oman’s entry into Islamic banking took place at the end of 2012.

Covid-19 offers a more integrated and transformative growth opportunity with a higher degree of standardization, a stronger focus on the social role of industry, and significant adoption of financial technology or fintech.

Competitive landscape

The Islamic finance market is fragmented with a large number of players trying to capture a significant share of the developing market. In some regions, such as Asia and Africa, it is growing moderately with the presence of a large number of local players and a few major players. However, GCC is a very competitive market, with the presence of a large number of international players. Bank Al-Rajhi, Dubai Islamic Bank and Kuwait House Finance are among the main players in the region.

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Companies mentioned

  • Islamic Bank of Dubai
  • National Commercial Bank Saudi Arabia
  • Bank Mellat Iran
  • Bank Melli Iran
  • Kuwait Finance House
  • Bank Maskan Iran
  • Islamic Bank of Qatar
  • Islamic Bank of Abu Dhabi
  • Islamic Bank of May
  • Islamic Bank CIMB

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