Global Islamic Banking Assets To Exceed $3.4 Trillion by 2018

Global Islamic banking assets  are set to exceed $3.4 trillion by 2018, fuelled by economic growth in core Islamic financial markets, according to specialists at Ernst & Young (EY).

EY’s Global Islamic Banking Centre said the combined profits of Islamic banks broke the $10 billion mark for the first time at the end of 2013.

“While the profit numbers for Islamic banks are impressive, they are still, on average, 15-19 per cent lower than traditional banks in these markets. Regionalisation and operational transformation, which are currently underway in several leading Islamic banks, will help to close this gap,” said Ashar Nazim of EY.

EY forecasts significant growth potential for the industry with an already existing 38 million global customers. However, only a small number of these customers have transitioned from a traditional to an Islamic banking relationship.

According to EY the average number of Islamic banking products per customer is just over two, this is considerably less than five products per customer for traditional banks.

Many GCC countries are taking steps to implement Islamic banking on a larger scale, to give the sector a boost, with Islamic lenders seeing an increase in profits.

In addition, asset growth within GCC Islamic banks is expected to outpace that of conventional banks, with Qatar posting the fastest asset growth in the region, according to credit ratings agency Standard and Poors (S&P).

S&P is forecasting Qatar’s Islamic banks will grow over the next five years, reaching an asset base of $100 billion by 2017, up from $54 billion at the end of 2012, which would place Qatar as the third-largest Islamic banking market after Saudi Arabia and the UAE.