Mar 21 2013
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Rapid growth in Islamic banking assets
The country's Islamic banking assets were estimated to have grown by more than 23 percent during last year. Qatar's regulatory clarity has helped its Islamic banks to achieve the high growth rate, said the report by the Ernst & Young Global Islamic Banking Center.
There is potential for a strong Islamic capital market play in Qatar in future. Barring the conventional industry leader, Islamic banks are comparable in size to conventional peers. Large infrastructure spend will fuel continued profitable growth for the banking industry, the report noted.
The Global Islamic banking assets with commercial banks reached $1.8trn in 2013, representing average annual growth of 17 percent. Islamic banking growth outlook continues to be positive, growing 50 percent faster than overall banking sector in several core markets. Top 20 Islamic banks make up 55 percent of the total Islamic banking assets and are concentrated in 7 countries, including GCC.
Ashar Nazim, the partner at E&Y Global Islamic Banking Center said he expected a relatively positive outlook for the Islamic banking industry in the GCC. "Quality of growth remains under pressure and we expect more Islamic banks initiating an honest introspection of their operating model, especially with regards to the weak data management infrastructure," he noted.
Previously, the consultancy had estimated the Islamic institutions accounted for about a quarter of the entire banking industry in the GCC.
"Inability of most Islamic banks to generate accurate data and on time remains a serious concern for the management, the board as well as the regulators. Where such information is available, the analysis remains very rudimentary and has not really translated to a true competitive advantage," remarked Nazim.
On the Gulf's Islamic banks' operating model he said in comparison to their conventional banking peers, Islamic banks remain technologically disadvantaged as software systems are primarily designed for financial institutions based on conventional banking frameworks.
© The Peninsula 2013
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