Islamic Banking Goes Global. Source: worldpoliticsreview.com

Reports by specialized financial institutions indicate that Islamic banking assets and assets under management in Islamic countries except Iran grew to about $450 billion, the deputy board chairman of [the Saudi] al-Salam Bank, Hussein al-Meiza, said in a speech before the Algerian Economic Forum. The volume of Islamic assets might increase to about $1 trillion by 2010.

Al-Meiza pointed out that Islamic banking is growing at higher rates than the [traditional] banking market and the levels of profits of Islamic banks and financial institutions are better than those of traditional banks in several Arab countries.

Statistics confirm that the deposits of Islamic financial institutions amounted to $58 billion, and their assets volume have rapidly increased from nearly $20 billion in 1997 to $84 billion in 2005. Furthermore, the growth rate in the Islamic financial industry in the Gulf region, as an example, is up by nearly 35%; with nearly 270 banks and financial institution exist in the Islamic countries, including 34 banks and financial institutions that operate in Bahrain, which has the largest number of such banks in the Middle East region. This reflects a shift from the traditional system to the Islamic system of investment, the Al-Salam Bank official noted.

Al-Meiza pointed out that the areas for future growth in Islamic banking include “sukuk” [Islamic bonds], paid by large projects in infrastructure and real estate with the desire of investors in the search for a variety of financial instruments, and the asset management that is expected to witness a boom due to the tremendous wealth in the region in addition to the markets of the Islamic Asian countries that are growing rapidly. Furthermore, the issuance of Islamic sukuk began to attract investors from Europe, the United States and Asia, in addition to the Gulf region, which is going through an unprecedented economic boom. In 2007, the sukuk market witnessed encouraging growth in terms of the number of offerings and the total value of deals. Al-Meiza attributed the reason for the increase in the volume of sukuk to the high oil prices, which climbed to a record level of nearly $100 per barrel.

Figures issued by the US bank Citygroup indicate that the value of Islamic funds worldwide is estimated at more than $3.3 billion with an anticipated growth of more than 25% over the next seven years, while the Islamic banks’ deposits are estimated at around $200 billion with an annual growth of between 10% and 20%.

al-Riadh, Saudi Arabia, January 24, 2008