Islamic banking is expected to grow to $ 4 trillion by 2020

Views Number 87 Date 11/06/2017 - 19:33

Economy News Baghdad:

"Islamic banks are still able to double their assets every five years," said Abdul-Ella Belaitiq, secretary-general of the General Council of Islamic Banks and Financial Institutions. "The sukuk offered by governments in the region is not enough to absorb the large liquidity of Islamic banks, .

"The volume of Islamic banking is growing, although the past two years have witnessed a slowdown in growth compared to the previous decade," Belaatik said in an interview with Al-Iktissad News.

He said there was a difference in growth between markets according to the extent of Islamic banking maturity, in some of which seven per cent were recorded, while others rose to between 15 and 20 per cent. "There is a steady growth in assets. We note that the size of Islamic banking is doubling globally every five years. In 2010, it was $ 1 trillion and in 2015 it is more than $ 2 trillion. Now it is expected to reach $ 3.5 or $ 4 trillion. 2020. "

"In 2014, profitability fell in countries where liquidity is tied to oil resources such as the Gulf and East Asia, but in the past six or nine months Islamic banks have been able to adapt to new oil prices," he said. The liquidity problem of some countries last year and governments have reduced investments, but in the last quarter of last year things are getting better. "

But he noted that the year 2017 still faces some challenges and a blurry vision of the geopolitical fluctuations in countries, including the elections in more than one Western country, describing the situation as "cautious optimism about the future."

Belaitiq said that the recent merger of Islamic banks, especially in Bahrain and Qatar, is a natural development in light of the situation of many Islamic banks. "This is a kind of inevitability. In the last decade or two we have witnessed the creation of banks without capital "Since the start of the global financial crisis, there have been regulatory changes and precautionary measures. These standards are a burden on Islamic banks, especially small ones, given the cost of risk management and liquidity requirements."

He stressed that the central banks in the countries of the region have been directed to Islamic banks over the past years calls for the integration of the solution to overcome these problems and the ownership of capital to help them achieve better growth.

On the value added tax in the Gulf region and its impact on Islamic banks, which some believe may suffer the most because of the nature of its work, he said that it is not new to the Islamic banking sector in general, especially that the tax applied in Egypt, Tunisia and other countries, Sepabi's experience in providing advice and assistance.

As for his views on Gulf sovereign sukuk issues, especially those in Saudi Arabia and Bahrain, he said, "This is a very important issue, and we are in the pipeline. Before the oil price challenges arose, we were asking for sovereign issuances because Islamic banks needed them to manage liquidity. Issued similar instruments, such as Hong Kong, Britain and Luxembourg.

"Financing Islamic banks for infrastructure outside the sukuk framework is another problem, which is related to laws, controls and how to manage risk, although some countries have started to issue sukuk sovereigns, but levels are not enough," he said.
"We want an opportunity for Islamic banks to help with development plans and infrastructure financing, and we ask governments to allow mechanisms to be put in place for this investment," he said.

On his assessment of the Islamic banking experience that was recently launched in Morocco, Belaithik said that there is a state of anticipation about the experience of naming partnership banks first, instead of "Islamic banks", as well as creating a unified national committee for fatwa to replace the Sharia committees of each bank. However, he hoped that the experiment would contribute to expanding the financial coverage of the country and bringing those who did not enter the financial system into the economic circle, as well as the opportunity to enter West Africa, which accounts for 20% of the transactions of the banks of Morocco, especially countries such as the Gambia and Senegal.

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