Islamic finance likely to advance on firm growth

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fe Bureau: Chennai, Feb 03 2010, 22:14 IST

Tags: Islamic Finance Growth | Islamic Banks

Just when many of the world's financial systems have been fighting to weather the capital market turmoil, Islamic finance growth has stayed strong and will likely be brisk during the next year, said Standard & Poor's Ratings Services in a report 'Islamic finance is likely to advance In 2010 on firm growth and widening geographic reach'.

"We believe Islamic finance has become a recognized and a specific segment of finance on its own with still-bright growth prospects," said Standard & Poor's credit analyst Mohamed Damak. "We think Islamic finance is set to make further inroads in developed Western markets while Southeast Asian countries will likely fuel Islamic finance advance in Asia in 2010."

At the same time, though S&P believes there are a number of important questions for which the answers are not necessarily clear, they may play a part in shaping the sector's future growth. Specifically in non-Muslim countries, and especially in Europe, we consider they include the size of demand for Sharia-compliant products, regulatory and tax environments, support of the political and financial communities, sovereign sukuk issuance, and the possibility of a common strategy for extending Islamic finance across EU countries.

Assets of the top 500 Islamic banks expanded 28.6% to total $822 billion at year-end 2009, compared with $639 billion at the end of 2008, according to publicly available information.

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