From Matthias Knab, currently in Africa: According to Celent, a Boston-based financial research and consulting firm, Islamic finance has become a major global industry, with over 300 institutions currently involved in both Muslim countries and international markets. Globally, Islamic banking assets are estimated between US$600 billion and $650 billion and have registered a growth rate of 10-15% per year over the last decade, Celent says in its new report, Islamic Banking in the Middle East and North Africa.
Some key findings of the report include:
- Islamic banking is an attractive business because it is generally highly profitable. Major Islamic banks have been less impacted than conventional banks by the current financial crisis.
- The Middle East is currently one of the most developed Islamic banking markets, with more than US$255.8 billion in Islamic banking assets. Over the last decade with the expansion of economies, this region has seen exceptional growth, both in terms of financial institutions providing Islamic products and services and assets under management. Furthermore, Islamic banking assets have grown more rapidly than conventional assets in the Middle East region. However, Islamic banking is not equally developed across all countries.
- Islamic banking is in an infancy stage in the North African region, representing approximately US$18 billion in 2007.
- Islamic banking markets in Saudi Arabia and Kuwait are reaching their maturity phase, with Islamic banking assets growing less rapidly than other countries in the region and representing 42.5% of total banking assets in Saudi Arabia and nearly 30% in Kuwait. These two markets are not particularly attractive for entrants, given the fierce competition of settled players.
- Islamic banking markets in Qatar and UAE are more appealing for entrants because they are currently in the growth phase. Indeed, in the UAE, Islamic banking assets represent less than 15% of the total banking assets, growing by a CAGR of 48.1% between 2003 and 2007. More impressively, in Qatar, Islamic banking assets grew by a CAGR of 54.3% between 2003 and 2007, reaching 18.4% of total banking assets.
- With 25 Islamic banks in 2005, Bahrain hosts the largest concentration of Islamic financial institutions even if Islamic banking assets represent only 6.7% of the total banking system. Islamic banking market in Bahrain is in a growth phase, with a CAGR of 41% between 2003 and 2007. However, this market is difficult to enter because of the numerous competitors already established.
- Islamic banking in Turkey has strong growth potential because the market is far from being saturated, with Islamic banking assets only representing 3.3% of the banking system in 2007. Islamic banking could expand to the mass market, which is the largest in the region, with nearly 72 million......................
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