Once again the close of the year has come around more quickly than we ever thought possible, and it is time again for our annual review and outlook of the Islamic finance industry with a comprehensive overview of the highs, lows, peaks and troughs of the last 12 months – and what turbulent months they have been.
The euphoric highs of 2014 saw an explosion of non-Muslim sovereign issuances push Islamic finance into the mainstream public eye and record Sukuk volumes drive the sector forward amid strong interest, robust retail performance and a burgeoning global asset management industry. Increasing awareness of the strength, stability and sovereign support for Islamic banking brought a wider reach and greater diversity to the table, while the sector also gained traction in a broad range of new markets and asset classes.
Yet 2015 brought a rather different flavor to the table. The year started strong with some major Sukuk issuances from the , , the government of Ras Al Khaimah and of course the groundbreaking -backed issuance from . However, as the year progressed the markets became increasingly turbulent: with oil down over 60% since July 2014 and severe commodity price volatility. The economic outlook of the major economies remained a concern and China’s weak performance led to a global backlash that hit emerging economies and Asia particularly hard. With growth forecasts slashed and liquidity tightening, emerging markets saw a flood of capital outflows as foreign investors worried about a US rate hike and falling returns pulled out their cash – while domestic investors also fled to safer havens such as the US and Europe. The low oil prices have already begun to impact monetary policy – Saudi Arabia has pulled in billions of dollars in sovereign wealth investments overseas to plug its widening fiscal deficit, while government bank deposits in the GCC have fallen and public spending sharply contracted, leading to tighter credit conditions, limited liquidity for Gulf banks and an overall slowdown in the market.
Islamic finance to still grow in 2016 but with a sag
Growth in Islamic finance will likely slacken in 2016, in Ratings Services’s opinion. The industry has achieved critical mass, with total assets exceeding US$2 trillion by our estimate.
The Islamic banking and finance industry may still be posting positive growth but the industry has recognized that to move forward and be at par with the conventional, digital innovation is imperative. In this exclusive interview with MOHAMMED KATEEB, the group chairman and CEO of , we explore latest banking technology trends, market outlook and gain an insight into the firm’s strategy, aspirations and achievements.
NBF Islamic: Steadfast in growing market share
The UAE Islamic banking market is competitive to say the least, yet, in the short 12 months since its launch, — the Shariah banking window of ( ) — has managed to turn a profit and attract over AED1 billion (US$272.2 million) in deposits. VINEETA TAN speaks to the person driving the success of the business, CEO Vince Cook, and asks what else we can expect from one of the emirates’ youngest Islamic banking players.