Ratings agency Moody’s is predicting that Islamic Finance will continue to outgrow conventional assets in core Islamic markets as the appetite for Shariah compliant financial services increases.
In its report, Cross-Sector Islamic Finance: Strong longer-term growth prospects despite relatively flat 2018, Moody’s cites not only growing demand for Islamic finance from individuals but also government support as the primary drivers for the domestic and global growth of Islamic finance.
Penetration of Islamic banking in the GCC region has grown from 31% in 2008 to 45% in 2017. Saudi Arabia remains the largest market for Islamic finance with $292 billion of assets as of September 2017. The fastest growing market is Oman which expanded at a rate of 20% during the first nine months of 2017, mainly due to the fact that it was a late entrant into Islamic finance.
Meanwhile annual sukuk issuance more than doubled ($42 billion to $100 billion) between 2008 and 2017, driven by GCC sovereigns and Moody’s expects a similar level of issuance in 2018, although a rise in oil prices might reduce sovereign financing needs.
The takaful sector also experienced strong growth in 2017 with Moody’s estimating gross premium income of more than $20 billion, helped by Islamic insurers’ increased penetration in Southeast Asia and North Africa.
©2018 funds global mena