Islamic banks in the United Arab Emirates (UAE) continued steady growth in 2010 with assets of these banks up by about 11 per cent, according to the Dubai Chamber of Commerce and Industry.
Collective assets of the eight Islamic banks in the UAE, the second largest Arab economy, were AED 269 billion, accounting for around 16.2 per cent of the overall banking assets of Dh1.66 trillion, at the end of 2010, according to the chamber.
In a study, the chamber said the UAE had eight Islamic banks at the end of 2010, with nearly 260 branches, controlling about Dh198bn in deposits. They accounted for around 10.9 per cent of the total deposits with the country’s 23 national banks and 28 foreign units.
The size of global Islamic finance industry is at around $1 trillion (Dh3.67 trillion), with Malaysia topping the contribution. ?Islamic finance in the UAE has been recording a steady and impressive growth in last few years. Industry experts estimate the industry size to rise to $2 trillion in three to five years.
According to industry experts, growth opportunities lie for Islamic finance in various areas including SME financing and also by tapping into the wealth of high net worth individuals which is estimated to increase at 8.1 per cent on an average from 2009-2013, with Asia-Pacific and Middle East seeing the maximum increase in wealth.
Strong liquidity profile has been one of the most important strengths of Islamic banks in this region, apart from lesser exposure to sub prime assets, due to these banks are considered a safer option by customers.
The Dubai Chamber said that long term prospects for the industry are bright and “Islamic banks in the UAE are recording steady growth because of rising demand for shariah-compliant banking business…growth is expected to continue in the coming years due to an increase in income and population,” it said.
The study noted that demand for Islamic banking services, including from non-Moslems, gained momentum after the 2008 global fiscal crisis jolted most conventional banks worldwide.
“Studies show that Islamic banking turnover will surge from around Dh3.7trn in 2010 to Dh9.9trn in 2015,” it said. “But it should be noted that Islamic banks are not fully immune to global crises and world economic downturn as was shown in the wake of the 2008 crisis, when many banks suffered from liquidity shortages.”
The study said that despite the positive economic climate in the UAE, Islamic banks in the country face some challenges in the short term…we expect that these banks will fully recover in the coming period and will be able to expand business in untapped markets such as Turkey, Syria and? southeast Asia.”
Source: Emirates 24/7