Islamic Banking: New Markets To Emerge

BMI View: We expect 2014 to be a key year for the global Islamic finance industry as several new markets come to the fore. It has been our long-held view that rather than becoming an integrated global financial system, Islamic banking will see the creation of regional hubs. Even with this slightly fragmented outlook, we still expect significant growth for the sector. That said, we think the impact of low base effects is beginning to wear off and we expect to see lower growth rates in the coming years.

We expect 2014 to be a pivotal year for the US$1.5trn global Islamic finance industry. Despite political turmoil rumbling on across the Middle East and North Africa (MENA), strong sukuk issuance from banks in the Gulf Cooperation Council (GCC) and sovereigns in Asia, combined with landmark product and regulatory developments, have helped bolster the industry. Our core view is that 2014 will see the development of regional hubs as the Islamic banking industry grows, but little coordination on a global level. We still see potential for strong growth, in part fuelled by a more promising global macroeconomic outlook. However, growth rates are likely to be slightly lower over the coming years on the back of higher base effects.

Recent Developments

  • Outlook Remains Positive
    Global Islamic Bond Issuance

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