Islamic banking: ‘Share expected to increase in Gulf’

Ratings agency predicts conventional banks’ solid positions will get in the way.

DUBAI: Islamic banks are set to boost their market share in the energy-rich Gulf states to nearly 30% in the next five years, ratings agency Standard and Poor’s said on Monday.

“We think Islamic banks’ market share of overall banking system assets in the Gulf Cooperation Council (GCC) countries could gradually inch closer to 30% over the next five to six years, from just under 25% currently,” said Standard and Poor’s credit analyst Timucin Engin.

The agency said it expected total GCC banking assets, both conventional and Islamic, to rise to $2 trillion by the end of 2015, from $1.7 trillion at year end 2013.

But solid market positions by conventional banks in the region will prevent the fast-growing Islamic banks from attaining a bigger share, said Engin.

The GCC region groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

It has one of the world’s largest Islamic banking markets and the rating agency said government support should help the sector to keep expanding its market share.

The agency added that it expected Islamic banks would continue to grow faster than their conventional peers in the next couple of years, particularly in Qatar and Saudi Arabia, where domestic credit is projected to grow the most.

Published in The Express Tribune, October 14^th, 2014.

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