Islamic banks “are making mark”

Islamic banks “are making mark”

A new report from a global strategic management consulting firm shows that Islamic banks are making their mark in non-Muslim countries.

The AT Kearney study reveals that these wholesale banks target a broad set of corporate, institutional and high net worth clients, both Muslims and non-Muslims.

While Sharia-compliant banking has traditionally focused on the GCC and Malaysia, there has recently been a dramatic increase in the number of Islamic banks outside the core markets, most remarkably in the UK, where the number of Islamic banks has more than doubled over the past 12 months.

At the same time, their products remain popular in their core markets, where Islamic banks consistently outgrow their conventional competitors.

“While Islamic banks in their core markets take a universal banking approach, with retail, corporate and investment banking business lines, they focus on wholesale banking in the UK,” said AT Kearney Middle East manager of financial services Dr Alexander von Pock.

Assets in the Islamic banking sector grew to over $250 billion globally in 2006, according to the UK Treasury.

In the GCC, this segment expanded to 15 per cent of the total system and is expected to reach 50pc within the next few years.

The success at home enables these banks to export their business abroad, as Islamic banks from the GCC are the major shareholders behind all of the newly set-up Islamic banks in the UK.

However, the strategic approach they take on differs between them and their home countries.

“Islamic investments have often been outperforming conventional investments, hence Western, non-Muslim investors are becoming more interested in Islamic finance.

“They account for up to 40pc of buyers,” AT Kearney Dubai associate director Maktoum Al Maktoum.