Islamic banking grows 4.3% in 2020: IFSB

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Kuala Lumpur

The Islamic banking segment’s performance grew by 4.3% in 2020, compared to 12.4% in 2019.

As of Q3 2020, the Islamic banking segment accounts for 68.2% (72.4% in 2019) of the total value of Islamic Financial Services Industry (IFSI) assets, the declining share being mainly due to increased prominence of the Islamic Capital Market (ICM) segment.

This is as per the Islamic Financial Services Board (IFSB), which issued the ninth edition of its annual flagship publication: the Islamic Financial Services Industry Stability Report 2021.

The report provides updates on the key trends in growth and developments, analytical and structural outlooks, as well as examines the resilience of the IFSI against the Covid-19 shock and other vulnerability factors across the Islamic banking, Islamic capital market and takaful segments.

The IFSB Secretary-General, Dr Bello Lawal Danbatta stated: “The issuance of the IFSI Stability Report 2021 takes place at a time when the world is still faced with the challenges of the Covid-19 pandemic and its implications for the stability of the global financial system.”

“Despite an unclear pattern and duration of the pandemic, the IFSI sustained its growth momentum to an increased estimated worth of $2.70 trillion in 2020, and recorded a growth rate of 10.7% year-on-year (y-o-y) based on significant improvement across the three segments of the IFSI, especially in Islamic banking and the Islamic Capital Market,” he said.

Dr Bello highlighted that based on various analyses contained in the IFSI Stability Report 2021, the performance of the global IFSI projected a sense of optimism in the short term.

This will depend on, among other things, timely access to, and the efficient roll-out of, Covid-19 vaccines; jurisdictions’ capital flows, fiscal and monetary policy spaces and capacity to recover from recession; digital transformation process; and the extent of contact-intensiveness of key economic sectors. The report said the Islamic banking segment retained its dominance in the global IFSI.

The domestic market share for Islamic banking in relation to the total banking segment continued to increase in at least 23 countries.—TradeArabia News Service

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