Despite difficult operating conditions in most countries amid pandemic-driven economic downturns, demand for Islamic financing assets (lending) across the core Islamic markets will grow in 2021, according to rating agency Moody’s.
The rating agency said while the Islamic financing remained resilient in 2020 and it expects growth to continue into 2021. In the GCC mergers between Islamic and conventional banks, where surviving entities are Islamic banks, will drive further one-off increases in assets, as they did in 2019 and 2020.
Growth in Islamic financing assets remained steady in 2020, despite a marked slowdown in economic activity across core Islamic banking markets (which include the GCC, Malaysia, Indonesia and Turkey), and continued to outpace conventional asset growth.
As a result, the market share of Islamic financing assets in core Islamic markets increased to 32.8 per cent of total financial assets (including conventional bank loans) in September 2020, from 31.4 per cent in December 2019 and 30.4 per cent in
Islamic finance penetration in the GCC accelerated in the past decade to reach 45.7 per cent in September 2020 from 32 per cent in 2009. Saudi Arabia was the main contributor to this growth, although similar trends prevailed in the other GCC countries as well.