Islamic banks now provide the best returns on cash deposited for two, three, four and five years – and these market leading rates are encouraging more UK customers to put money into sharia-compliant accounts.
Since advertising savings rates of up to 4.8 per cent on comparison sites such as Moneysupermarket.com, the Bank of London and the Middle East (BLME) has seen a fourfold increase in customer deposits.
Despite the recent credit crunch, an increase in commodity prices and global economic slowdown, the Islamic securities markets is poised for solid growth, said a top banker on the sidelines of a major Islamic finance summit in Bahrain.
The geographical spread of Islamic securities products and activities is likely to grow in the Europe, especially the UK and France, Asia Pacific countries, North Africa and the energy-rich Central Asian states, remarked Central Bank of Bahrain (CBB) executive director, financial institutions supervision, Abdul Rahman Al Baker.
Islamic fund assets under management (AuM) grew by 7.6 per cent to $58 billion (Dh213 billion) in 2010, up from $53.9 billion in 2009, according to the fifth annual Ernst & Young Islamic Funds and Investments Report (IFIR 2011) released yesterday.
The growth was largely due to market performance and partially on account of new money inflows. Assets under management are largely dominated by equities — about 39 per cent.
Sukuk and infrastructure should be a natural fit. While the sukuk market has flourished over the last four years, these have concentrated more on raising finance for balance sheet purposes; refinancing existing more expensive debt including very often conventional finance debt; overcoming the mismatch between short-term deposits and longer term liabilities by raising longer term financing; and providing working capital and funds for expansion.
Top Islamic banking officials will meet in Singapore this week to discuss ways to revive an industry which has stalled as interest in new markets cool and legal uncertainties cloud the role of sukuk as funding tools.
Once touted as a viable alternative to traditional banking, Islamic finance has failed to make a mark outside its core markets as countries from Britain to Hong Kong and Australia put on hold sukuk issuance plans and proposed regulatory changes to accommodate sharia banking.
As the Islamic funds industry seeks to shake off a period of stagnation, leading players are developing far-sighted strategies that will get the industry back on the growth track.
However, some major challenges still remain and more than 400 leaders in the global Islamic investments industry will gather at the seventh Annual World Islamic Funds and Financial Markets Conference, which will be held from September 26 to 27 in Bahrain, to plot new growth horizons and forge winning business models fully in tune with the new economic realities of the Sharia-compliant investments market.
First Community Bank (FCB) has introduced an Islamic-compliant unit trust underlining the growing list of Islamic products targeting the Muslim market.
The firm has received approval from the Capital Markets Authority (CMA) to rollout the fund, which will make selective investments in equities, government bonds and real estate options that are Sharia-compliant.
Turkey’s first Islamic fund, run by Istanbul-based brokerage Bizim Securities, is seeking to attract more investment from the Persian Gulf with its Shariah-compliant stock index.
The Istanbul Stock Exchange started an Islamic gauge of 30 shares on Jan. 6. Bizim, whose parent company Boydak Holding owns shares in companies including an Islamic bank, is planning to raise 100 million Turkish Liras and through investments set to begin in the second half of 2011, Deputy Chief Executive Avşar Sungurlu said in an interview last week.
RSS Feed