BY GABRIEL DIKE Another on danger list Tragedy struck the Lagos State University (LASU) on Friday as a 200 level female student from the Department of History and International Relations died after attending a send forth party. A second male student is said to be on danger list at Lagos State University Teaching Hospital (LASUTH). Both…
By BLAISE UDUNZE
Global Islamic banking assets are expected to cross the $1.8 trillion mark in 2013 up from $1.3 trillion in 2011. This was made available by Ernst & Young’s in its World Islamic Banking Competitiveness Report 2013. According to E&Y’s report, the Islamic banking industry continues to record robust growth, with the top 20 Islamic banks registering a growth of 16per cent in the last three years.
It was reported that Nigeria’s first licensed Islamic bank, Jaiz International Bank has continued to record robust growth as it aims to raise N12billion of the targeted capital base. Saudi Arabia has the largest market of the world’s Islamic banking assets.
According to the report, the Islamic banking industry in Saudi Arabia – with an estimated $207 billion of Islamic assets – was ranked first in 2011 followed by Malaysia with total assets of $106 billion and UAE third with total assets of $75 billion.
The form of banking is also growing in new markets such as Indonesia, Egypt, Iraq and Libya and E&Y noted that South Africa has made significant strides in the inclusion of Islamic Finance into its tax legislation with the relevant amendments expected to be effective from 2013. Across Africa, E&Y says the need for government Islamic Bond (Sukuks) has become more pronounced as in some instances banks are required to hold a certain percentage of interest bearing instruments. Islamic banks are prohibited from gaining from the yields that interest bearing instruments produce and consequently any interest received.
The obvious challenge remains around ensuring that a proper regulatory framework exists to facilitate both sovereign Sukuks and corporate Sukuks, noted the report. “The market currently has great interest in the sovereign Sukuk.
Sukuks are seen to be attractive as a result of the foreign direct investment (FDI) that it would attract particularly from the Middle East where investors will seek Shariah compliant instruments”, says Emilio Pera, Financial Services Leader at Ernst & Young. “Islamic finance continues to provide significant opportunities in Africa with Africa being home to more than 400 million Muslims.
With the majority of the Muslim community being unbanked together with the need to attract foreign investment from Gulf Cooperation Council (GCC) countries who seek Shariah compliant investments, the market appetite for these products continues to grow,” says Merisha Kassie, Director in Financial Services at Ernst & Young.
The strong global market growth forecast as outlined in the report, and the surge of activity in Africa with respect to the proposed issuance of sovereign Sukuks in South Africa and other African countries support the growing momentum of Islamic Banking in Africa.
Despite the projected asset growth and the introduction of new Islamic initiatives in a number of countries, E&Y observes that profitability continues to lag behind but with the implementation of transformation agendas over the next two to three years, Islamic banks will close the performance gap that currently exists with the overall banking industry.
According to Ernst & Young’s report, successful transformation could see the profit pool of Islamic banks rise by an additional 25per cent by 2015.