Here's why growth in Islamic banking will slow in the coming years

The slump in oil prices is one factor.

Analysts at BMI Research expect growth in Islamic banking to be slow over the coming years, as lower-for-longer oil prices continue to weigh on the economic outlook of the Gulf Cooperation Council (GCC) countries, which account for more than two thirds of total Islamic banking assets.

Here's more from BMI Research:

While an uptick in sovereign bond issuance will compensate for some of the slower growth, we believe that opportunities will be concentrated in expanding into new markets, especially as a number of countries adopt regulations supporting the development of Islamic finance.

That said, a number of long-term obstacles persist, especially the lack of standardisation in the industry and the lower profitability compared to conventional banking.

With the exception of Malaysia, which accounted for 15.5% of total Islamic banking assets in 2015, the largest markets for Islamic finance are all oil-exporting economies , notably Saudi Arabia (33.0% of assets), the UAE (15.4%), Kuwait (10.1%) and Qatar (8.1%).

The slump in oil prices since H214 has forced governments to cut down on spending, resulting in a sharp slowdown in economic activity. This has in turn weighed on Islamic banking growth. Banks have remained relatively resilient, by looking to transform their business model and diversify their sources of revenues, for instance by putting a greater emphasis on asset management, brokerage and trade finance.

The UAE is also incentivising the use of Islamic finance, with the Security and Commodities Authority (SCA) having announced its intention to open up markets to smaller sukuk issuers and shortening the approval timeframe for issuance applications. That said, it will not be sufficient to prevent a slowdown, which has already started to take place.

Given our expectations for oil prices to stay low for longer, and amid existing market saturation in these core markets, we believe that opportunities will focus on expanding Islamic banking to untapped markets. In particular, we see growth potential in markets currently seeking to establish new regulations authorising and/or encouraging the use of Islamic finance.

Turkey will be one of the most exciting markets to watch over the coming years, with Islamic banks having increased their market share in recent years and the government's efforts to establish regulations encouraging more widespread use of sukuk. Also traditionally opposed to Islamic banking for political reasons, Morocco authorised requests to open Islamic finance institutions at the beginning of 2017, with the first branch opening in May.

This shows the potential for governments to introduce more favourable regulations, especially as it could increase financial inclusion among poorer citizens.

Bagaimana perkembangan perubahan fokus manajemen kekayaan bank?

Seorang analis mengatakan, "Ada hingga $25 miliar dalam biaya yang bisa didapat di Asia, tetapi ini pasar yang sulit.

Aplikasi blu oleh Group BCA memperluas ekosistem digital melalui BaaS

Strategi tersebut telah berhasil meningkatkan transaksi dan membangun kepercayaan nasabah sebesar 53,4% sepanjang 2023.

Christine Ip dari UOB merenungkan karir perbankan tiga dekadenya dan kembali ke dunia seni

Dia percaya bahwa keuangan dan kreativitas saling berkaitan dalam membangun kolaborasi talenta yang holistik di UOB.

Shally Koh dari Citi berbicara tentang bagaimana mendorong perbankan yang lebih beragam

Bank tersebut memperkenalkan program keterlibatan pria dan dukungan ibu sebagai bagian dari upayanya untuk kesetaraan gender.

Maisie Chong dari StanChart berbicara tentang tidak pernah menolak peluang dan melangkah maju

Chong berbagi tentang menemukan kepuasan dan pemenuhan diri melalui perjalanan kerja.

Mayda Lim dari OCBC dalam membangun pipeline talenta di bidang teknologi dan perbankan

Lim menggabungkan kebutuhan untuk mendukung bankir perempuan dengan kekurangan talenta dalam industri tersebut.

Aturan baru batasan harga mendorong lebih banyak penggabungan P2P di Indonesia

Regulasi ini akan meningkatkan biaya kepatuhan, namun batasan harga akan membuat sulit untuk mengimbanginya.

Deputi Gubernur: Pembiayaan Islam di Indonesia akan berkembang sebesar 10% -12% pada 2024

Ekonomi dan keuangan syariah Indonesia mempertahankan pertumbuhan positif pada 2023.

Bagaimana HomePay memerangi penipuan renovasi di Singapura

Uang ditempatkan dalam rekening escrow dan disalurkan saat pencapaian tahap-tahap tertentu.