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Islamic banking industry grows around the world

Islamic banking

The Islamic banking sector has witnessed a significant growth in recent years, at a time when dozens of banks are working to adopt this sector.

According to official statistics, the volume of Islamic banking in the world is close to three trillion dollars.

In turn, the Governor of the Saudi Arabian Monetary Agency, Fahd Al-Mubarak, said during the opening of the fifteenth summit of the Islamic Financial Services Board that “the Islamic financial industry has witnessed developments.”

He explained that the volume of Islamic banking globally amounted to $2.7 trillion during the past year, up from about $2.44 trillion in 2019.

He added that 80% of these assets are concentrated in banks, 15% in the form of Islamic sukuk and bonds, 4% in Islamic investment funds, and 1% in Islamic insurance known as “takaful.”

Islamic banking

In the midst of the consequences of the pandemic, the industry was able to deal with it effectively and reduce its negative effects thanks to monetary and financial policies as a result of financial reforms and prudential banking legislation following the 2008 global crisis.

These measures have enhanced the protection of clients and the preservation of financial stability in a financially parallel manner, and created a system to respond to global crises in a strong manner.

According to the report of the Islamic Financial Services Board for the current year, Islamic banking has achieved an annual growth of more than 10%, and Saudi Arabia alone has acquired a quarter of that number.

Al-Mubarak pointed out at the summit organized under the slogan “Islamic Finance and Digital Transformation: Achieving a Balance between Innovation and Durability” that his country, through the Islamic banking sector, was able to lead the world in terms of the volume of financial assets compliant with Islamic Sharia in various financial and commercial sectors.

He pointed out that the total assets of Islamic financial services in the banking sector, sukuk sector, insurance sector and investment funds sector in the oil-rich Gulf country amounted to nearly $800 billion, which represents approximately 28 percent of the total Islamic financial assets globally.

The main indicators of the Islamic banking sector in Saudi Arabia witnessed rapid growth, as the total Sharia-compliant financing amounted to more than $430 billion, while the total volume of Sharia-compliant deposits amounted to $433 billion by the end of the second quarter of 2021.

This growth and this advanced rank in the Islamic financial industry also comes in order to achieve the objectives of “Vision 2030,” which considers this type of financing important to enhance economic activity.

For example, the Islamic finance industry contributes to achieving a number of vision objectives such as providing a prosperous life in a healthy environment through financing a green and sustainable economy.

In addition, enabling social responsibility through the endowment sector, developing and diversifying the economy by developing the stock market and debt market, increasing employment rates, providing participatory financing solutions, and supporting small and medium enterprises.

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