Islamic banks weather economic storm: Study



Islamic banks weather economic storm: Study London: Banks that comply with Islamic Sharia law are thriving despite the global financial crisis, thanks largely to a "conservative approach to risk," according to a new listing published on Thursday.

The latest research by The Banker magazine reveals that assets held by fully Sharia-compliant banks or the Islamic units of conventional banks rose by 28.6 per cent to USD 822 billion in 2009, up from USD 639 billion in 2008.

This contrasts sharply with the stagnation in the conventional banking sector. The Banker's survey of the top 1,000 world banks published in July showed annual asset growth of just 6.8 per cent.

"A conservative approach to risk and close links between the financial sector and real assets has helped shield the sector from the worst of the credit crisis," said the magazine's editor, Brian Caplen.

The Banker said the Islamic finance industry was building a "solid track record," with a compound annual growth rate for 2006-2009 of 27.86 per cent, and forecast assets would hit USD 1,033 billion in 2010.

But Caplen warned that work remained in managing liquidity at Islamic banks, and transparency and financial reporting "remain challenges" for the industry.

The 2009 Top 500 Islamic Financial Institutions appears in November's edition of The Banker.

Bureau Report