COMCEC Financial Outlook 2018
20
against the financial crises. Therefore, Islamic finance has been recognized as part of global
finance with its growing customer base, asset size, diversified instruments, and geographical
spread. Also, the importance of Islamic finance in the global financial system has been
recognized by institutions ranging from international organizations to global financial
institutions.
Islamic finance has emerged as a useful tool for financing development worldwide, including in
non-Muslim countries. Major financial markets are discovering substantial evidence that Islamic
finance has already been mainstreamed within the global financial system. The Islamic finance
industry has expanded rapidly over the past decade, growing at 10-12% annually and total
assets are estimated at over USD2 trillion, covering bank and non-bank financial institutions,
capital markets, money markets and insurance (“Takaful”). In many majority Muslim countries,
Islamic banking assets have been growing faster than conventional banking assets. There has
also been a surge of interest in Islamic finance from non-Muslim countries such as the UK,
Luxembourg, Germany, South Africa, and Hong Kong. Islamic finance is equity-based, asset-
backed, ethical, sustainable, environmentally- and socially-responsible finance. It promotes risk
sharing, connects the financial sector with the real economy, and emphasizes financial inclusion
and social welfare.20
The growing market shares and rising domestic systemic importance of Islamic finance
underscore the importance of developing robust regulatory frameworks for prudential
regulation and supervision in Islamic finance jurisdictions.
2.2 Islamic Finance Outlook
Islamic financial sector has continued its growth performance in 2018 but at a steady pace
(Table 3). According to latest data, the total asset size of the Islamic finance sector has slightly
increased from USD 2.05 trillion [2017] (that was the first time the sector recorded USD 2
trillion) to USD 2.2 trillion in 2018 with 7.0% YoY growth rate [2017: 8.5%]. Relatively low
growth performance can be attributed to the depreciation in the local currencies of some
emerging economies against the dollar, which induces to decline in the dollar values of the
industry assets. Apart from the effect of the weak local currencies, economic and geopolitical
issues led to the slight growth performance of the industry21.
Table 3. Breakdown of IFSI by Sector and by Region 22 (USD billion)
Islamic Banking Outstanding Sukuk
Islamic Funds
Assets
Takaful
Contributions Total
Region 2017 2018 YoY 2017 2018 YoY 2017 2018 YoY 2017 2018 YoY 2017 2018 YoY
Asia 232.0 266.1 15% 239.5 323.2 35% 24.8 24.2 -2% 3.3 4.1 24% 499.6 617.6 24%
GCC 683.0 704.8 3% 139.2 187.9 35% 26.8 22.7 -15% 12.6 11.7 -7% 861.6 927.1 8%
MENA (ex-
GCC) 569.0 540.2 -5% 17.8 0.3 -98% 0.1 0.1 0% 9.5 10.3 8% 596.4 550.9 -8%
Africa (ex-
North)
27.1 13.2 -51% 2.0 2.5 25% 1.6 1.5 -6% 0.7 0.0 -99% 31.4 17.2 -45%
20 World Bank, Islamic Finance Brief
21 Islamic Financial Services Industry Stability Report 2019
22 For purposes of regional classification, Iran is included in “MENA (ex. GCC)”, while Turkey is included in “Others”