KUALA LUMPUR: While global Islamic banks are expected to experience slow loans growth this year due to the subdued economic environment, the industry is well-capitalised to weather this challenging period, says a market player.
Banking Regulation and Supervision Agency of Turkey, Vice Chairman, Dr Yakup Asarkaya said currency devaluation in emerging markets would also potentially affect loans growth for regional players.
“Despite the decline, we do not see this causing any problem for regulatory agencies as there is still a lot of capital in Islamic banks,” he told reporters on the sidelines of the seminar on “Islamic Finance and Global Regulation: Moving Targets and New Horizons’ here today.
The one-day seminar was organised by the Islamic Financial Services Board (IFSB), in conjunction with IFSB’s Annual Meetings and Side Events 2017 from today until April 6.
Yakup said just like any other industry, Islamic banks were also unfavourably impacted by the weakening of commodity prices and a slowing Chinese economy.
In its 2016 Islamic Financial Services Industry Stability Report, the IFSB said increasing cost of banking operations has been one of the factors driving the reduction in net profit in some Asian countries.
The countries that recorded an increase in the average cost-to-income ratio were Kuwait, Malaysia, Saudi Arabia, Turkey, Bangladesh, Indonesia and Jordan.
The report concluded by reiterating that Islamic banking would remain the dominant sector of the Islamic Financial Services Industry (IFSI), accounting for almost 80 per cent of the global IFSI.
The total Islamic banking assets in key markets have expanded at a compound annual growth rate of 15.4 per cent for the period 2008 until 2014. — Bernama
Originally published on www.english.astroawani.com