Islamic finance assets stand at US$2.88 trillion in 2020 and are expected to grow to US$3.69 trillion by 2024. Shaima Hasan, Senior Proposition Manager within the Refinitiv Islamic finance division, explains.
- Refinitiv and the Islamic Corporation for the Development of the Private Sector (ICD) release 2020 Report forecasting that global Islamic finance assets are expected to hit $3.69 trillion in 2024.
- Malaysia, Indonesia, Bahrain, UAE and Saudi Arabia ranked as the top five developed countries globally in Islamic Finance.
- Islamic finance assets increased 14 percent to US$2.88 trillion in 2019, the highest recorded growth for the industry since the global financial crisis.
The Islamic finance industry saw double-digit growth of 14 percent with a total of $US2.88 trillion in assets by the end of 2019, despite the expected volatility due to sustained low oil prices and the approaching coronavirus pandemic.
According to the Islamic Development Report 2020, the strong growth in industry assets was driven by continued growth in Islamic banking assets, which account for most of the industry’s assets.
In addition, the growth was also impacted by the elevated levels of sukuk issuance in the traditional markets in the GCC and Southeast Asia, besides the impact of the growing global popularity of Green and ESG sukuk which have continued to 2020.
In collaboration with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB), the global Islamic Finance Development Indicator (IFDI) provides the industry’s various stakeholders with a detailed analysis of the key factors driving growth in the Islamic finance industry.
It is the definitive barometer of the state of the Islamic finance industry in 2020, with rankings provided for 135 countries around the world.
It draws on five indicators considered to be the main drivers of development in the industry. By measuring changes in these indicators over time and across countries, the IFDI provides a vital tool in guiding policy within the industry.
The IFDI evaluates the strength of the ecosystem behind the industry’s overall development as well as the size and growth of the different Islamic finance sectors within the many countries where it has a presence.
The report also provides a detailed look at the current state of the industry based on the Islamic Finance Development Indicator (IFDI) which considers five key indicators in the development of Islamic finance: Quantitative Development; Knowledge; Governance; Corporate Social Responsibility; and Awareness.
The outlook for the Islamic finance industry is uncertain while the COVID-19 pandemic remains, despite the rapid growth in digital solutions.
Despite the strong expansion seen in 2019, industry growth is forecast to slow to the single digits, reaching US$3.69 trillion by 2024, as the world attempts to deal with the Coronavirus pandemic that erupted on a global scale in the first quarter of 2020.
While the total impact of the pandemic on the industry cannot be measured quantitatively before the end of 2020, at the time of writing, several Islamic financial institutions including Islamic banks had reported losses or a drop-in profit caused by a Covid-related increase in loan impairments.
In addition, governments and multilateral organizations have introduced a stream of wide-ranging measures to defend their economies and societies.
These include some extremely large government stimulus packages that have stretched fiscal deficits to the limit.
Central banks are turning to debt to shore up their fiscal positions and sukuk are proving an increasingly popular choice of instrument.
Meanwhile, Islamic financial institutions have been responding to the crisis by stepping up their digital services and using Islamic social finance instruments to support those who are struggling financially due to the crisis.
The impact of the coronavirus on Islamic finance is analyzed in the report not just in terms of the different sectors of the industry but also covers the disruption to the industry’s supporting ecosystem such as education. To learn more, access the full ICD Refinitiv Islamic Finance Development Report.
However, despite that, the pandemic has been a game changer as several Islamic financial institutions have moved to offer their products via digital platforms in order to better serve their locked-down customers, thereby speeding the advance of technology within Islamic finance.
Although Islamic FinTech had already been making headlines in recent years, digital-based financial institutions have become much more popular during the pandemic, just as digital solutions have leapt ahead in other economic sectors around the world.
Refinitiv as the world’s largest provider of data and information, was leading on the digital front by providing support to banks and financial institutions to transfer smoothly to the digital environment while offering a range of digital solutions customized to customer’s needs. One key Islamic finance product that we offer at Refinitiv Eikon / Workspace is the Islamic Finance Indicator (IFDI) App.
Releasing the new IFDI Islamic Finance Database for 2019-2020
We are proud to announce the release of the new 2020 Islamic Finance Development Indicator (IFDI) App as part of its Islamic finance offerings on Refinitiv’s leading platforms Eikon / Workspace.
At Refinitiv, we’ve focused on collecting and distributing financial and qualitative information to the industry. Our Islamic finance development indicator (IFDI) is the most comprehensive Islamic finance database available today. The database provides excel sheets with the details of every Islamic institution that discloses its financials of over 1500 institutions with a dollar by dollar breakdown of the $3 trillion Islamic finance industry. It includes the information of more than 500 Islamic banks, 300 takaful entities, 12,000 outstanding sukuk, 1,300 Islamic funds and 500 other Islamic finance providers to ensure our clients are empowered with the market information that they require. In addition, through the interactive map, you can also view the underlying Islamic finance data for several countries within the universe.
The database will provide policymakers and market practitioners precise numbers that reflect the indigenous values of the Islamic finance industry and will assist economic policy decisions in regard to the industry and its effects on and links within the wider economic ecosystem.
To access the IFDI Database
- Eikon users can access the page here.
- For new users, please contact us at IFG@Refinitiv.com
- To learn more, visit the Refinitiv Islamic finance website.
- In addition to Eikon page, you can download the latest Islamic Finance Development Report – IFDI 2020.
