Mohamed Damak, senior director and global head of Islamic Finance (center), speaking during a media roundtable in Dubai on Monday. Antonie Robertson/The National
Mohamed Damak, senior director and global head of Islamic Finance (center), speaking during a media roundtable in Dubai on Monday. Antonie Robertson/The National
Mohamed Damak, senior director and global head of Islamic Finance (center), speaking during a media roundtable in Dubai on Monday. Antonie Robertson/The National
Mohamed Damak, senior director and global head of Islamic Finance (center), speaking during a media roundtable in Dubai on Monday. Antonie Robertson/The National

Gulf Islamic banks poised for mid-single digit asset growth over next 18 months


Fareed Rahman
  • English
  • Arabic

Islamic banks in the Arabian Gulf will see "mid-single-digit growth" this year and next due to government spending on strategic initiatives and healthy oil prices, S&P Global Ratings said.

Islamic banks in the Gulf lost ground in 2018 as compared to growth at conventional banks. However, the rating agency said sharia-compliant lenders have strong fundamentals with a stable market share of around 36 per cent of total bank assets in the GCC. They also enjoy stable profits, providing an average return on assets of 1.6 per cent.

“Overseas expansion is providing higher geographic diversification but it also comes with risks. High capital buffers will provide resilience to banks,” said Mohamed Damak, senior director and global head of Islamic Finance at S&P Global Ratings during a media roundtable in Dubai on Monday.

On the outlook for Islamic finance globally, he said the market would continue to grow slowly due to weaker economic performance in some core countries, including Turkey and Iran.

The sukuk market expanded strongly in the first eight months of 2019, however, with $113 billion (Dh415bn) issued globally, up 34 per cent on the same period last year, he added. In the UAE, sukuk issuance was Dh5.5bn, slightly higher than the Dh5.4bn issued in the first eight months of last year.

The total volume of sukuk issuance in Islamic countries is expected to be around $140bn to $150bn in 2019, up from $131 billion in 2018, according to the ratings agency. Indonesia and Turkey continued strong levels of issuance in the first eight months of 2019.

“Issuers continue to prefer the conventional route in the Gulf due to the lack of standardisation and the complexity attached to sukuk issuance versus conventional bonds,” Mr Damak said.

“Oil price volatility but a higher number (in oil prices) means lower financing needs and issuance for the GCC,” he added.

Green sukuk issuance is also likely to accelerate as efforts to combat climate change gain traction and countries in the region start renewable projects. Dubai is targeting a renewable mix of 75 per cent by 2050 while Saudi Arabia intends to build a $200bn solar project.

“A lot of these investments could be financed through green sukuk,” said Mr Damak.

Separately on Monday, Dubai Islamic Economy Development Centre (DIEDC) signed an agreement with the Dubai International Financial Centre, Dubai Financial Market and the Climate Bonds Initiative on Monday to collaborate on growing the green sukuk market and stepping up the exchange of knowledge and expertise in the field.

“The agreement aims to promote the issuance of green sukuk in the UAE and across the world, in addition to developing the standards of certification for green sukuk along the lines of the Climate Bonds Standard and Certification Scheme,” DIEDC said in a statement.

COMPANY PROFILE
Name: Airev
Started: September 2023
Founder: Muhammad Khalid
Based: Abu Dhabi
Sector: Generative AI
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
 
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WHAT IS GRAPHENE?

It was discovered in 2004, when Russian-born Manchester scientists Andrei Geim and Kostya Novoselov were experimenting with sticky tape and graphite, the material used as lead in pencils.

Placing the tape on the graphite and peeling it, they managed to rip off thin flakes of carbon. In the beginning they got flakes consisting of many layers of graphene. But when they repeated the process many times, the flakes got thinner.

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In 2010, Geim and Novoselov were awarded the Nobel Prize for Physics. 

UAE currency: the story behind the money in your pockets
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THREE
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UAE currency: the story behind the money in your pockets
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BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES

SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities

Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails

Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies

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UAE

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Japan

5

Norway

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Saudi Arabia

10.

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F1 The Movie

Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem

Director: Joseph Kosinski

Rating: 4/5

MATCH INFO

Bayern Munich 2 Borussia Monchengladbach 1
Bayern:
 Zirkzee (26'), Goretzka (86')
Gladbach: Pavard (37' og)

Man of the Match: Breel Embolo (Borussia Monchengladbach)

Frankenstein in Baghdad
Ahmed Saadawi
​​​​​​​Penguin Press

Brief scoreline:

Liverpool 2

Keita 5', Firmino 26'

Porto 0