» Two Factors Hinder Islamic Banking Growth in 2017

Two factors may affect Islamic banking growth in 2017, stated a report by “S & P Global Credit Ratings Agency”. They are the:

- Decline of oil prices globally in the core markets; The Islamic banking sector mainly focuses on the oil-exporting countries in the Gulf Cooperation Council countries (GCC), Iran and Malaysia, as they account for more than 80% of the Islamic banking sector assets.

- Lack of standardization in the industry, which is still a collection of small local sectors as well as the absence of the Islamic economic agglomeration.

However, whilst Islamic banking sector growth is weak compared to previous years, it still has opportunities for growth due to the continuous increase in deposits and the client base.

Thus, growth in the next year is forecast to reach 5 %. Also, the report points out that there are three opportunities that could help the sector to grow:

- The first is the normal correlation between the Islamic banking sector principles and some of the UN’s 17 sustainable development goals.

- The second is the huge participation of multi-party lending institutions, uniting both the legal structures specifications and the interpretation of sharia provisions.

- The third is the uniting of the sector enabling it to become a real world sector in its own right instead of being a set of small sectors.

The Malaysian based International Islamic Liquidity Management (IILM) has issued sukuk for a four-month term:

The Malaysian based International Islamic Liquidity Management Corporation (IILM) has issued its inaugural short term sukuk programme aimed at addressing liquidity challenges faced by institutions that offer Islamic financial services. The IILM has introduced a new due date of only four months for a tranche of $ 500 million for the first issuance. It had previously only issued securities for three and six month terms. This new issuance will be of great assistance.