Islamic Finance

S&P: Ample opportunities in Waqf and zakat for Islamic bankers

| 30 August, 2017
RUPA DAMODARAN
S&P: Ample opportunities in Waqf and zakat for Islamic bankers
Photo: Pushish Images / Shutterstock.com

Wed Aug 30, 2017 | 6:53PM MYT | KUALA LUMPUR

Due to a less rosy outlook in 2018, Islamic finance players across the globe should seize new opportunities created by the Sustainable Development Goals and innovate with products like Waqf and zakat, said Standard & Poor’s global head of Islamic finance Dr Mohamed Damak.

With the industry now at a crossroads, the players can chose the hard way by creating new growth opportunities while strengthening the foundation through standardisation.

“The easy way would be to accept the five per cent growth rate we expect in 2018 and let the industry continue to evolve as it is,” he said in a webcast.

Growth of Islamic finance will be around five per cent due to the less supportive economic conditions, he said.

In 2018, he said Gulf Cooperation Council (GCC) countries will deliver almost one third of their growth in 2012.

“Malaysia is faring better, thanks to the diversification of its economy and strong responses during the decline of oil prices,” he said.

The GCC, Iran and Malaysia account for 90 per cent of the banking assets of the industry.

Growth is moderating in Iran due to the remaining sanctions and scarcity of financing options.

He also noted that the sharp depreciation/devaluation in some core countries explains why the industry has barely crossed the US$2 trillion mark in 2016.

Islamic finance principles, which does not have “riba”, speculation, illicit sectors and promotes profit and loss sharing and asset backing, make Islamic finance a natural partner.

The sukuk market grew strongly in the first half of 2017 underpinned by jumbo issuances in the GCC and good liquidity in the GCC and globally.

After its US$9 billion sukuk during the period, Saudi Arabia announced that it will tap the local sukuk market.

During the first half, Mohamed said, Islamic banks did better than their conventional counterparts.

Copyright New Straits Times