Islamic Finance 

The IFSB Islamic Financial Services Industry (IFSI) Stability Report 2019 

| 01 August, 2019

31 July 2019, Kuala Lumpur - The Islamic Financial Services Board’s (IFSB) today issued the seventh edition of its annual flagship publication: the Islamic Financial Services Industry (IFSI) Stability Report 2019. The Report examines the implications for the global IFSI of recent economic developments and changes in the global regulatory and supervisory frameworks, tracks developments and trends as well as examines the resilience of the three sectors of the IFSI: Islamic banking, Islamic capital market and takaful.

The IFSB Secretary-General, Dr. Bello Lawal Danbatta stated that the IFSI Stability Report 2019 takes place a decade after the global financial crisis (GFC) and at a time when various financial reforms arising from the crisis are now being finalised and operationalised. He stated further that amidst the softened momentum of growth recorded in the global financial system in 2018 due to, among other reasons, increasing inflation and currency depreciation in a number of jurisdictions with significant presence of Islamic banking the global IFSI has recorded a 6.9% (y-o-y) growth rate, and is estimated to be worth about USD 2.19 trillion as at 2Q18.

Dr. Bello highlighted that based on various analyses contained in the IFSI Stability Report 2019, the global IFSI is well placed to maintain its positive growth trajectory, experiencing asset increases across all three of its main component markets. To achieve this, he remarked that the IFSI should be wary of the new challenges posed by evolving market structures due mainly to advancements in financial technology, increasing activities of the non-bank financial institutions, as well as increasing cyber risks among other operational issues.

Key highlights of the IFSI Report 2019 include:

- The Islamic banking sector retained its dominance in the global IFSI. The domestic market share for Islamic banking in relation to the total banking sector continued to increase in at least 19 countries, remained constant in six, and declined in 11 jurisdictions among the 36 jurisdictions covered in the IFSI Stability Report 2019.

- The Islamic banking sector’s performance grew by a mere 0.9% in 2018, compared to 4.3%   in 2017, and as at 2Q18 accounts for 72% (76% in 2017) of the total value of IFSI assets mainly due to the depreciation of local currencies in terms of the USD, especially in some emerging economies with a significant Islamic banking presence.

- The ICM sector as at end of 2018 accounts for 27% of the global IFSI assets on the back of a positive performance due to the sovereign and multilateral sukuk issuances in key Islamic finance markets to support respective budgetary expenditures as well as number market debuts of sovereign issuances, including green sovereign sukuk to finance eco-friendly environment projects.

- The share of global takaful industry in the global IFSI remains unchanged at 1.3%. Global takaful contributions grew by 4.3% (y-o-y and in nominal terms) in 2017, with a six-year (2012–17) compound average growth rate of almost 6.9%. As at end 2017, an estimated 306 takaful institutions, including retakaful and takaful windows, now offer takaful products in at least 45 countries globally.

The Report utilises data from the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) database for the Report’s Islamic banking sector analysis.

The IFSI Stability Report 2019 is available for download from the IFSB website, www.ifsb.org.

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NOTE TO EDITOR:

About the Islamic Financial Services Board (IFSB)

The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets, and insurance sectors. The IFSB also conducts research and coordinates initiatives on industry-related issues, as well as organises roundtables, seminars and conferences for regulators and industry stakeholders. Towards this end, the IFSB works closely with relevant international, regional and national organisations, research/educational institutions, and market players. The members of the IFSB comprise regulatory and supervisory authorities, international inter-governmental organisations, market players, professional firms and industry associations. For more information about the IFSB, please visit www.ifsb.org

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