The number of banks offering Islamic products will increase by 50 percent around the world by 2009 because of high public demand, the head of a newly licensed sharia-compliant investment bank in Bahrain said on Sunday.
"Some might say Islamic banking is a fashion, but it will continue to grow as people feel more comfortable with it," Mark Hanson, chief executive of Global Banking Corporation, said on the sidelines of a financial conference in Dubai. "Over the next two years, we will see an increase of 50% in banks providing Islamic services globally and Islamic loans are part of that."
In Saudi Arabia, for example, there is more pressure from shareholders to see sharia-compliant products, he added. Citigroup, Merrill Lynch, Morgan Stanley and Deutsche Bank, will list Islamic-structured products on the Dubai International Financial Exchange (DIFX), said Armen Papazian, senior vice president of innovation and development at the stock exchange.
The value of Islamic loans is growing by 40% a year and the rate is likely to fasten, Hanson said. The Gulf Arab Islamic bond market is likely to recover from the global credit squeeze by April as companies get used to higher borrowing costs after a summer of turmoil that largely killed off sales, according to a Reuters poll issued last month.
Demand among the world's 1.2 billion Muslims for financial services that comply with their faith is surging as Gulf Arab nations reap a windfall from oil prices that have surged almost five-fold in the past six years. The Islamic finance industry, worth about $500 billion in assets, has been growing at about 10% a year for the last decade, according to ratings company Standard & Poor's.