Global Islamic finance assets reached $1.3 trillion in 2011 – report
A new report from The CityUK’s UK Islamic Finance Secretariat (UKIFS) indicates that Islamic finance assets worldwide continued a long run of growth to reach an estimated $1.3 trillion in 2011, 150 per cent up over the previous five years. Despite political unrest in some countries the industry has continued to expand, not only in its core markets of the Middle East but also in South East Asia and offshore jurisdictions such as Bermuda.
Islamic funds, for example, reached a new high of $58 billion in 2010, with the available pool about ten times larger at over $500 billion. Even so, competition is fierce, with average management fees worldwide down from 1.5 per cent in 2006 to 1.0 per cent in 2011.
Keith Phillips, Executive Director, UKIFS, comments, “Our report once again shows that the UK continues to maintain its position as the leading Western provider of Islamic finance with assets of $19 billion.
“The UK also benefited from a globally buoyant sukuk market in 2011, with issuance up 60 per cent to $84 billionn. This was reflected in ten new sukuk listings on the London Stock Exchange’s markets in 2011 and two in early 2012. There are now 37 sukuk with a combined value of $20 billion listed on the London Stock Exchange’s markets. Additionally, seven exchange traded funds and two exchange traded products are also listed on these markets.”
In the UK, banks, sukuk issuance and exchange traded products are buttressed by the strong infrastructure of professional support for Islamic finance deals and transactions. This includes over 25 major law firms and the largest four professional services’ firms, and this has yet to be seriously rivalled by any other European financial centre.
The UK is also making an increasing contribution to the development of Islamic finance education and skills with four professional institutions and 10 universities and business schools offering qualifications. These include the Chartered Institute of Management Accountants, CassBusinessSchool, the University of East London and DurhamUniversity. With shari’ah-compliant finance utilised for the redevelopment of Chelsea Barracks and the construction of the Shard of Glass in London, Islamic finance also has a crucial role to play in infrastructure development in the UK.
Considerable potential exists for expansion of the industry worldwide, although appropriate legal and regulatory structures are crucial for its development in individual countries. The work that is now being undertaken through UKIFS with its six practitioner-led workstreams covering topics from wholesale banking to skills is looking to address these issues by creating more efficient structures and processes and applying greater innovation to drive market development.