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UAE Accounts for 20 Per Cent of $19b Global Sukuk Issuance

The UAE also recorded the second highest Islamic loan volume in the region after Saudi Arabia, the data released at the Reuters Islamic Banking and Finance Summit in Dubai shows.

“Islamic loan volume reached in excess of $5.6 billion in Saudi Arabia during the February 2009 to February 2010 period. Islamic loan volume in the UAE was the next highest at $4 billion, followed by Qatar at $1.2 billion, Bahrain,” it said.

The Malaysian government was world leader as Sukuk lead arranger in the period from February 2009 to February 2010 with 134 issues and a market share of 50 per cent — a manager commitment of more than $21 billion.

Razi Fakih, deputy chief executive of Amanah told the summit, that HSBC expected double-digit revenue growth this year in the Islamic finance industry, where its Amanah banking division expects more sukuk mandates 
than in 2009. HSBC expects to have more than the 15 mandates it had in 2009 for sukuk, or Islamic bond issues, Fakih said. “We’re confident we can do better in 2010,” Fakih said. “We see a very bright 2010 in the sukuk space.”

New issuance will come more from the Middle East and Asia than from the West, he said, with some issues already lined up for the first quarter of the year.

Fakih’s bullish outlook for HSBC-mandated issuance runs counter to consensus expectations for global sukuk volumes to weaken in 2010, in part due to a weakening in market sentiment in the wake of the Dubai debt crisis.

Fakih said the Islamic financial sector remained poised to outgrow conventional finance in revenue terms after both sectors suffered 
under the global crisis.

Islamic lenders in general and HSBC in particular have greater exposure to emerging markets with faster growth rates than developed 
countries, he said.

According to HSBC, the Islamic finance industry enjoyed a compound annual growth rate for 2006-2009 of 28 per cent, with assets forecast to hit $1.033 trillion in 2010. Dubai Islamic Bank was among the top ten Islamic loan lead arrangers for the February 2009 to February 2010 period. Others include Samba Financial, Qatar Islamic Bank, Credit Agricole CIB, National Commercial Bank, HSBC, Standard Chartered Bank, Al Rajhi Banking and Investment, Al Hilal Bank 
and Arab Bank.

Islamic assets under management amount to $34.74 billion across 555 worldwide funds. A total of 147 Islamic funds manage more than $18 billion in Saudi Arabia; 36 funds in Kuwait manage $2.1 billion; 20 funds in Bahrain manage $394 million; three in the UAE manage $78 million; and Qatar manages $16 million with one fund. Global Takaful premiums reached $5.6 billion last year; $2.4 billion in Saudi Arabia, $157 million in the UAE, and $149 million in Qatar.

Islamic banking is one of the world’s fastest growing financial sectors, according to industry estimates. It has attracted more attention in the aftermath of the global financial crisis as investors are increasingly looking for alternative, ethical ways of investing.

Standard & Poor’s Ratings Services (S&P) said in a recent report that Islamic finance has become a recognised and a specified segment of finance on its own with still-bright growth prospects.
 “We think Islamic finance is set to make further inroads in developed Western markets while South-East Asian countries will likely fuel the Islamic finance advance in Asia in 2010,” it said.

S&P said according to publicly available information, assets of the top 500 Islamic banks expanded 28.6 per cent to total $822 billion in 2009, compared with $639 billion in 2008.
— issacjohn@khaleejtimes.com