- Islamic banks’ gross credit increased 8.4% to AED343 billion in Q117
- Islamic banking assets grew 3.2% per cent in the UAE to AED522 billion
quarter-on-quarter in the Q117
- Islamic banks’ domestic credit grew 7.4% to AED325 billion in Q117,
which is expected to fuel the growth of the halal sector
- UAE’s Islamic banking assets are growing faster than that of the
conventional banks
The UAE’s AED522 billion Islamic banking assets will help fuel the growth of the country’s halal sector,
according to research conducted by Orange Fairs and Events, organisers of the Halal Expo Dubai 2017.
Seven Islamic banks out of the 23 registered commercial banks in the UAE represent nearly a fifth of the
country’s banking assets. Islamic banks’ assets grew more than three times of conventional banks’
assets during Q117, according to the UAE Central Bank’s latest quarterly report.
“In the first quarter of 2017, Islamic banks’ assets had a higher growth (3.2%) than the conventional ones
(1%), while on an annual basis Islamic banks grew by 8% and continued to dominate the conventional banks growth that showed an increase of 5.9%," the report, issued by the UAE
Central Bank, said.
"The share of conventional banks’ assets at the end of 2017 Q1 is 80.3% of the total, while the
share of the Islamic banks' assets is 19.7%. Islamic banks’ financing growth has been dominating
the conventional banks’ loans increase in the first quarter of 2017 in almost all subcategories, with
exception of financing to government and government-related entities (GREs).”
Gross credit of the Islamic banks in the UAE recorded 8.4% growth to AED343 billion – or nearly
double the rate of 4.4% growth rate of gross credit of the conventional banks in Q117, the first quarter of
2017.
Similarly, domestic credit growth of the Islamic banks rose 7.4% to AED325 billion in Q117. The growth rate is nearly double the 4.1% growth in domestic credit for conventional banks.
Higher assets and gross credit growth rates empower the Islamic banks to fund the halal industries and
help fuel the growth of halal or Islamic economic activities.
By nature, Islamic banks engage in ethical
finance and asset-based lending, eliminating speculation-based high-risk financial activities and
insulating the sector from economic crises. Such crises occurred during the global financial crisis from 2008 to 2009, when asset-based ethical finance emerged stronger and helped Islamic banks to overcome the stress tests by
a wider margin compared to conventional lenders. As it happened, many conventional lenders collapsed and had to be bailed
out by governments.
Islamic banks’ credit to individuals recorded a 7.6% jump to AED126 billion in the first quarter, compared
to 2% growth in conventional banks’ credit to individuals, reaching AED224 billion in Q117.
Raees Ahmed, Director of Orange Fairs and Events, organiser of Halal Expo Dubai, 2017, said, "This means Islamic banks’ personal finance, Islamic credit card sector is growing at a higher rate than
that of the conventional banks’ personal finance and credit card segment.
“The split between conventional and Islamic banks indicates that the growth in Islamic financing is much
steeper than that for the conventional banks’ loans. This effectively means that lending in the halal sector
is going up at a much higher rate than that of the non-halal sector, as was evident in the first quarter of
2017.
“Islamic banks’ credit to the business and industrial sector grew 7.6% to AED151 billion in the first
quarter of 2017. This means that the credit growth to the halal industries and business sector remains
higher compared to the non-halal industries and services sector. This is also a reflection of the UAE’s
growing importance as a centre of the global halal economy.
“Besides, the growing global awareness on healthy food, consciousness on cleanliness and hygiene
environment is helping the growth of the halal sector – that promotes healthy, organic, clean and hygienic
products and thus protects life from the ill-effects of food and consumables,” Raees said.
The 9th edition of the Halal Expo – Dubai 2017 will be held at the Roda Al Bustan Hotel from September
18 to 19, 2017. Halal Expo Dubai 2017 is the largest and most comprehensive business-to-business (B2B) halal
exposition in the Middle East for the US$2.3 trillion global halal industry.
"Financing of halal industries and businesses are expected to get a solid boost with the stronger growth
in Islamic banking sector in the UAE and the Halal Expo – Dubai 2017 will help global halal businesses
gather under one roof and explore business opportunities,” Raees said.