According to EY, some of the favourable drivers for QISMUT include:
- Combined GDP set to cross US$4.8 trillion by 2018
- Average per-capita income range between US$5,500 and US$103,000;
- a bankable population of 252 million,
- banking penetration of 90%, and
- a volume of trade that is expected to increase by 49% in the current decade.
There are challenges, however. Sociopolitical stability is critical, as is regulatory clarity; an Islamic financial regulatory framework is required, covering supply mechanisms, demand management and infrastructure. Islamic banks are relatively small, EY says, and have yet to convert significant megatrends like mobile banking into a business advantage.
According to EY, the misuse of commodity murabahah and tawwaruq practices has also disillusioned proponents of Islamic banking. "Banks, multilaterals and Islamic infrastructure institutions should grab this (small) window of opportunity to help drive and sustain product development efforts," EY said in the newsletter.
In an analysis of the challenges for various countries in QISMUT, EY said the primary risk for Dubai in the UAE is the "quality of execution". In Istanbul, Turkey, it is a "supply-side bottleneck" that is the challenge; more regulatory clarity and additional financial institutions are required for growth. EY believes that financially independent Islamic subsidiaries will help to sustain strong performance in Kuala Lumpur, Malaysia.
EY forecasts a CAGR of 19.7% through 2013 to 2018 for QISMUT, with total assets reaching US$1.6 trillion by the end of the forecast period, provided economic stability is maintained in certain Islamic finance markets, the larger Islamic banks transition successfully to a new phase of development; and there is connectivity across high-growth markets and sectors. Globally, EY said the Islamic banking profit pool is projected to reach US$30.5 billion by 2018.
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