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The growth of Islamic finance

HSBC Amanah deputy CEO Razi Fakih discusses the growth of Islamic finance and the bank’s development in opening up markets and offering alternatives to Western banking practices.

Michael Jones: As a constituent of the global financial market, how much has
Islamic finance grown in prominence in the last ten years?

Razi Fakih: Estimates vary. According to The Banker, Islamic assets reached $894.9
billion in 2010, 9% higher than in 2009. While Shari’ah-compliant assets represent
only 1% of global assets, the industry has been growing at a compounded annual
growth rate of 23.5% from 2006 to 2010.

The Islamic Financial Services Board said in an April 2010 report that the industry’s
assets have been growing by more than 20% annually since 2000. It forecasts
Islamic profits reaching $32 billion over the next five years and that by 2012 Islamic assets are likely to reach about $1.6 trillion, with revenues of $120 billion.

What are the main factors pushing Islamic finance to the fore?
The Islamic banking industry has been growing at double-digit compounded
annual growth rates over the past couple of years. Malaysia and the Gulf Cooperation
Council (GCC) countries in particular have been beneficiaries of the strong growth.
According to management consulting firm Oliver Wyman, the Islamic finance
industry is expected to grow at about 20% annually until 2012.