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Kingdom’s Islamic finance assets at $94b

Last updated: Friday, June 22, 2012 1:24 AM



Beirut — Saudi Arabia is one of the main contributors to the Islamic finance industry, with an estimated $94 billion in Islamic finance assets representing 26 per cent of the GCC total, a report said.

Saudi Arabia’s contribution is also valued at 8.2 percent out of total global Islamic finance assets, added the Deloitte Middle East Islamic Finance Knowledge Center (IFKC) report entitled ‘Empowering Risk Intelligence in Islamic Finance’.

It addresses and investigates the important issues in practice and regulation in Islamic finance in the current market challenges. The report also assesses the impact of Islamic financial institutions in different countries.

The report also focuses on the governance and structural aspects of an effective risk management framework in Islamic finance. It presents new findings in the practice of Islamic Finance risk management that offer guidance to boards in managing risk in troubled times.

It is based on a survey and group of case studies developed during the second half of 2011, on 20 leading Islamic financial institutions from the Middle East and South East Asia, with aggregate assets of more than $50 billion. It also includes several interviews conducted with industry leaders and risk management executives.

“Greater pressure has been placed on financial institutions offering Islamic Financial services to galvanize risk exposure and governance capabilities,” said Dr Hatim El Tahir, director of the Deloitte Middle East IFKC.

“Global and regional jurisdictional regulatory reforms are continuing. How this regulation will affect the Islamic Finance sector and the role of IIFS in the economy is yet to be seen,” he added.

The Deloitte report finds that Saudi Arabia saw the launch of one the first and most important institutions in the Islamic finance industry.  The Islamic Development Bank (IDB) is a multilateral development financing institution established in Jeddah in 1975. Up until today, the IDB has contributed over $200 million of technical support to nearly 70 Islamic financial institutions around the world.

Furthermore, Saudi Arabia saw the establishment of other prominent institutions that played a role in the advancement of IF. This includes the founding of the International Association of Islamic Banks in 1977, with a goal of promoting and facilitating cooperation between Shari’a-compliant financial institutions, as well contributing to harmonization of the industry on an international level.

Today, there are four Islamic Commercial Banks operating in Saudi Arabia. They include: Al Rajhi Bank, $58.8 billion total assets; Bank Al Jazira, $10.3 billion total assets; Alinma Bank, $9.8 billion total assets and Bank Albilad, $7.4 billion total assets.

Aside from Islamic commercial banking, cooperative insurance industry evolved considerably in the Kingdom during the past 9 years, the report said. – Agences

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