Special Report: Islamic banking - The top 20 Gulf institutions
Islamic banks may account for only a small proportion of the world banking industry, but these days they are healthier than most of their conventional peers
Despite the global financial crisis, most of the 20 largest sharia-compliant banks in the GCC have increased the value of their asset base in the past year.
Banks with retail operations have performed best. Saudi Arabia’s Al-Rajhi Bank heads the list of Gulf Islamic banks by size, recording a 10 per cent increase in its assets over the past 12 months to $43.9bn.
Islamic banks still have ample liquid assets despite the credit crunch, partly as a result of their focus on customers in the region, which meant they avoided having the exposure to sub-prime real estate in the US that ruined some of the world’s biggest financial institutions.
But while sharia-compliant banks have weathered the downturn better than their conventional counterparts, the economic slowdown has inevitably affected them.
The region’s Islamic banks’ loan portfolios are heavily exposed to real estate, and the steep decline in property values, particularly in the UAE, has hit some institutions hard.
Despite their relatively strong performance over the past 12 months, the year ahead will be spent safeguarding revenues in the hope of a return to growth across the economy as a whole in late 2010.
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