MANAMA: The convener of the 22-year World Islamic Banking Conference (WIBC) Middle East Global Advisors – is set to reveal cutting-edge insights on the outlook of the global Islamic financial industry in its inaugural “Finance Forward Islamic Finance Outlook Report 2016” this December.
The Outlook Report is expected to serve as a compass for Islamic Finance leaders who are undertaking key decisions that will fundamentally shape their business strategies for 2016, says Dr. Sayd Farook, Vice Chairman and CEO of Middle East Global Advisors.
The uniqueness of the report, he adds, is that it combines meaningful insights from Islamic finance leaders – gathered from an extensive survey of practitioners’ sentiment – with robust analysis of the performance of Islamic financial institutions. According to the report, three major global macro developments of 2015 will shape the outlook of the industry: commodity prices (particularly oil), development in global interest rate policy, and a slowdown of the Chinese economy. Low commodity prices do not bode well for either the Gulf Cooperation Council or Southeast Asian economies, home to most of the world’s Islamic banks.
However, a positive outcome for Islamic banks in a ‘new normal’ of low oil prices is that they enter with low rates of non-performing loans, high liquidity (in part due to the limited liquidity management options), high capital levels and simple balance sheets with mostly Tier 1 capital overall. Thus, while the outlook for Islamic banks is likely to be muted going forward (and some may even face some fall-off in profitability), many leading Islamic banks have built up their resilience in the face of tightening liquidity, slowing loan growth and worsening credit risks.
Survey results of the Outlook Report highlighted two key trends: the development of ethical business models and that of Digital Banking.
Shariah compliance is necessary but not sufficient for consumers demanding ethical financial services. This implies that corporate social responsibility is not enough—consumers want their financial institutions to integrate an ethical approach into their core business mode, says Blake Goud, Chief Research Officer at Middle East Global Advisors.
Bankers told us that internet and mobile banking (40% and 38% respectively) were the priorities in reaching their customer, higher than the share who said they used branches (25%) and ATMs (15%), he adds.
The “Finance Forward Islamic Finance Outlook Report 2016” will be launched at WIBC on 2nd December 2015.
WIBC 2015 is a three-day gathering of the industry’s leaders taking place on the 1st, 2nd and 3rd of December at the Gulf Hotel in Manama, Kingdom of Bahrain.
