Moody's sees slower Islamic banking growth in 2009

Moody's sees slower Islamic banking growth in 2009

Nov 29, 2008
Dubai: Gulf-based Islamic banks, which have displayed resilience amid the current global financial turmoil, will see a slowdown in asset growth next year, ratings agency Moody's said in a report.
Globally, the Islamic banking sector grew about 27 per cent in 2007 and this year's growth rates are expected to be 20-30 per cent.
The report noted that early signals of financial performance and liquidity in the fourth quarter of 2008 so far portend a slowdown.
However, 2009 is likely be a tough year for Islamic banks. Moody's said it expects that the growth rate of their combined assets "will decelerate, probably in the range of 10 per cent to 15 per cent".
Most Islamic financial institutions have seen their reputation benefit from the current financial crisis, reflecting their conservative approach to business, a proximity to their domestic and regional deposit franchises, balanced and ordered appetite for growth and focus on basics of banking as opposed to innovation.

Background article on Halal Banking
Muslim scholars say the Qur’an prohibits collecting interest on loans. But many banks, both global and local, have found clever ways to meet religious strictures. It’s a system that may be hypocritical, but also profitable.
The coverage can be a little bit breathless: “La finance Islamique en plein boom,” Le Figaro reported in September. Yes, Islamic banking, structured along the lines that religion decrees, is in full boom. But is it really banking? And is it really kosher?