The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
DUBAI / AGENCIES
The UAE’s AED522 billion Islamic banking assets will help fuel the growth of the country’s Halal sector, according to a research conducted by Orange Fairs and Events, organisers of the Halal Expo – Dubai, 2017.
Seven Islamic banks out of the 23 registered commercial banks in the UAE represent nearly a fifth of the country’s banking assets. Islamic banks’ assets grew three times more than the conventional banks’ assets during Q1 2017, said the research, quoting data from the UAE Central Bank’s latest quarterly report.
“In the first quarter of 2017, Islamic banks’ assets had a higher growth of 3.2% than the conventional ones-1%- while on an annual basis Islamic banks grew by eight percent and continued to dominate the conventional banks growth that showed an increase of 5.9 percent,†the CB report mentioned.
Gross credit of the Islamic banks in the UAE recorded a 8.4 per cent growth to Dh343 billion – or nearly double the rate of 4.4 per cent growth rate of gross credit of the Conventional banks in the first quarter of 2017. Similarly, domestic credit growth of the Islamic banks also rose 7.4 per cent to Dh325 billion in the first quarter of 2017. The growth rate is nearly double than the 4.1 per cent growth in domestic credit growth of the Conventional banks.
Higher assets and gross credit growth rates empower the Islamic banks to fund the Halal industries and help fuel the growth of Halal or Islamic economic activities. By nature, Islamic banks engage in ethical finance and asset-based lending – that eliminates speculation-based high-risk financial activities and insulate the sector from economic crises – witnessed during the 2008-09 global financial crisis – when the asset-based ethical finance emerged stronger and helped Islamic banks to overcome the stress tests by a wider margin compared to the Conventional lenders – many of whom collapsed and had to be bailed out by governments.
Islamic banks’ credit to individuals recorded 7.6 percent to AED126 billion in Q1 2017 compared to a two percent growth in the conventional banks’ credit to individuals that reached AED224 billion for the same period.