The IFSB issued the Eighth Edition of its Annual Flagship Publication: the Islamic Financial Services Industry (IFSI) Stability Report 2020
Date posted: 6 August 2020
6 August 2020, Kuala Lumpur - The Islamic Financial Services Board’s (IFSB) today issued the eighth edition of its annual flagship publication: the Islamic Financial Services Industry (IFSI) Stability Report 2020. The Report provides updates on the key trends in growth and developments, analytical and structural outlooks, as well as examines the resilience of the IFSI against the COVID-19 shock and other vulnerability factors across the Islamic banking, Islamic capital market and takāful segments.
The IFSB Secretary-General, Dr. Bello Lawal Danbatta stated that “the IFSI Stability Report 2020 takes place at a time when numerous developments that may impact the stability of the global financial system are prevalent: notably, the COVID-19 pandemic and global crude oil price volatility.” He stated further that “notwithstanding, the total worth of the IFSI had increased to an estimated USD 2.44 trillion in 2019 and that, the IFSI sustained its growth momentum in 2019, recording a growth rate of 11.4% year-on-year (y-o-y) based on significant improvement across the three segments of the IFSI, especially in Islamic banking and the Islamic Capital Market.”
Dr. Bello highlighted that based on various analyses contained in the IFSI Stability Report 2020, the performance of the global IFSI projected a sense of optimism for 2020. However, the combined effects of the shock from the COVID-19 pandemic and oil price volatility, as well as the financial services industry’s vulnerability to factors such as global trade wars, economic sanctions and political blockades, will test the strength and resilience of the IFSI in 2020 and beyond.
Key highlights of the IFSI Report 2020 include:
- The Islamic banking segment retained its dominance in the global IFSI. The domestic market share for Islamic banking in relation to the total banking segment continued to increase in at least 27 countries, remained constant in seven, and declined in two jurisdictions among the 36 jurisdictions covered in the IFSI Stability Report 2020.
- The Islamic banking segment’s performance grew by 12.7% in 2019, compared to a mere 0.9% in 2018. As at 3Q19, the Islamic banking segment accounts for 72.4% (76% in 2018) of the total value of IFSI assets, the declining share being mainly due to increased prominence of the ICM segment.
- The ICM sector as at end of 2019 accounts for 26.5% of the global IFSI assets on the back of a positive performance due to the sovereign and multilateral ṣukūk issuances in key Islamic finance markets to support fiscal financing and eco-friendly environment projects.
- Islamic funds also recorded a noteworthy growth of 29.8% in terms of the total value of assets under management, while the Islamic equity markets also rebounded in 2019 posting its strongest performance since the Global Financial Crisis in 2009.
- The share of global takāful industry in the global IFSI declined marginally to 1.1%. However, global takāful contributions grew by 3.2% (y-o-y and in nominal terms) in 2018, with a seven-year (2012–18) compound average growth rate of 8.5%. As at end 2018, an estimated 353 takāful institutions including retakāful and takāful windows now offer takāful products and services globally.
The IFSI Stability Report 2020 utilises data from the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) database for the Report’s Islamic banking sector analysis.
The IFSI Stability Report 2020 is available for download from the IFSB website, www.ifsb.org.
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