Islamic banking industry in Asia-Pacific seen reaching $450bln or 60% of total Islamic bank assets

From Komfie Manalo, Opalesque Asia: A report by Celent, a Boston-based financial research and consulting firm, sees fast growth in the Islamic banking industry in the Asia-Pacific region, second only with the phase in the Middle East.

The report adds assets of Islamic banks in the Asia-Pacific region is now estimated to reach $450bln, representing 60% of the total Islamic bank assets across the globe.

Key points of the report The economic crunch facing Western markets has resulted in emerging countries in the Asia-Pacific region that investors find more attractive. The growing Muslim population that expands at a rate of 2 percent annually, are mostly potential clients for these Islamic banks. Muslims now number around 1.7bln or 28.4% of the global population. At least 1 billion of them are in the Asia-Pacific region making it the next big market for Islamic banks.

Global assets of Islamic banks is estimated between $700 billion and $750 billion. Notably, Islamic banks are enjoying a faster growth rate and profit margins compared with their conventional counterparts. However, since the Islamic banking sector is a relatively new concept, the industry is facing challenges, particularly in areas of technology adoption, lack of Islamic banking experts, differences in tax treatment of various Islamic banking products and integration with global financial standards.