JEDDAH – The Islamic banking profitability is gaining momentum across key markets such as Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey and is expected to exceed $25 billion by 2018, EY said. Specialists at EY's Global Islamic Banking Center have forecast that the global Islamic banking assets with commercial banks are on course to exceed $3.4 trillion by 2018, fuelled by growing economic activity in these core Islamic finance markets which reported combined profits of $10 billion for the first time at the end of 2013. “While the profit numbers for Islamic banks are impressive, they are still, on average, 15-19 percentage points lower than traditional banks in these markets. Regionalization and operational transformation, which are currently underway in several leading Islamic banks, will help to close this gap,” said Ashar Nazim, Global Islamic Finance Leader at EY. There is significant growth potential for the industry. There are an estimated 38 million customers who bank with Islamic retail banks globally, but only a small number of these customers have fully transitioned from a traditional to an Islamic banking relationship. The average number of Islamic banking products per customer is just over two, whereas leading traditional banks have an average of five products per customer. “Building consumer confidence through service excellence, especially when it comes to customers opening accounts and cross-selling can increase the market share of Islamic banks by 40 percent from these customers,” Ashar said. According to a recent survey of around 1,000 retail banking customers in the UAE, Egypt, Turkey, Indonesia and the UK commissioned by Abu Dhabi Islamic Bank (ADIB) majority of customers found their existing banks performed poorly in the areas related to basic ethics (lack of transparency, hidden fees, not suggesting the right products and not protecting customers' best interests). — SG/Agencies
