Raees Ahmed
UAE’s $144bn Islamic bank assets ‘will boost Halal sector’
DUBAI, September 17, 2017
The UAE’s Dh528.6 billion ($144 billion) Islamic banks’ assets will help fuel the growth of the country’s Halal sector, according to research conducted by Orange Fairs and Events, organisers of the Halal Expo Dubai, which opens tomorrow (September 18).
Seven Islamic banks out of the 23 registered commercial banks in the UAE represent nearly a fifth of the country’s banks assets, it said.
Islamic banks’ assets grew 6.9 per cent year-on-year to Dh528.6 billion in July 2017 compared to Dh494.5 billion in July 2016, according to the latest UAE Central Bank statistics. However, the Conventional banks assets grew only at 4.1 per cent year-on-year to Dh2.1 trillion in July 2017, up from Dh2.02 trillion in July 2016.
This shows that the Islamic banks assets grew more than 59.42 per cent faster year-on-year than the Conventional banks’ assets between July 2016 and July 2017, according to the UAE Central Bank’s latest statistical bulletin.
Gross credit of the Islamic banks in the UAE recorded an 8.2 per cent growth year-on-year to Dh354.6 billion in July 2017, up from Dh327.6 billion recorded in July 2016 – or nearly four times the rate of 2.3 per cent year-on-year growth rate of gross credit of the Conventional banks to Dh1.24 trillion in July 2017, up from Dh1.21 trillion in July 2016.
Similarly, domestic credit of the Islamic banks also rose 6.8 per cent to Dh331.1 billion in July 2017, up from Dh311.9 billion in July 2016 – or four times the rate of 1.7 per cent year-on-year growth rate of domestic credit of the Conventional banks to Dh1.12 trillion in July 2017, up from Dh1.10 trillion in July 2016.
“Higher assets and credit growth rates empower the Islamic banks to fund the Halal industries and help fuel the growth of Halal or Islamic economic activities,” said Raees Ahmed, director of Orange Fairs and Events, organiser of the Halal Expo – Dubai, 2017. The event gets underway on September 18.
“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 a 5.3 per cent year-on-year growth to Dh128.6 billion in July 2017, compared to 1.5 per cent year-on-year growth in the Conventional banks’ credit to individuals that reached Dh225 billion in July 2017.
“This means Islamic banks’ personal finance, Islamic credit card sector is growing at a higher rate than that of the Conventional banks’ personal finance and credit card segment. A comparison between Conventional and Islamic banks indicates that the growth in Islamic financing is much stronger than that for the Conventional banks’ loans. This effectively means that lending in the Halal sector is going up at a much higher rate than that of the non-Halal sector, as was evident in the first quarter of 2017,” Raees Ahmed said.
“Islamic banks’ credit to the business and industrial sector grew 6.5 per cent year-on-year to Dh154.7 billion in July 2017, compared to Conventional banks’ 2.1 per cent year-on-year growth to Dh574.7 billion in July 2017. This means that the credit growth to the Halal industries and business sector by Islamic banks remains higher compared to the non-Halal industries and services sector. This is also a reflection of the UAE’s growing importance as a centre of the global Halal economy.
“Besides, the growing global awareness on healthy food, consciousness on cleanliness and hygiene environment is helping the growth of the Halal sector – that promotes healthy, organic, clean and hygienic products and thus protects life from the ill-effects of food and consumables,” Ahmed said.
The 9th edition of the Halal Expo Dubai, will be held at the Roda Al Bustan hotel from September 18 – 19, 2017.
Halal Expo Dubai is the largest and most comprehensive Business-to-Business (B2B) halal exposition in the Middle East for the $2.3 trillion global halal industry. The event, which attracted participation from 13 countries in its previous edition and registered 3,700 trade visitors from 40 countries, expect larger trade participation where buyers and sellers of halal products and services are expected to do brisk business.
Halal Expo Dubai focusses on a number of business verticals, including, halal food, halal beverage, halal fashion, halal cosmetics and personal care products, halal travel and tourism, halal hospitality, halal banking and finance.
This State of the Global Islamic Economy Report, 2016-17, estimates global Muslim spend across sectors at over $1.9 trillion in 2015, while the Islamic Finance sector has around $2 trillion in assets.
Food and beverage tops spend by the global Muslim population, at $1.17 trillion in 2015, followed by clothing and apparel at $243 billion, media and recreation at $189 billion, travel at $151 billion, and spending on pharmaceuticals and cosmetics at $133 billion.
The report estimated the revenues from Halal Certified food and beverage products to be $415 billion; while revenues from halal fashion clothing purchased by Muslim women to be $44 billion and revenues derived from halal tourism services to be $24 billion, in 2015.
“Financing of Halal industries and businesses are expected to get a solid boost with the stronger growth in Islamic banking sector in the UAE and the Halal Expo – Dubai 2017 will help global Halal businesses gather under one roof and explore business opportunities,” Raees Ahmed said.
“Interestingly, non-Muslims are also fast accepting halal products and services due to the scientific, hygienic benefits and ethical aspects. The term halal is gradually becoming a universal concept, more than an Islamic way of life.
“In this regard, Halal Expo is expected to play a crucial role in promoting halal, healthy, clean and green lifestyle movement across the Gulf region. We expect more than 100 business entities from 13 countries to participate at the two-day exhibition that will showcase the latest trends in halal products and services worldwide.”
The global halal products and services sector is growing at 8 per cent year-on-year to $2.3 trillion (Dh8.44 trillion) – higher than the GDP of more than 200 countries in the world, according to research conducted by Orange Fairs and Events.
Of this, about 67 per cent represents the food and beverage industry, worth $1.4 trillion (Dh5.13 trillion).
More than 100 companies from 15 countries Kazakhstan, Malaysia, Indonesia, Poland, Pakistan, Switzerland, India, UK, Brunei, Philippines, South Africa, China and many more are expected to join the show. – TradeArabia News Service