Bahrain’s Islamic banking sector set for further growth

Bahrain’s Islamic banking sector set for further growth

MANAMA: Bahrain's sizable Islamic banking sector is set for further growth powered by consolidation and rising appetite for Sharia-compliant finance, it has emerged. A report by Fitch Ratings issued yesterday says the market share of Islamic banks (including Islamic windows) in Bahrain is expected to increase in 2021-2022 after reaching 37.1 per cent of domestic banking system assets and 17.2pc of total banking system assets (including foreign assets) at end-2020. The increase will be driven by bank mergers and acquisitions, continued Islamic financing growth amid a recovering economic environment, rising public awareness of Islamic products, and greater use of fintech solutions. The Islamic banking sector benefits from mainstream relevance and high awareness of Islamic products, a wide branch and digital banking network, government support in the form of an enabling regulatory framework and the availability of Islamic liquidity-management instruments. The sector continues to have significant importance with total Islamic banking assets reaching $35.7 billion at end-2020 or about 106pc of Bahrain's GDP. The domestic market share of Islamic banks has been steadily rising from 35.4pc in 2015, driven by an increase in real estate financing, but the pandemic and lower oil prices in 2020 resulted in domestic asset growth of