Bahrain’s Islamic banking sector set for further growth

SectorFinancial Services

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 more...