Dubai: Western financial institutions and investors are becoming increasingly comfortable with sukuk structures, and by the turn of this decade the total sukuk issuance is expected to exceed $100 billion, according to global rating agency Standard & Poor's.
"Mounting demand around the world for Sharia-compliant financial products and services is fueling the Islamic banking industry's buoyant expansion," said Standard & Poor's credit analyst Anouar Hassoune.
Sharia-compliant assets worldwide are now close to an estimated $500 billion and have been growing at more than 10 per cent per year over the past 10 years, placing Islamic finance in a global asset class all of its own.
In the Gulf and Asia, Standard & Poor's estimates that 20 per cent of banking customers would now spontaneously choose an Islamic financial product over a conventional one with a similar risk-return profile.
The market share of Islamic banks currently stands at 12 per cent in Malaysia and 17 per cent in the GCC countries. Retail banking services and issuance of Islamic notes (sukuk), have been and will continue to be frontrunners in the global Islamic finance boom, the rating agency said.
"The development of Islamic finance in the Magh-reb should be gradual and the Mashreq is emerging as a natural partner," said Standard & Poor's credit analyst Mohammad Damak.
Islamic finance will continue to expand, both geographically and in terms of products offered, and newly created Sharia-compliant instruments are set to rival product offerings at conventional banks, according Standard & Poor's.