Excellence in Islamic finance

Islamic finance is growing as a source of finance for both Islamic and other investors around the world. The UK is the leading Western centre for Islamic financial services (IFS), with London as its world leading financial services centre.

Globally, the demand for Islamic finance is clear. The market for IFS as measured by Shariah-compliant assets rose by 10% to reach $1,041bn by end-2009, taking global assets above the US$1,000bn threshold for the first time: a respectable outcome in the context of the difficult economic environment. Our own research estimates that the global market for Islamic finance grew at a similar rate in 2010, and has the potential to sustain this rate of growth over a number of years. This is, however, largely dependent on major markets in the Middle East not being affected by the spread of political upheaval in the region.      

Banks, Sukuk listings and management of funds are buttressed by the UK’s uniquely strong infrastructure of professional support for Islamic finance deals and transactions. This includes more than twenty major law firms professional service organisations – including the ‘Big Four’ accounting practices – all of which have established teams providing specialist Islamic finance services covering tax, listings, transactions, regulatory compliance, management, operations and IT systems. This extent of expertise has yet to be seriously rivalled by other Western financial centres.

The Sukuk (Islamic notes that represent an alternative to conventional bonds) market recovered strongly in 2010 with record issuance of US$50bn and while there have been defaults, the impact on the broader market has not been as extensive as was feared a year or two ago and quality issuers of Sukuk continue to attract demand from investors. Indeed, the UK has a strong interest in the development of the Sukuk market. The London Stock Exchange has proven to be an attractive draw for Sukuk issuance. As at Q1 2011, the number of Sukuk listing at the LSE totalled 31, with an aggregate value of US$19bn.

Bank revenues also picked up in 2010, following downward pressure on revenue and profitability in the two previous years. The 22 banks in the UK offering Islamic finance products now exceed that of any other Western country. 2010 also saw the global Islamic fund management industry increase by 7.6% to US$58 billion, bucking the relatively flat growth trend of previous years. 

As Islamic finance expands and the range of products continues to broaden, there is a growing global demand for education and skills and UK institutions are today at the forefront of providing qualifications for the global industry. Courses in Islamic finance are now offered by over thirty professional institutions, colleges and universities spanning the full range of qualifications; from school level through vocational and career-based qualifications as well as undergraduate and postgraduate degrees.

With all of these factors in place, the potential for growth in UK-based IFS is immeasurable. The UK financial services sector represents a springboard for global growth and the partner of choice in the delivery of Islamic finance excellence. UK based providers are increasingly focusing on services that complement those available in other centres, and at the UK Islamic Finance Secretariat (UKIFS), a part of TheCityUK, our goal is to continue with the development of strong partnerships with other global Islamic finance centres and to support the favourable environment for investment opportunities in Islamic finance.

If you would like to be first to receive our latest research, including our 2012 report on Islamic finance, register at this address.

To find out more about membership of UKIFS and how it can benefit your business, contact us.