Rehan Sheikh, CEO of Standard Chartered Saadiq, Ahsan Ali, Global Head of Islamic Origination, and Ali Allawala, Head Islamic Banking-Retail Clients, discussed the potential for Islamic banking in the global market.
Sheikh said that Islamic finance assets, currently estimated at $1.8 trillion globally, are expected to grow to $3.3-3.5 trillion by 2020.
Much of this growth will come from Sukuk issuances, according to the Saadiq representatives’ projections. Ali said that Sukuk is now mainstream component of capital markets in core countries such as Malaysia and the UAE, and that several more issuance should be coming, primarily from sovereign, quasi-sovereign and financial institution issuers. As a lead arranger, Standard Chartered topped the Bloomberg Sukuk table for the first three quarters of 2016.
“The GCC has been the primary driver of the international Sukuk issuances. Malaysia is a very strong market, but we haven’t seen [the same] in terms of international dollar issuances—GCC is in the lead,” Ali said, adding that most of the issuances have been from the UAE market.
For Standard Chartered Saadiq’s own operations, Sheikh said that its core markets are Malaysia, UAE a Pakistan, Indonesia and Bangladesh, but that it is looking to grow parallel with Standard Chartered’s existing conventional operations across the world, including entrance into Brunei and more African markets.
“Africa is a huge space where there are a lot of queries that are coming out…there is always talk about penetrating that market,” Sheikh said, though he added that there are “no real plans in terms of which countries we would go in”.
Saadiq opened its first African operation in Kenya in 2014, however Standard Chartered has operations across 16 African and 23 Asian countries.
“We will complement the global footprint that we have,” Sheikh said.
Saadiq will also be growing its product base to compete with the conventional side’s offerings. Allawala told reporters that Saadiq’s Indonesian aims to launch Takaful products by early 2017.
According to Standard Chartered’s figures, Saudi Arabia currently holds a 51 per cent share of the Islamic finance market, followed by Malaysia (23 to 25 per cent) and the UAE (22 to 23 per cent). Malaysian authorities are targeting a 40 per cent market share by 2021, while the smaller Indonesia market is looking to hit 15 per cent market share by 2023.
