Moody’s forecasts fast growth for Islamic banking in next five years
by Sebastian McCarthy
Islamic banking within the Commonwealth of Independent States (CIS) will grow substantially over the next five years, according to Moody’s Investors Service.
The US agency is forecasting financial expansion in many of the CIS counties during the years ahead as a result of government initiatives built to nurture the sector.
“Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan are set to lead this expansion of Islamic banking,” said Svetlana Pavlova, AVP-analyst at Moody’s, in a report released today.
Pavlova added: “These countries have large Muslim populations, and are notable for their governments’ commitment and progress in establishing better legal and regulatory infrastructure for Islamic finance.”
Kazakhstan’s government aims to boost the share of Islamic banking assets to three per cent of total banking assets in the country by 2025 from the current 0.2 per cent, the report said.
In Kyrgyzstan, the national bank aims to expand the share to five per cent by 2021 from the current 1.4 per cent.
While Russia was judged to have the weakest growth potential, some individual banks are seeking to meet demand for Shariah-compliant products and services under existing laws.
One example given in the report was Sberbank, the largest commercial bank by assets in Russia, which was looking to offer such services and has launched an Islamic payment application in 2019.
AK BARS, the largest bank in the Republic of Tatarstan, introduced a pilot Islamic mortgage product in 2019.