The assets of Islamic banks in Qatar rose to QR195bn at the end of 2012 compared to QR8.8bn 10 years ago, HE the Governor of the Qatar Central Bank (QCB) Sheikh Abdullah bin Soud al-Thani has said.
Speaking at Oman’s Second Islamic Banking and Finance Conference on Sunday night, the central bank governor said the assets of Islamic banks represented 23.8% the total assets of the banking sector, up from 14% back in 2002.
Deposits in Islamic banks represented 26.6% of the deposits in the banking sector, he said. Islamic banks have a total of QR121.6bn in deposits. Profits of Islamic banks jumped to QR3.8bn during the same period, Sheikh Abdullah added.
One of the results of the increased demand for Islamic banking services, the central bank governor said, was that commercial banks had sought in 2005 to offer Islamic banking services.
The QCB had then cleared the proposal in order to increase competitiveness in Islamic banking.
The assets of Islamic banking services offered by commercial banks were QR45.7bn, representing 31% of the total assets of the banking sector, he noted.
However, in 2011, the governor said QCB withdrew the licence for commercial banks to offer Islamic services, noting that a major reason for the ban was to enhance the ability of both Islamic and commercial banks to manage their risks more efficiently.
There were also reasons related to regulations and monetary policy, he added.
Sheikh Abdullah stressed that a number of challenges still face the Islamic banking and finance sector despite its success. The main challenges according to the governor, were developing new services that were in compliance with Shariah and also the requirements of the global financial system.
“There is also a need to develop legislation that govern the relationship between Islamic banks and its customers that are consistent with international law”, he said .
The QCB governor said Qatar’s keenness to encourage Islamic finance extends beyond banks to investment companies and Islamic finance companies.
Sheikh Abdullah praised the progress Islamic banks have made worldwide, adding that the global assets of Islamic banks had amounted to $1.3tn at the end of 2011, which could potentially reach $1.8tn by the end of this year.