Focus of growth shifts to Asia
Asia's emergence as the healthiest engine of global economic growth is as evident in Islamic finance as it is in the conventional banking sector. The Gulf Co-operation Council (GCC) region remains the core of Islamic finance, accounting for more than 40% of total sharia-compliant assets.
However, Islamic asset growth in this region slipped to just 5.5% in this year's ranking, from 34.5% the previous year. By contrast, in Asia, which has a 14.6% share of total assets, the growth rate was almost unchanged at 22.6%.
Those differences are also reflected in the fastest movers' list, which compares the latest asset figures available this year with the previous data available. That comparison is not necessarily year on year, and can lead to some anomalies. For Yemen's Saba Islamic Bank, for example, the extraordinary growth rate reflects the fact that the previous data for the bank was at start-up, when the bank had made almost no investments. In addition, the high inflation rate and multiple exchange-rate policies in Iran make growth rates for its banks' balance sheets more opaque and difficult to compare internationally.
Rise of Asian banks
Even with these caveats in mind, the rise of Asian Islamic banks is evident relative to their GCC peers. In total, 10 Asian banks feature in the fastest movers' list, compared with just six for the GCC. Indonesia alone accounts for three of these banks, including the second highest climber, Bank Muamlat, which has rebounded dramatically after a difficult year in the previous ranking.
Bangladesh is another high-growth market, with two banks notching up asset growth of more than 300% and total sharia-compliant assets up 25.6%. The potential to sustain this is clear - Islamic assets in Bangladesh in this ranking still total just $9.4bn in a country that has a population of 160 million, almost entirely Muslim. By contrast, Malaysia has Islamic assets of $102.6bn for a population of 27 million, of which about 60% are Muslim.
The truly missing market is India, which has a Muslim population of about 160 million, where Islamic banking is in its absolute infancy. Two of four Indian banks in the ranking report assets, totalling just $22.8m, and a clearer regulatory approach to Islamic banking will be vital to enable expansion in the country.
Turkey's growth
Another market to watch is Turkey, the only one of the top 10 countries to rise up the ranking, overtaking the UK to take eighth place. Sharia-compliant assets in Turkey have increased by 26.6% to $22.6bn, concentrated among just four banks. One of those Turkish banks, Kuwait Turket Evcaf, launched the country's debut sukuk, for $100m, in August 2010, a financing that may allow the bank to join next year's fastest movers' list.
