(MENAFN- The Peninsula) The Islamic banks in Qatar will continue to grow faster than their conventional peers in the next couple of years. The credit growth of Qatar's Islamic banks is likely to accelerate in 2015, ratings agency Standard & Poor's noted yesterday.
Islamic banks' market share in the Gulf will likely keep increasing over the next few years, within a supportive operating environment, after slower gains last year. Qatar, Saudi Arabia, and the UAE offer the brightest growth opportunities in the Gulf Cooperation Council (GCC).
"We think Islamic banks will continue to grow faster in the next couple of years than their conventional peers, though, particularly in Qatar and Saudi Arabia, where we believe domestic credit will grow the most", the ratings agency said in its report on 'Gulf Islamic Banks' released yesterday.
Islamic banks in Qatar grew their balance sheets by 28 percent between 2009 and 2013 as they capitalised on the government's large investments.
Another key driver was the Qatari government's recent initiatives, such as banning conventional banks from engaging in Islamic banking, the report said. Barwa Bank has helped Islamic banks in Qatar grow faster than their conventional peers. Consequently, the relative weight of Islamic banks in Qatar in the S&P's sample increased to 16 percent in 2013 from 11 percent in 2009.
The report that noted Qatar's Islamic banks' growth has outpaced the banks in the neighbouring GCC countries owing to the Qatari government's high infrastructure investments over the past few years.
Islamic banks will continue to attain market share in the Gulf over the next couple of years, the report said.
The banks' market share of overall banking system assets in the GCC could gradually inch closer to 30 percent over the next five to six years, from just under 25 percent currently, in Standard & Poor's Ratings Services' opinion.
The S&P report noted the GCC region has one of the world's largest Islamic banking markets and enjoys healthy performance metrics. In addition, government support to the sector should help Islamic banks to keep expanding their market share.
"Moreover, we anticipate that the operating environment over the next two years will continue to underpin Islamic banks' business profiles and credit quality," the report said.
S&P estimates that Islamic banks' market share is currently nearing one-quarter of overall GCC banking system assets and that it could gradually pull closer to 30 percent over the next five to six years.
In Qatar, most Islamic banks improved their reported non-performing advance ratios markedly at year-end 2013.
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