The total Islamic banking assets with commercial banks in six major markets across the globe are expected to reach $1.6 trillion by 2020 and the total industry profit pool is expected to reach $27.8 billion.

The six markets including Qatar Indonesia Saudi Arabia Malaysia the UAE and Turkey known as Qismut will see Shariah-compliant banking assets of commercial banks exceeding $801 billion in 2015 representing 80 per cent of international Islamic banking assets. Globally Islamic banking assets with commercial banks are set to exceed $920 billion in 2015 EY said in a report.

While Islamic retail and commercial banking assets continue to grow at 16 per cent in 2014 and 2015 GCC countries added $91 billion in Shariah-compliant assets in 2014.

Globally assets held by Shariah-compliant financial institutions will expand to approximately $3 trillion from the current $2 trillion in the next few years despite moderate growth and headwinds the Islamic finance industry will face in 2016.

Standard & Poor's Ratings Services said 2016 would be a crossroads for Islamic finance with headwinds including the possible negative impact of much lower oil prices and the prevailing low interest rates in most major developed countries slowing the industry growth.

According to S&P the projected size of the Islamic banking sector in the UAE is expected to account for almost 15 per cent of the world's six core Islamic markets estimated to hit $1.8 trillion by 2019.

"With the exception of Turkey and Indonesia Islamic banking has gained market share in all markets demonstrating the immense success and resilience of the industry. Twenty-two international Islamic banks now have $1 billion or more in shareholder equity making them better positioned to lead the future regionalisation of the industry. In relative terms however they are still only one third of the size of their largest traditional peers in home markets and also lag in terms of return on equity" said Gordon Bennie Mena financial services leader EY.

The EY report noted that Islamic banking continues to see strong growth with a compounded annual growth rate of 16 per cent.

In 2014 the GCC countries added $91 billion in Islamic assets representing a year-on-year growth of 18 per cent. Turkey lost its market share by 0.3 per cent due to political pressure on one of the leading Islamic banking institutions in the country.

Saudi Arabia continues to dominate the share of the global Islamic banking market at 33 per cent followed by Malaysia at 15.5 per cent and the UAE at 15.4 per cent. Islamic banks in Bahrain have also been steadily gaining market share over traditional banks EY said.

Leading Islamic banks have done well to go mainstream with a competitive sizeable business in their home markets said Ashar Nazim partner Global Islamic Banking Centre EY.

"The combined profit pool of Islamic banks across Qismut was estimated at $10.8 billion in 2014 which is a notable milestone" Nazim added.

According to Muzammil Kasbati director Global Islamic Banking Centre EY: "The external operating environment is getting tougher given the prevailing oil price and the resulting impact on banking system liquidity and infrastructure spend. Islamic banks are in a better position to weather this storm due to the simpler nature of their balance sheets basic products and localised operations.

"However they do not appear to be ready for the digital changes that are impacting the way customers engage with banks. A review of their operating models will be critical to the success of Islamic banking across the Organisation of Islamic Cooperation markets."

In terms of banking market share Saudi Arabia Kuwait Bahrain and Qatar are expected to be the major players by 2020.

Ashar said Qismut would remain the key driving market with the GCC providing the additional acceleration for future growth of the industry and Turkey expected to recover from the current temporary setback.

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