(MENAFN - Arab News) The total assets of Islamic financial institutions (IFIs) in the GCC (Gulf Cooperation Council), according to the Bahrain-based Capinnova Investment Bank, showed a sustained growth between 2003 and 2008, representing 288.2 billion at the end of 2008.
Capinnova, the Shariah-compliant investment banking arm of BBK, is upbeat about the Islamic finance industry in the region and predicts that it will grow more this year.
Capinnova is licensed by the Central Bank of Bahrain; the bank is well capitalized and is wholly owned by BBK. Capinnova has an authorized capital of 500 million and paid-up capital of 151.5 million.
"The key fact that the Islamic finance industry is asset based and not debt financed has protected and prevented this sector from the crises that has brought the downfall of conventional financial giants worldwide," said Capinnova's Chief Executive Officer Jamal Hijres.
"We are confident about the Islamic finance industry's future and we believe that it will grow stronger in 2010,"added Hijres.
Quoting Standard and Poor's report, the bank added that the assets of the top 500 Islamic banks expanded 28.6 percent to total 822 billion in 2009, compared with 639 billion in 2008.
"The Islamic banking sector is considered to be one of the largest growing sectors and a major revolution for the financial industry. The growth of the Islamic banking industry in particular has been remarkable in recent years and as per published reports it is expected to touch 4 trillion in the next five years. We aim to leverage on this exponential growth and further strengthen the Islamic banking industry in Bahrain and across the region," added Hijres.
"I would like to mention that while Islamic finance is one of the big success stories in finance today, it is worth looking at the current credit crunch in conventional finance to see how easily one problem can spiral out of control. This is something that Islamic finance practitioners need to take on board and make sure they are well prepared. Firm corporate governance programs, striking a good balance between risk and reward, achieving greater market penetration, transparency on compliance, and learning from conventional banking successes and failures are all effective goals that will help consolidate Islamic finance. The year 2010 will also be a year that surely will test the strengths of the Islamic finance industry and I am confident that the industry will deliver and further consolidate its position," added Hijres.
In January 2010, Capinnova acquired a 50 percent stake in Sakana Holistic Housing Solutions.
Bahrain-based Sakana was earlier a 50/50 joint venture between BBK and Shamil Bank. BBK took the decision to transfer the ownership of Sakana to Capinnova to strengthen and diversify the bank's investments in the Islamic financial sector while complying with the principles of Islamic law.
Capinnova aims to provide quality investment products and innovative solutions to companies, financial institutions and high net worth individuals.
By Mahmood Rafique