While business activities undertaken according to the principles of Islamic law, or sharia, have been a feature of the Gulf region for over a millennium, recent years have seen the emergence of a modern Islamic financial services (IFS) sector that has established itself as an important component of regional economies. Kuwait is no exception. Its Islamic banks, investment companies and insurance providers have steadily expanded their operations on the back of the country’s hydrocarbons-powered…
Islamic financial services
From The Report: Kuwait 2012
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Sharia-compliant banking represents a large and vibrant market segment in Kuwait, as Islamic banks exhibit a similar profitability trend to their conventional counterparts. Within Kuwait, Islamic banks hold 35% of total banking assets, and it has been estimated that they are growing at a rate of 20% per annum. On the other hand, the 2008 financial crisis brought the sharia-compliant segment slow or stagnant expansion and, in some cases, contraction. This has highlighted the need for a comprehensive regulatory structure to complement the legal framework and the implementation of a new layer of regulations. The government is poised to address this need with new sukuk (sharia-compliant bonds) and trust laws, designed to establish a robust governance framework for sukuk issuance.
This chapter includes interviews with Mohammad S Al Omar, CEO, Kuwait Finance House; and Mohammed Jarrah Al Sabah, Chairman, Kuwait International Bank.