Islamic financial services
From The Report: Kuwait 2012
View in Online Reader

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.

Articles from this Chapter

Overview

A vibrant market: Sharia-compliant banks remain relatively healthy while the takaful sector is crowded
OBG
plus

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…

Interview

OBG talks to Mohammad Al Omar, CEO, Kuwait Finance House
OBG
plus

Interview:Mohammad Al Omar Did Islamic financial institutions emerge from the global financial crisis in a stronger position than their conventional counterparts? MOHAMMAD AL OMAR: Like traditional lenders, Islamic financial institutions were affected, both in Kuwait and in other GCC countries. We are now seeing weak economic growth around the world following the crisis. Nonetheless, the consequences for Islamic banks were generally less severe because of their lower leverage and smaller…

Interview

OBG talks to Mohammed Jarrah Al Sabah, Chairman, Kuwait International Bank
OBG
plus

Interview:Mohammed Jarrah Al Sabah What can be done to stimulate lending in Kuwait and boost local exposure in international markets? MOHAMMED JAEEAH AL SABAH: There are two steps that can be taken to boost lending. First, the government must use fiscal policy to stimulate the economy. This can be achieved by increasing general spending rates through capital expenditure on infrastructure and other development projects. Second, the authorities must enhance liquidity in the local banking sector…

Analysis

Underwritten expansion: A new insurance law will address issues in the takaful segment
OBG
plus

Strong competition in the local market from both takaful and conventional players has made recent years challenging for Kuwait’s sharia-compliant insurers. The performance of dedicated takaful providers in 2010 was mixed, with gains by players such as National Takaful and Ain Takaful (which grew their premiums by 17.4% and 58.7%, respectively) contrasted by muted performances from a number of companies adjusting to the new landscape, such as Wethaq Takaful and Gulf Takaful, whose premiums contracted…

Analysis

Under control: Robust regulations for sukuk issuance are hoped to boost activity
OBG
plus

The regularity with which the Kuwaiti government has issued bonds over the past decade has driven aggregate bond growth – sovereign and corporate – and helped to establish the country as a leading issuer of bonds’ sharia-compliant equivalents, sukuks. While the global economic crisis has seen a dropoff in bond and sukuk issues across the region, a return to economic growth and ambitious infrastructural development programmes underpin a recovery in the fixed-income market – and Kuwait…