Islamic Financial Services
From The Report: Kuwait 2014
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One of the foremost and earliest players in the global market for Islamic financial services, Kuwait could soon see the segment play a larger role in the banking sector. Half way through 2013, Kuwait housed more than $70bn in sharia-compliant banking assets, around 6% of the global total and a figure widely expected to grow in the coming years. Key drivers include a sector- wide focus on asset diversification, new opportunities in the sukuk (Islamic bond) market and the potential conversion of the Commercial Bank of Kuwait, a conventional lender, to sharia-compliant status.

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Overview

A key player in the global sharia-compliant financial industry
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Kuwait has become a major global centre for a wide variety of activities in the Islamic financial services (IFS) sector in recent years. By the end of the first half of 2013, the country housed more than $70bn in sharia-compliant banking assets, which was equal at the time to 6% of total global Islamic banking assets, according to data from the research arm of the local market leader Kuwait Finance House (KFH). This figure is widely expected to grow in the coming years. Indeed, half of Kuwait’s…

Analysis

The domestic sukuk market is poised for a period of expansion
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As a major regional centre for Islamic banking and other sharia-compliant financial services, Kuwait is widely expected to take a leading role in the rapidly expanding sukuk (Islamic bond) market in the coming years. In the early and mid-2000s both sukuk and conventional bonds were considered to be a major source of funding, both for the government and for private sector firms. While debt activity was reduced in the wake of the 2007-08 international economic downturn – due primarily to a widespread…

Analysis

Focusing on trade finance in an effort to diversify income and boost foreign exposure
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Since the 2007-08 international economic downturn, revenue diversification has been a major focus for financial institutions around the world. In Kuwait, where a handful of Islamic financial institutions (IFIs) were forced to enter into restructuring in the wake of the financial crisis and most others saw a major drop in income, this has taken many forms over the past five years. In an effort to reduce their exposure to the troubled domestic property market, many local sharia-compliant banks, investment…