Islamic Financial Services
From The Report: Kuwait 2015
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Over the past decade Kuwait has worked to shore up its longstanding reputation as a centre for Islamic financial services, leading to the rapid expansion of sharia-compliant banks and investment companies in recent years. Islamic banking assets, at just over 20% of the total in 2005, grew to around 45% by the end of 2013, and an IMF report released in December 2014 showed Kuwait’s sharia-compliant banking sector is the fifth largest in the world, with more than $68.9bn in assets. Moving forward, the bond market appears poised for a resurgence, with a variety of private and state-owned firms recently announcing plans to issue sukuk, or sharia-compliant bonds. The government has also been preparing to introduce a new, independent insurance regulator since 2012, with draft legislation reportedly including a separate set of rules and regulations for providers of takaful, or Islamic insurance.

Articles from this Chapter

Overview

Growing impact: Despite some remaining challenges, the sharia-compliant financial sector is on the rise
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Over the course of the past decade Kuwait has worked to shore up its longstanding reputation as a centre for Islamic financial services (IFS), leading to the rapid expansion of sharia-compliant banks and investment companies (ICs) in recent years. Islamic banking assets, which accounted for just over 20% of total banking sector assets in 2005, grew to around 45% of total assets by the end of 2013. Sharia-compliant ICs saw a similar jump in the same period, from around 29% of total assets in 2005…

Analysis

New players: The Islamic banking sector has undergone rapid growth over the past decade
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In April 2014 the Commercial Bank of Kuwait (CMBK) received approval from 85% of its shareholders to convert the bank to a full-fledged sharia-compliant lender, making it the most recent financial services provider to begin exploring a possible conversion. Indeed, Ahli United Bank Kuwait (AUB) went through a similar process in 2010. When CMBK completes the transition to sharia compliance – potentially before the end of 2015 – Kuwait’s banking sector will be predominantly composed of sharia-compliant…