Islamic Banking in the Middle East and North Africa

Report Published by Celent

Islamic finance has become a major global industry, with over 300 institutions currently involved
in both Muslim countries and international markets. Globally, Islamic banking assets are
estimated between US$ 650 billion and US$700 billion and have registered a growth rate of 10–
15% per year over the last decade.

The Middle East region has seen exceptional growth in terms of both institutions providing Islamic
financial services and assets under management. The Middle East is one of the most developed Islamic
banking markets, with more than US$255.8 billion in assets. However, development varies between
countries: Saudi Arabia and Kuwait are reaching the maturity phase, while other markets are still in
growth phases.

The largest growth potential for Islamic banking in the Middle East is in Turkey, where it is still a niche,
representing only 3.3% of banking systems in 2007. However, Celent estimates that Islamic banking
assets will continue to grow and will represent 5.1% of total banking assets by 2010. In fact, in the
countries we studied, Islamic banking assets have grown more rapidly than conventional assets.
North African markets are also attractive targets for expansion, for both Islamic banks and conventional
banks offering Islamic products or opening subsidiaries. The North African region, particularly Egypt and
Algeria, is a large and still untapped market.

"Islamic banking is an attractive business because it is generally highly profitable. Major Islamic banks
have been less impacted by the financial crisis than conventional banks," says Perrine Fiorina, an
analyst with Celent’s banking group and author of the report. "However, competition among banks has
intensified in the Middle East, making the North African region more attractive for market entrants."

This report provides an analysis of Islamic banking in two major regions: the Middle East and North
Africa. It defines Islamic banking products and examines the major players involved by reviewing the size
and growth of Islamic banking.