As Muslim populations in Europe and North America continue to grow, the demand for Islamic finance services is exceeding supply, one of the region’s leading bankers has said.
Mike de Graffenried, chief executive officer of Qatar First Investment Bank (QFIB), told Arabian Business: “I’m quite sure that the more profound demand is for retail finance; for home financing.”
He also added: “That is probably not being met as deeply as it should be. I think the availability of services lags demand at this point.”
In addition, de Graffenried noted that as Western governments seek new investment bases, and as long as the Gulf region continued to develop excess capital, they would need to start borrowing Islamically, through sukuk.
But the CEO also pointed out that a number of banks from the region are reaching out to Europe. Qatar Islamic Bank has plans to open services in Paris, and there are a number of Islamic banks in London.
de Graffenried added: “And as those businesses build up or as the Muslim community gets bigger and bigger in terms of economic power within Europe, I think the corporate banking services are going to have to develop.”
He also said: “There’s much talk about it, but not much has happened in reality, but as long as this is going to be an excess capital generating region, and the desire at least in the private sector is to be more Islamic in one’s investments, one would think that the market would develop further.”
The QFIB official admitted that the industry hadn’t developed at quite the pace observers might have suggested, but added that Islamic finance had a strong future abroad.
Qatar Islamic Bank is in the process of launching its first dollar denominated sukuk issue after roadshows in regions including Europe. Sources have said the lender could raise as much as $750m.
At the end of last week, Bank of London and the Middle East (BLME) the biggest wholesale Islamic bank in Europe - marked a return to profitability by reporting profits before tax of $5.7m in the first half.