By Andy Sambidge
Rating agency delivers positive verdict on GCC institutions during global financial crisis.
Islamic financial institutions (IFIs) in the GCC countries have displayed strong resilience amid the current global financial debacle, according to Moody's Investors Service in a new report.
The rating agency believes this is not only thanks to their strong growth and typically conservative approach, but also because the core principles of Islamic banking have protected them from elements of the crisis.
Global Islamic banking assets grew around 27 percent in 2007 and growth of 20-30 percent is expected this year as well.
Anouar Hassoune, a Moody's vice-president and senior credit officer said Moody's expects IFIs in the Gulf region to be able to continue growing, albeit at a slower pace, before resuming more rapid growth, most probably within 18 months.
The report added that IFIs' reputation had benefited from the current crisis, reflecting their conservative approach to business, a close proximity to their domestic and regional franchise, their balanced and ordered appetite for growth, and focus on the basics of banking as opposed to innovation.
"All these factors, which used to be perceived as weaknesses before the credit crisis began, are now being used as shields against the potential damages of imported stress," said Hassoune.
"As a result, in the short term, in times of crisis, clients may find it more comfortable doing business with an Islamic bank."For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.