Islamic banks growing rapidly in Turkey

The Islamic banks in Turkey form 5.2 percent of banking assets and will reach 10 percent by 2018, since those banks surpass the rest of the banking sector and have steady financing growth over 20 percent per year, a specialized economic report showed Friday. "During 2012, the total assets of the Islamic banks grew by 25.2 percent y-o-y to reach TRY70.3bln. As at end-March 2013, total assets of Islamic banks stood at TRY74.7bln, representing 6.3 percent ytd growth (industry growth: 4.2 percent ytd)," reads the report. Data also showed that the Islamic banking assets accounted for 5.2 percent of all banking assets in Turkey as at end-March 2013, up from 5.1 percent at the end-2012. Moreover, the KFH expected that the Islamic banks' total assets are expected to reach 10.0 percent of the Turkish banking system's total by 2018. "In comparison, conventional banking assets expanded by 4.2 percent ytd, as at end-March 2013 (2012: 11.4 percent y-o-y), to TRY1.3tln from TRY1.25tln, as at end-2012. The Central bank's database shows that the Islamic banking assets growth had consistently exceeded that of conventional banking assets growth," added the report. The report pointed out that the KFH-Turkey is first in deposits, not to mention factors that spark further growth during the coming period; especially that the Islamic banks are highly demanded and offer a wide array of products. The Turkish banking sector has three kinds of banks, which are the commercial, development, and investment banks; in addition to Islamic banks that do not deal with interest. The limited existence of the Islamic banks guarantees its ability to continue to grow significantly during the coming years. The KFH report underlined that continuous measures and initiatives taken by the Turkish government will drive the Islamic banking sector to new heights in the longer term. "By 2018, Turkey is expected to witness its Islamic bank's total assets reaching 10 percent of the overall banking sector's total assets (March 2013: 5.2 percent). "In general, we remain optimistic on the potential of the Islamic banking in Turkey, given the following: low penetration of Islamic banking in Turkey; encouraging demographics and a large Muslim population (99 percent) will continue to support the demand for Shariah-compliant products and investments in Turkey; and Turkey's bid to strengthen relationships with countries in the Middle East will contribute to the growth of Islamic finance in the country." (end) fnk.ibi KUNA 241916 May 13NNNN