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The total value of Bahraini banks' Islamic banking assets increased by 50 per cent in 2008 to $24.6 billion (BD9 billion), according to figures issued by the Central Bank of Bahrain (CBB).
This increase, at a time when traditional banking institutions worldwide saw widespread depreciation in their assets, is a testament to the ongoing success and resilience of the Islamic banking system. By its very nature it precludes some of the riskier practices that have led conventional banks into their current situation.
The sound basis provided by Shariah principles, and the asset based business model have jointly provided a firm platform for the strong performance in the sector.
Such has been the growth of Islamic finance in Bahrain that since 2000 the Islamic banking sector has seen assets increase by 1,280 per cent and the number of Islamic finance institutions continues to grow.
The CBB has approved more than 33 licences for Islamic finance institutions since 2005. Bahrain is widely recognised as a global leader in Islamic finance, playing host to the largest concentration of Islamic financial institutions in the world. Presently, there are 36 specialist Islamic banks operating in the kingdom whilst many conventional banks have integrated Islamic windows within their operations.
Khalid Hamad, executive director-banking supervision, CBB, said: "Whilst the underlying principles of Islamic finance have safeguarded it against the worst of the economic downturn, it is Bahrain's tried and trusted world-class regulatory standards that have helped attract institutions to the country and led to the rapid growth of Islamic finance assets."
CBB Governor Rasheed Al Maraj, pictured left, said: "The continuing implementation of sound business principles should allow the industry to continue its rapid and successful growth of recent decades, and Bahrain is well-positioned to remain at the forefront of developments through the application of prudent regulatory standards."
