Abu Dhabi Islamic Bank (ADIB), a top-tier Islamic financial services institution, highlighted the important role played by the Islamic banking sector in promoting economic and financial growth in the UAE. This was revealed in Abu Dhabi 2011 Report unveiled by Oxford Business Group in collaboration with ADIB.
The report revealed that the UAE Islamic financial services sector represented 30% of the global Islamic banking industry in 2011 and due to the growing demand for Islamic financial services among different customer segments within the UAE. The report showed that Islamic banks have played a major role in financing UAE infrastructure projects, residential properties for UAE nationals and development of the human capital market through training of national talent.
Commenting on the report, Tirad Mahmoud, CEO of Abu Dhabi Islamic Bank, said, “UAE Islamic banks play an important role in the development of the global Islamic banking industry which is now valued at more than US$ 1 trillion. This growth in the Islamic banking industry is driven by the increased demand for Islamic services and products by a growing number of customers. Demand is growing due the industry’s emphasis on ethical principles, its commitment to the principles of transparency and the application of the principle of mutual benefit in its operations and transactions.”
Tirad Mahmoud highlighted the effective role of Shari’a committees, which are independent from bank managements, in regulating and controlling banking operations. They ensure compliance with Shari’a principles and enforce the principles of transparency and mutual benefit in all banking transactions. He also praised the support that Islamic banks receive from the UAE Central Bank which helps develop the sector and has led it to achieve a global recognition.
Islamic banking assets in MENA rose to US$ 416 billion in 2010. This represented a cumulative annual growth rate of 20% over five years, compared with less than 9% for conventional banks.
“Although there are similarities in the nature of work of Islamic and conventional banks, there is a vast difference in their financial mechanisms and transactions. In Islamic banking for example, the rates of Murabaha are fixed and known to the client from the moment the contract is signed. Islamic Banks cannot increase that rate even in the event that the client is unable to meet monthly payments on time,” added Tirad Mahmoud.
The Abu Dhabi 2011 Report aims to provide a snapshot of the Islamic banking sector in the UAE, specifically in the Emirate of Abu Dhabi. It is an increasingly important reference for the industry and contains a wide range of interviews with leaders of the Islamic banking sector.