The IFSB issued the Ninth Edition of its Annual Flagship Publication: the Islamic Financial Services Industry (IFSI) Stability Report 2021

The Islamic Financial Services Board (IFSB) today issued the ninth edition of its annual flagship publication: the Islamic Financial Services Industry (IFSI) Stability Report 2021. The Report provides updates on the key trends in growth and developments, analytical and structural outlooks, as well as examines the resilience of the IFSI against the COVID-19 shock and other vulnerability factors across the Islamic banking, Islamic capital market and takāful segments.

The IFSB Secretary-General, Dr. Bello Lawal Danbatta stated that “the issuance of the IFSI Stability Report 2021 takes place at a time when the world is still faced with the challenges of the COVID-19 pandemic and its implications for the stability of the global financial system.” He stated further that “despite an unclear pattern and duration of the pandemic, the IFSI sustained its growth momentum to an increased estimated worth of USD 2.70 trillion in 2020, and recorded a growth rate of 10.7% year-on-year (y-o-y) based on significant improvement across the three segments of the IFSI, especially in Islamic banking and the Islamic Capital Market.”

Dr. Bello highlighted that based on various analyses contained in the IFSI Stability Report 2021, the performance of the global IFSI projected a sense of optimism in the short term. This will depend on, among other things, timely access to, and the efficient roll-out of, COVID-19 vaccines; jurisdictions' capital flows, fiscal and monetary policy spaces and capacity to recover from recession; digital transformation process; and the extent of contact-intensiveness of key economic sectors.

Key highlights of the IFSI Report 2020 include:

• The Islamic banking segment retained its dominance in the global IFSI. The domestic market share for Islamic banking in relation to the total banking segment continued to increase in at least 23 countries, among the 36 jurisdictions covered in the IFSI Stability Report 2021.

• The Islamic banking segment’s performance grew by 4.3% in 2020, compared to 12.4% in 2019. As at 3Q20, the Islamic banking segment accounts for 68.2% (72.4% in 2019) of the total value of IFSI assets, the declining share being mainly due to increased prominence of the ICM segment.

• The ICM sector as at end of 2020 accounts for 30.9% of the global IFSI assets on the back of a positive performance due to the sovereign and multilateral ṣukūk issuances in key Islamic finance markets. 

• Islamic funds also recorded a noteworthy growth of 31.9% in terms of the total value of assets under management, while the Islamic equity markets also rebounded in the later part of 2020 after the initial shock and volatility in 1Q20 due to the outbreak of COVID-19 pandemic. 

• The share of global takāful industry in the global IFSI declined marginally to 0.9% with a -14.8% growth y-o-y mainly due to the exchanged rate used for some member jurisdictions.

• The role of the Islamic social finance sector is very crucial in a post-COVID-19 financial system stability. 

The IFSI Stability Report 2021 utilises data from the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) database for the Report’s Islamic banking sector analysis. The Report also includes box-article contributions from some IFSB members, namely; Central Bank of Bahrain, Central Bank of the UAE, Saudi Central Bank, and the State Bank of Pakistan. Other contributors are the Insurance and Private Pensions Regulation and Supervision Agency of Turkey, International Islamic Liquidity Management, and Moody's Investors Services.

The IFSI Stability Report 2021 is available for download from the IFSB website, www.ifsb.org.

Published on 18 August 2021