The UK retains position as key Western centre for Islamic finance

• UK remains leading Western provider ranked ninth globally
• Global Islamic finance market up 10% in 2009 and is estimated to have grown at a similar rate in 2010
• Bright outlook dependent on key markets in Middle East avoiding upheaval
• Investor demand for quality sukuk supports record $50bn issuance worldwide

The launch of TheCityUK's new report on Islamic Finance provides a landmark for promotion of the industry internationally as the UK maintains its position as the leading Western provider of Islamic financial services.

Richard Thomas, Chief Executive of Gatehouse Bank, said "Gatehouse Bank is pleased to support TheCityUK Islamic Finance 2011 report. As an active market participant in the growing community of financial institutions in the UK dedicated to delivery of sharia compliant solutions, we welcome this latest research that continues to raise awareness of achievements made by the UK Islamic financial services industry".

The 22 banks in the UK offering Islamic finance products exceed that of any other Western country. There were 5 sukuk listings at the London Stock Exchange in 2010 and one in early 2011, bringing the aggregate total at the LSE to 31 listings worth $19bn. Islamic funds managed in the UK have combined assets of $300m.

Banks, sukuk listings and management of funds are buttressed by the UK's uniquely strong infrastructure of professional support for Islamic finance deals and transactions. This includes more than twenty major law firms and the Big Four accounting firms. This has yet to be seriously rivalled, although both Paris and Frankfurt are seeking to develop capabilities.

Duncan McKenzie, TheCityUK's Head of Research said "Despite increasing competition the UK remains the only country in the West to feature prominently in ninth position with assets of $19 billion in The Banker's global ranking of sharia compliant assets by country."

The report estimates that the global market for Islamic financial services rose by 10% to reach $1,041bn by end-2009, taking global assets above the $1,000bn threshold for the first time: a respectable outcome in the context of the difficult economic environment.

TheCityUK estimates that the global market for Islamic finance grew at a similar rate in 2010, with the potential to continue growth at this rate over a number of years. This is dependent however on major markets in the Middle East such as Saudi Arabia, Iran, UAE and Kuwait not being affected by the spread of political upheaval in the region.

The sukuk market recovered strongly in 2010 with record issuance of $50bn. While there have been defaults, the impact on the broader market has not been as extensive as was feared a year ago. Quality issuers of sukuk continue to attract demand from investors.

Revenues of banks picked up in 2010, following downward pressure on revenue and profitability in two previous years. Fewer launches mean that growth in Islamic funds industry has slowed in the recent years with global assets totalling $52bn in 760 funds.

Islamic Finance 2011(.pdf, 2583kb)