Singapore, July 5 (ANI): Islamic banks are likely to continue to expand faster than traditional peers in Southeast Asia, and SP Global Ratings will bring growth drivers and risks to the sector by Covid-19 on Monday Said after analysis.
The Islamic Bank said it has benefited from government support, a large population of Muslims in many Southeast Asian countries, and a strong demand for Shariah-compliant financial products.
Additional benefits include increased standardization of contracts and the potential integration of Islamic financial global legal and regulatory frameworks.
Nonetheless, these institutions, such as traditional banks, are experiencing pandemic turmoil. In the new wave of infection, Islamic banks’ growth rates are likely to ease and asset quality stresses will last longer, SP said.
High levels of tolerance for both traditional and Islamic banks obscure the true range of weak lending in these emerging markets. Recognization of problematic loans will be delayed, but temporary remedies will help stressed borrowers.
This potentially masks asset quality issues and underestimates the impact on earnings and capital, SP said.
In addition, the sudden business and operational disruption brought about by the pandemic has led to a rapid change in the mindset and strategy of Islamic lenders who are more actively considering product digitization and FinTech partnerships and outsourcing. Did.
In addition to these issues, the FAQ addressed other questions that investors may have, such as downside risk, M & A, comparative growth in the sectors between Brunei, Indonesia, Malaysia and the Philippines. (ANI)
Credit FAQ explores fast-growing drivers of Islamic banks
Source link Credit FAQ explores fast-growing drivers of Islamic banks