Tuesday, July 31, 2007
Indonesian Islamic banking growth
Shari'ah-compliant banking in Indonesia is expected to triple by the end of next year from 1.7 percent of total banking assets to 5.25 percent by end-2008, according to the Indonesian central bank. The Islamic banking sector accounted for 1.42 percent at the end of 2005 and 1.55 at the end of 2006. The underdevelopment in Islamic banking in Indonesia is well recognized so the potential for fast growth exists, but in order to triple to 5.25 percent the percentage of assets with Islamic banks will require incredibly rapid growth. The growth rate in 2006 was 9%, which has increased to an annualized 22% so far this year. In order to reach 5.25 percent by the end of 2008, the annual growth rate needs to be 84% per year and this is growth in excess of overall banking asset growth.