The Central Bank of Qatar’s directive: Impact on Islamic banks

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Originally published in Islamic Finance News - 23rd May 2012.

Earlier this month Reuters assessed the impact of the Central Bank of Qatar (QCB)’s February 2011 directive to conventional banks, requiring them to stop offering Islamic products and close their Islamic windows. Reuter’s assessment was that the expected windfall for the Islamic banks has not yet materialized and the ban seems to have had little impact on the conventional banks.

Before the ban, the IMF estimated that the Islamic banking assets in Qatar during 2010 accounted for 31% of total assets. By QCB’s reckoning, those assets grew 35% last year.

That marked a slowdown, however, from the 39% expansion the previous year. Interestingly, the conventional banks seem to have been little affected, with assets growing 23% in 2011, up from a 16% increase during 2010.

In fact, contrary to Moody’s prediction that Qatar National Bank would be negatively impacted, its assets jumped 25% last year and there was actually a slight improvement on its return on assets.

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Published In: Administrative Agency Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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