SE Asia's Islamic banking sector forecast to grow 8% in three years

A study conducted by S&P Global Ratings shows that the Islamic banking market in Southeast Asia, particularly in Malaysia and Indonesia, is set to post a compound annual growth rate of 8% from 2022 to 2026. The USD290bn Southeast Asia Islamic banking market currently forms 17% of global Islamic banking assets, behind the two largest markets in the Gulf Cooperation Council and the Middle East. The research team expects Malaysian Islamic banks will post a compound annual growth rate of 6-8% and account for close to 45% of the overall commercial banking loan book by the end of the period. Indonesian Islamic banks can likely gain from ample growth opportunities and low penetration, and post credit growth of 12-14%, driven by its consumer portfolio.