Islamic banks have attracted more assets than conventional banks in 2009 due to a more conservative approach to risk, according to a survey on Thursday from The Banker Magazine and a unit of HSBC.
The survey found assets held by Islamic banks or sharia-banking arms of conventional banks rose 29 per cent this year to $822 billion.
A similar survey by The Banker on "Top 1,000 World Bank Rankings" in July found annual asset growth at conventional banks of 6.8 percent .
While Iranian banks accounted for about 36 per cent of total assets, Gulf banks, led by Al Rahji Bank of Saudi Arabia are making their mark in the top 10 Islamic banks by assets.
The Gulf states account for 43 per cent or $353 billion of the total global aggregate. Despite the growth, the sharia-compliant aggregate asset total is less than 1 per cent of the Top 1,000 World Banks aggregate asset total.
Vishnu Kant, senior analyst at Sico Bank in Bahrain said: "In the Gulf, Islamic banks will continue to do well. But in the long term, they will face tough competition from conventional banks as the global uncertainty gradually declines".
David Dew, deputy chief excutive officer of HSBC Amanah said: "It is important that the Islamic finance industry continues to analyse its growth critically if it is to become a truly credible alternative to conventional banking in a significant number of markets".
Assets held by Islamic financial institutions are forecast to hit $1.033 trillion in 2010 according to HSBC Amanah and The Banker.
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