Singapore emerging as a key player in Islamic banking: Standard Chartered
City-state attracts corporates with low-cost funds and favorable ratings
SINGAPORE (MNTV) — While Islamic finance has traditionally been dominated by Muslim-majority countries, Singapore is positioning itself as a leading alternative market, according to a new report by Standard Chartered.
The report, titled “Islamic Banking for Financial Institutions,” highlights the global growth of Islamic finance, with assets reaching $5.5 trillion in 2024 and projected to hit $7.5 trillion by 2028. Despite its expansion to over 90 markets, 80% of these assets remain concentrated in five countries: Iran, Saudi Arabia, Malaysia, the UAE, and Kuwait.
Standard Chartered notes that Singapore’s rise in Islamic banking stems from its low cost of funds, strong sovereign ratings, and access to investors. These factors are increasingly attracting corporates seeking to diversify their Islamic finance portfolios.
“Corporates looking to distribute their Islamic exposures are being lured by the city-state’s low cost of funds and favorable investment climate,” the bank states.
The report identifies two key drivers for the industry’s future growth: regulatory advancements and market expansion. Established markets like Saudi Arabia and Malaysia are focusing on integrating strategic governance frameworks, while countries such as Indonesia, Oman, and Türkiye are enhancing their capacity-building efforts. Pakistan, in a significant regulatory development, passed a constitutional amendment in October 2024 to eliminate all forms of interest (riba) by 2027.
In terms of geographic expansion, Islamic finance is making strides in sub-Saharan Africa, with Ethiopia, Malawi, and Uganda introducing Islamic banking since 2020. Russia has also joined the fold, launching a two-year Islamic banking pilot program in 2023, targeting Muslim-majority regions.
Singapore’s emergence signals a diversification of Islamic finance assets, offering a competitive and innovative alternative to traditional hubs like Dubai, Malaysia, and London. The city’s rise underscores its potential as a pivotal player in a rapidly evolving global financial landscape.
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