Big interest, no interest

AFTER morning coffee but before the keynote speaker came the muezzin’s recitation from the Koran: “Those who consume interest cannot stand except as one stands who is being beaten by Satan into insanity.” But those attending the Global Islamic Financial Forum needed no reminders that Muslims are supposed to eschew interest: the industry based on that premise is booming. Ernst & Young, a consultancy and accounting firm, estimates that Islamic banking assets grew at an annual rate of 17.6% between 2009 and 2013, and will grow by an average of 19.7% a year to 2018. Khalid Howladar of Moody’s, a rating agency, calls this “a landmark year” for Islamic finance, in that it is moving from “a very esoteric asset class to one that’s more… global.”

Most of the world’s Muslims are not so devout that they completely abjure conventional finance: even in Saudi Arabia, the assets of Islamic banks account for barely half of all banking assets. Muslim account-holders, Mr Howladar explains, tend to be more concerned with the products and service on offer than with the strictures of sharia (rules based on Muslim scripture). But Islamic finance, he says, has become sophisticated enough to appeal on both counts. Humphrey Percy, who heads the eight-year-old Bank of London and the Middle East, believes that most of his customers came not out of fierce piety, but “purely as a value proposition”.