GCC Islamic lenders’ additional product costs falling

February 22, 2014 1:14 am

Standard & Poor’s has said additional costs which Islamic banks in the GCC charge consumers relative to conventional banks seem to be declining, Reuters has reported. Reasons for the drop in extra costs are not yet entirely clear, but they may include the industry’s growing familiarity with certain types of Islamic financial contracts and transactions, which could be leading to lower development costs, said Paris-based Mohamed Damak, primary credit analyst at S&P. “The more you have standardisation in Islamic finance and the more products are commoditised, then you will see product costs falling. This is why standardisation is so important in Islamic finance.”