Fitch Sees Outlook for Indonesia’s Shariah Banking Sector Improving

Fitch Ratings (Fitch) anticipates that the outlook for the Shariah banking sector in Indonesia is improving and that financing growth will continue to outperform that of the conventional sector. In 2020, the Indonesian Shariah banking sector recorded financing growth of 8%, compared to just 4% experienced in the conventional banking space.

Why it Matters?

Although the Shariah banking sector's market share is growing, it amounted to just 7% of Indonesia’s total banking industry in 2020, up from 6% in 2019. The improved outlook is expected to contribute to further market share growth and will be driven by a healthier economic environment, on-going regulatory forbearance, and a sustained policy push from the Government of Indonesia. The Shariah ban...