By 2026, the global Islamic finance industry is expected to reach $6 trillion

Written by Pooja Sharma

The UAE has made significant progress in strengthening its position as a global hub for the Islamic financial industry, with the Sharia-compliant banking sector currently accounting for 23% of the country’s total banking assets (equivalent to AED 845 billion). ing.

Khaled Mohamed Barama, Governor of the Central Bank of the United Arab Emirates, He said: “The domestic and booming Islamic banking sector has become an integral part of the UAE’s financial industry. and play a key role in achieving the sustainability goals of the wider financial sector.”

The central bank governor said that in line with the vision of the UAE leadership, the Islamic financial sector is key to the UAE’s sustainable growth and achieving the Sustainable Development Goals. In the UAE Islamic Finance Report 2023 published by CBUAE, Mr. Barama said: “We support the development of the UAE’s Islamic and sustainable finance sectors, to increase their participation and status in the broader industry. “We will continue our efforts,” he reportedly said.

In addition to the Takaful market and sukuk issuance, Islamic windows account for 25% of the UAE’s total Islamic banking assets, valued at AED 214 billion. “This is further strengthened by the issuance of Guiding Principles on Sustainability for Islamic Financial Institutions by senior Sharia authorities,” said the CBUAE Governor.

Apex Bank’s Islamic Finance Report highlights sustainable Islamic finance initiatives by Islamic Financial Institutions (IFIs) across the UAE, coinciding with the UAE Year of Sustainability and the recently held COP28 It becomes.

The report analyzes the performance of various Islamic finance sectors, initiatives and activities globally and regionally, with a particular focus on sustainability. The report also provides an overview of the legislative, regulatory and Islamic governance status, as well as an assessment of the sustainability strategies adopted by Islamic Financial Institutions (IFIs) and the opportunities and challenges they face.

The Islamic finance landscape in the UAE consists of eight independent Islamic banks, 16 Islamic banking outlets in conventional banks, and nine Islamic finance companies. The report also highlights the presence of 10 Takaful insurance companies, with total contributions amounting to Dh4 billion in 2022, while Sukuk outstanding in the first half of 2023 reached Dh217 billion.

The size of the global Islamic finance industry is on track to cross the $3 trillion mark this year, driven by strong developments in the GCC and several other core markets, after expanding at a similar pace in 2022. The newspaper announced that it is expected to grow by 10%. S&P Global Ratings. In 2022, GCC countries drove most of the growth in banking assets. During the same period, Malaysia and GCC countries accounted for the majority of the sukuk market.

The global Islamic finance industry is expected to reach $6 trillion by 2026, according to the ICD-Refinitiv Islamic Finance Development Indicators Report.

According to the IFDI report, Islamic banking activities accounted for approximately 70% of global Islamic financial assets in 2021. The second largest segment is Shariah-compliant debt capital market products, accounting for 18%, and the third is Islamic funds, accounting for approximately 4.0%.

Financial technology (FinTech), investment, lending and leasing companies, microfinance companies, and other Islamic financial institutions, including brokers and traders, accounted for 4.0% of global Islamic financial assets in 2021, while Takaful (Islamic insurance) had the smallest representation. Approximately 2.0%.