The UAE Islamic banks' assets have crossed the Dh1 trillion mark in 2024, according to the global rating agency Moody's Ratings.
"Islamic asset growth rebounded after the pandemic slow down. The total assets of the UAE's Islamic banking during 2021-2024 increased at a much faster pace of 11 per cent CAGR to reach Dh1.089 trillion ($296 billion) as of end-2024. The share of Islamic banks in the total banking assets was 24 per cent as of end-2024," said Moody's analysts.
"Currently, the banks in the UAE operate in a stable environment supported by diversification efforts and structural reforms which will continue to promote growth in the non-oil economy," said Moody's analysts.
The UAE recently announced plans to significantly increase the assets of Islamic banks in the federation and the value of locally listed sukuk by 2031. Specifically, the government aims to increase the assets of Islamic banks to Dh2.56 trillion, the total amount of listed local Islamic sukuk to more than Dh660 billion and the total amount of international sukuk to Dh395 billion. In 2024, $12.7 billion (Dh46.60 billion) of sukuk was issued in the UAE, of which UAE banks issued $4 billion.
The Central Bank of the UAE is advancing the Islamic finance sector to establish the country as an international centre for Islamic finance. This regulator aims to enhance market development, competitiveness, and sustainability. The UAE already boasts a well-established Islamic financial sector, which includes Islamic banks, Islamic banking windows, Islamic finance companies, and Islamic insurance (Takaful) companies. The country has nine fully-fledged Islamic banks and ten Islamic insurance (Takaful) companies.
Moody's analysts said that the UAE's decision to boost the Islamic finance sector is expected to considerably expand the global sukuk market, currently dominated by Malaysia and Saudi Arabia, with total global issuance reaching approximately $242 billion in 2024.
"The projected increase in Islamic banking assets will cement the UAE's position as the third-largest contributor to the Islamic finance market," it said.
