emirates7 - The Islamic finance sector in the UAE thrives in a dynamic economic environment supported by advanced regulatory frameworks that facilitate Sharia-compliant financial activities.
Since the establishment of the UAE’s first Islamic bank in 1975, the sector has grown substantially, becoming a cornerstone of the national economy. It encompasses Islamic banks, Islamic windows within conventional banks, and sukuk (Islamic bonds), which have experienced rapid expansion in both domestic and international markets.
The UAE is committed to fostering Islamic finance and the broader Islamic economy through progressive economic policies and legislation. These initiatives align with national objectives to achieve sustainable economic growth and position the UAE as a global hub for the Islamic economy.
In the 2022 *State of the Global Islamic Economy Report*, the UAE ranked among the top three Islamic economies globally for the third consecutive year. Additionally, it ranked fourth worldwide in Islamic financial markets by assets, according to the 2023 Islamic Finance Development Indicator (IFDI).
As of September 2024, data from the Central Bank of the UAE (CBUAE) indicates that Islamic banks accounted for approximately 22% of total banking credit in the UAE, with investments totaling AED 152.3 billion by the end of Q3 2024. Fitch Ratings forecasts that Islamic banks in the UAE will outpace conventional banks in growth over the medium term.
A CBUAE study revealed that 79% of Islamic banks in the UAE have adopted sustainability strategies, with 74% securing board-level approval. All Islamic banks reported having sustainability strategies in place, while some conventional banks with Islamic windows are still in the development phase.
The Sukuk market has seen remarkable growth in the UAE, driven in part by the Federal Government's issuance of dirham-denominated Islamic Treasury Sukuk, which has encouraged broader participation in the sector. The introduction of Green Sukuk since 2019 has further spurred sustainable financing, with the UAE ranking first regionally and second globally for outstanding sustainability Sukuk.
Fitch Ratings reported a 13.1% year-on-year increase in sukuk and bond issuances in the UAE, reaching $294.4 billion by Q3 2024, with sukuk accounting for about 20% of total issuances. The UAE’s debt capital markets are projected to surpass $300 billion by the end of 2024, supported by strategic initiatives to attract regional and international investors.
The UAE accounts for 6.6% of the global sukuk market, ranking fourth globally across all currencies. It is also one of the largest issuers of US dollar-denominated debt in emerging markets (excluding China), holding an 8.9% share in H1 2024, according to Fitch Rankings.
S&P Global Ratings anticipates continued robust growth in the UAE’s Islamic finance sector, bolstered by the strong performance of the non-oil economy. The COP28 summit in the UAE highlighted the alignment between Islamic finance principles and sustainability, showcasing the sector’s potential to drive sustainable development—a synergy expected to further accelerate its growth.
The UAE remains a global leader in sukuk issuance. Nasdaq Dubai, the largest exchange for sukuk worldwide, reported that the total value of sukuk listed in Dubai reached $98.9 billion as of December.
Since the establishment of the UAE’s first Islamic bank in 1975, the sector has grown substantially, becoming a cornerstone of the national economy. It encompasses Islamic banks, Islamic windows within conventional banks, and sukuk (Islamic bonds), which have experienced rapid expansion in both domestic and international markets.
The UAE is committed to fostering Islamic finance and the broader Islamic economy through progressive economic policies and legislation. These initiatives align with national objectives to achieve sustainable economic growth and position the UAE as a global hub for the Islamic economy.
In the 2022 *State of the Global Islamic Economy Report*, the UAE ranked among the top three Islamic economies globally for the third consecutive year. Additionally, it ranked fourth worldwide in Islamic financial markets by assets, according to the 2023 Islamic Finance Development Indicator (IFDI).
As of September 2024, data from the Central Bank of the UAE (CBUAE) indicates that Islamic banks accounted for approximately 22% of total banking credit in the UAE, with investments totaling AED 152.3 billion by the end of Q3 2024. Fitch Ratings forecasts that Islamic banks in the UAE will outpace conventional banks in growth over the medium term.
A CBUAE study revealed that 79% of Islamic banks in the UAE have adopted sustainability strategies, with 74% securing board-level approval. All Islamic banks reported having sustainability strategies in place, while some conventional banks with Islamic windows are still in the development phase.
The Sukuk market has seen remarkable growth in the UAE, driven in part by the Federal Government's issuance of dirham-denominated Islamic Treasury Sukuk, which has encouraged broader participation in the sector. The introduction of Green Sukuk since 2019 has further spurred sustainable financing, with the UAE ranking first regionally and second globally for outstanding sustainability Sukuk.
Fitch Ratings reported a 13.1% year-on-year increase in sukuk and bond issuances in the UAE, reaching $294.4 billion by Q3 2024, with sukuk accounting for about 20% of total issuances. The UAE’s debt capital markets are projected to surpass $300 billion by the end of 2024, supported by strategic initiatives to attract regional and international investors.
The UAE accounts for 6.6% of the global sukuk market, ranking fourth globally across all currencies. It is also one of the largest issuers of US dollar-denominated debt in emerging markets (excluding China), holding an 8.9% share in H1 2024, according to Fitch Rankings.
S&P Global Ratings anticipates continued robust growth in the UAE’s Islamic finance sector, bolstered by the strong performance of the non-oil economy. The COP28 summit in the UAE highlighted the alignment between Islamic finance principles and sustainability, showcasing the sector’s potential to drive sustainable development—a synergy expected to further accelerate its growth.
The UAE remains a global leader in sukuk issuance. Nasdaq Dubai, the largest exchange for sukuk worldwide, reported that the total value of sukuk listed in Dubai reached $98.9 billion as of December.