UAE is 4th largest Islamic finance market

The Central Bank of the UAE (CBUAE) has revealed that the main Islamic financial markets are located in the GCC, Southeast Asia, and South Asia. The UAE ranks fourth among the largest Islamic financial markets in the world (in terms of assets) according to the Islamic Finance Development Indicator report 2023 (IFDI 2023).

The CBUAE said in its UAE Islamic Finance Report 2023 that the Islamic finance sector grew by 11% in 2022, bringing the value of global Islamic financial assets to $4.5tn. The sector has achieved a 69% increase over five years and a 163% increase over the past 10 years.

The report explained that Islamic finance has developed in the UAE since the establishment of the first Islamic bank in 1975 through several sectors including Islamic banking, takaful insurance, and sukuk.

The CBUAE said that the assets of Islamic banks and windows in conventional banks currently represent 23% of total banking assets in the UAE, after achieving a growth of 16% over the past five years. The sukuk market is also witnessing an expansion in the UAE, as the federal government recently issued Islamic treasury sukuk in the UAE dirham, which could be a catalyst for other entities to issue Islamic sukuk.

The report noted that the Islamic finance sector has played a major and growing role in the field of sustainability globally due to the great compatibility and integration between the requirements of Islamic law and the aspirations of the Sustainable Development Goals.

The rapid growth rate of ESGrelated sukuk issuances is one of the indicators of the rapid development of sustainable Islamic finance, with total issuances reaching AED120.3BN by the first half of 2023.