Islamic banking assets contributed
60% of industry growth in 2024 compared with 54% in 2023
April 22, 2025
Strong banking
and sukuk industry performance led to 10.6% growth for the global Islamic
finance industry in 2024, with total sukuk outstanding surpassing $1 trillion
for the first time, according to S&P Global Ratings.
In 2025, amid
increased uncertainty, we expect continued positive growth in the industry, but
the sukuk market's regulatory landscape is still evolving with the possible
adoption of Sharia Standard 62, said the top ratings agency in a report
published today (April 21).
"We expect
$10 billion-$12 billion in sustainable issuance in 2025 and continue to think
it could drive future growth, although short-term performance might be lower
than our initial expectations," it added.
According to
S&P Global Ratings, the Islamic finance industry experienced a rapid asset
increase in 2024, mainly from growth in banking assets and sukuk owing to
higher foreign currency-denominated issuances.
S&P Global
Ratings expects this growth to continue in 2025 barring any significant
macroeconomic or intrinsic disruption.
"We have
recently revised our oil price assumption to $65 per barrel for the remainder
of 2025 and $70 per barrel from 2026. This will likely continue to support
some growth in most core Islamic economies," said the ratings expert
in its report.
Simultaneously,
financing needs driven by economic transformation programs will remain high,
and the inherent preference for Islamic finance will persist. As a result,
despite growing uncertainty, we expect the Islamic finance industry to grow in
2025.
However, a
further decline in oil prices could reduce the growth prospects for core
Islamic finance economies and markets, it stated.
Islamic banking
assets contributed 60% of industry growth in 2024 compared with 54% in 2023.
The GCC
accounted for 81% of this growth, with Saudi Arabia alone responsible for two
thirds of it, stated the expert.
This strong
performance results from opportunities created by the Saudi government's Vision
2030 program and the deep integration of the Islamic banking industry in Saudi
Arabia, which represented about three-quarters of banking system assets at
year-end 2024.
Bahrain also
experienced significant Islamic finance industry growth, particularly due to
Ahli United Bank's (BBB+/Stable/--) conversion from conventional to Islamic
banking. The UAE also contributed to this growth, thanks to the non-oil
economy's strong performance.
Elsewhere, we
have observed some growth in other countries, particularly in Malaysia and
Turkey.
"We expect
economic growth in Saudi Arabia and the UAE will continue supporting Islamic
banking asset expansion in 2025, barring any significant disruptions from
global trade tensions or a further decline in oil prices," stated the
ratings agency in the report.
Saudi Arabia's
Vision 2030 will continue to translate into significant banking system growth,
provided it attracts sufficient refinancing sources, including sukuk issuances
from the international capital market.
In the UAE, the
non-oil economy's performance, along with capital expenditure needs across
various sectors will further support financing requirements and sukuk issuances
in 2025, assuming current market volatility does not have a major impact,
stated the expert.
In other GCC
countries, we expect growth to continue thanks to reforms in Oman, Bahrain, and
Kuwait, as well
as anticipated increases in gas production in Qatar, it added.-TradeArabia
News Service