Islamic finance in UAE: Rapid growth, leadership in sustainability

The Islamic finance sector in the UAE benefits from a dynamic economic environment and advanced regulatory policies that support Sharia-compliant financial activities.Since the establishment of the UAE’s first Islamic bank in 1975, the sector has grown significantly over the decades, becoming a fundamental pillar of the national economy. The industry encompasses Islamic banks, Islamic windows in conventional banks, and sukuk (Islamic bonds), which have witnessed rapid growth in both domestic and international markets.The UAE is committed to developing economic policies and legislation to enhance Islamic finance and the broader Islamic economy. These efforts align with national objectives to ensure sustainable economic growth and establish the UAE as a global hub for the Islamic economy.The UAE ranked among the top three Islamic economies worldwide in the 2022 State of the Global Islamic Economy Report for the third consecutive year. It ranked fourth globally in Islamic financial markets by assets, according to the 2023 Islamic Finance Development Indicator (IFDI).According to the latest data issued by the Central Bank of the UAE (CBUAE) for September 2024, Islamic banks accounted for approximately 22 percent of the total banking credit in the UAE, with investments reaching AED152.3 billion by the end of Q3 2024.Fitch Ratings projects that Islamic banks in the UAE will grow faster than their conventional counterparts over the medium term.