The Islamic finance sector in the UAE has continued its steady growth, driven by supportive regulatory policies and economic strategies. Since the establishment of the first Islamic bank in 1975, the sector has become a key component of the national economy, encompassing Islamic banks, Islamic windows within conventional banks, and sukuk (Islamic bonds).
By the end of the third quarter of 2024, Islamic banks in the UAE accounted for 22% of total banking credit, with investments reaching Dh152.3 billion, according to data from the Central Bank of the UAE (CBUAE). The sukuk market has seen significant expansion, supported by the introduction of dirham-denominated Islamic Treasury Sukuk, encouraging broader participation in the sector.
Fitch Ratings reported that sukuk and bond issuances in the UAE grew by 13.1% year-on-year, reaching $294.4 billion by the third quarter of 2024, with sukuk accounting for 20% of total issuances. The UAE holds 6.6% of the global sukuk market and ranks fourth globally across all currencies. The country is also a leading issuer of US dollar debt in emerging markets, excluding China, with an 8.9% market share in the first half of 2024.
The debt capital market in the UAE is projected to exceed $300 billion by the end of 2024, driven by strategic initiatives aimed at attracting regional and international investors. Nasdaq Dubai, the world’s largest sukuk exchange, reported that the total value of sukuk listed in Dubai reached $98.9 billion by December 2024.
Sustainability has also become a focus for the Islamic finance sector. A CBUAE study found that 79% of Islamic banks in the UAE have implemented sustainability strategies, with 74% securing board-level approval. The introduction of green sukuk since 2019 has contributed to growth in sustainable financing, with the UAE ranking first in the region and second globally for outstanding sustainability sukuk.
The UAE’s Islamic finance sector benefits from a strong non-oil economy, with S&P Global Ratings predicting continued growth in the coming years. The sector’s role in supporting sustainable development was further highlighted during COP28, showcasing its alignment with sustainability principles and its potential to drive long-term economic progress.
