Islamic Finance Industry: Single-Digit Growth Projected in 2024-2025 with $160-170 Billion Sukuk Issuance and Digitalization
The Islamic finance industry is projected to experience single-digit growth and reach total assets of around $2.5 trillion in 2024-2025, according to a report.
Sukuk issuance is expected to be between $160 billion and $170 billion in 2024.
The industry grew by 8% in 2023 and 8.2% in 2022, driven by growth in banking assets and the sukuk industry.
Islamic banking assets increased by 56% in 2023, with financial institutions in the Gulf Cooperation Council region accounting for 86% of the reserve increase, with Saudi Arabia being the largest contributor.
The Islamic finance industry is expected to continue growing due to the implementation of Vision 2030 and corporate lending in the UAE.
The non-oil sector's good performance in the UAE contributed to a stronger showing in 2023.
Turkey and Indonesia also experienced growth, but the performance in Malaysia and Turkey was affected by currency depreciation in the ringgit and lira, respectively.
The issuance of Shariah-compliant debt products, or sukuk, began strongly in 2024 with Saudi Arabia being a significant contributor.
The decrease in issuance volumes in 2023, caused by tighter liquidity conditions in Saudi Arabia and Indonesia's lower fiscal deficit, was partially offset by an increase in foreign currency-denominated sukuk issuance.
The sukuk market, a segment of Islamic finance, began 2024 with strong growth, reaching $46.8 billion in issuance by March 31, 2024, compared to $38.2 billion in the same period in 2023.
This growth is attributed to high financing needs in core Islamic finance countries, particularly in Saudi Arabia, due to ongoing economic transformation programs.
The report suggests that the sukuk market will continue to grow in the near term, with opportunities in structured finance as banks refinance mortgage books.
However, the drive for digitalization and sustainability initiatives in the Islamic finance industry have had mixed results.
S&P Global reports that while opportunities for sustainable finance are substantial in the oil exporting countries' concentrated Islamic finance industry, progress has been slow.
However, digitalization has aided the banking sector's advancement.
The report predicts that the future of Islamic finance will be sustainable, collaborative, and digital.
The sustainability aspect arises from the compatibility of Shariah principles with sustainability goals and the industry's value proposition.
The collaborative nature stems from stakeholders' desire to maintain industry equilibrium and build on the past 50 years of development.
The text suggests that digitalization will influence Islamic finance in the future, offering benefits such as increased efficiency and a stronger value proposition for investors and issuers through the use of emerging technologies.
The industry grew by 8% in 2023 and 8.2% in 2022, driven by growth in banking assets and the sukuk industry.
Islamic banking assets increased by 56% in 2023, with financial institutions in the Gulf Cooperation Council region accounting for 86% of the reserve increase, with Saudi Arabia being the largest contributor.
The Islamic finance industry is expected to continue growing due to the implementation of Vision 2030 and corporate lending in the UAE.
The non-oil sector's good performance in the UAE contributed to a stronger showing in 2023.
Turkey and Indonesia also experienced growth, but the performance in Malaysia and Turkey was affected by currency depreciation in the ringgit and lira, respectively.
The issuance of Shariah-compliant debt products, or sukuk, began strongly in 2024 with Saudi Arabia being a significant contributor.
The decrease in issuance volumes in 2023, caused by tighter liquidity conditions in Saudi Arabia and Indonesia's lower fiscal deficit, was partially offset by an increase in foreign currency-denominated sukuk issuance.
The sukuk market, a segment of Islamic finance, began 2024 with strong growth, reaching $46.8 billion in issuance by March 31, 2024, compared to $38.2 billion in the same period in 2023.
This growth is attributed to high financing needs in core Islamic finance countries, particularly in Saudi Arabia, due to ongoing economic transformation programs.
The report suggests that the sukuk market will continue to grow in the near term, with opportunities in structured finance as banks refinance mortgage books.
However, the drive for digitalization and sustainability initiatives in the Islamic finance industry have had mixed results.
S&P Global reports that while opportunities for sustainable finance are substantial in the oil exporting countries' concentrated Islamic finance industry, progress has been slow.
However, digitalization has aided the banking sector's advancement.
The report predicts that the future of Islamic finance will be sustainable, collaborative, and digital.
The sustainability aspect arises from the compatibility of Shariah principles with sustainability goals and the industry's value proposition.
The collaborative nature stems from stakeholders' desire to maintain industry equilibrium and build on the past 50 years of development.
The text suggests that digitalization will influence Islamic finance in the future, offering benefits such as increased efficiency and a stronger value proposition for investors and issuers through the use of emerging technologies.
Translation:
Translated by AI
