"Islamic finance" In the UAE…accelerated growth and leadership in promoting sustainability

Abu Dhabi, December 21 / WAM / The Islamic finance sector in the UAE benefits from a dynamic economic environment and advanced regulatory policies that support this type of financing that is compatible with Islamic Sharia.
Since the establishment of the first Islamic bank in the country in 1975, Islamic finance in the Emirates has witnessed great development over the past decades, and has become one of the basic pillars of the national economy, as its tools vary between Islamic banks, Islamic windows for traditional banks, and sukuk issuances that are witnessing rapid growth in the markets. Local and international.
The UAE is committed to developing economic policies and legislation aimed at promoting Islamic finance and the Islamic economy in general, as part of ongoing national efforts to enhance the growth and sustainability of the national economy, and to make the UAE a global center for the Islamic economy.
The UAE was ranked among the top three Islamic economies, according to the Global Islamic Economy Index issued in 2022, for the third year in a row, and was ranked fourth among the largest Islamic financial markets in the world in terms of assets, according to the Islamic Finance Development Index report for 2023.
Many Islamic banks operate in the country today, in addition to the Islamic windows of traditional banks.
According to the latest Central Bank data for September 2024, the total credit of Islamic banks operating in the country constitutes about 22% of the total credit of the banking sector in the country.
Islamic banks’ investments at the end of the third quarter of this year reached 152.3 billion dirhams, and Fitch Credit Rating Agency expects Islamic banks to continue to grow at a faster pace than conventional banks in the medium term.
According to a study conducted by the Central Bank of the Emirates on the Islamic banking sector in the country, which included local and foreign Islamic banks as well as traditional banks that provide Islamic services, it showed that 79% of Islamic banks in the country adopt a sustainability strategy, while 74% of them reported that their strategy was based on… Board of Directors level: All Islamic banks have confirmed that they have sustainability strategies, while some strategies of conventional banks that have Islamic banking windows are under development or awaiting approval.
The Islamic sukuk market witnessed a remarkable expansion in the UAE, as the federal government issued Islamic treasury sukuk in dirhams, which constitutes an incentive for other entities in the sector.
Sustainable finance has witnessed rapid growth in the country since the issuance of the first green sukuk in 2019, whether through Islamic capital markets or Islamic finance.
The country ranks first in the region and second in the world in the volume of outstanding sustainability bonds.
According to Fitch, sukuk and bond issuances in the UAE witnessed strong growth, rising by 13.1% on an annual basis to reach $294.4 billion by the end of the third quarter of 2024, while the share of sukuks out of the total outstanding UAE issuances reaches about 20%.
The UAE debt markets are preparing to achieve further growth, according to Fitch, with expectations indicating the possibility of exceeding the $300 billion barrier by the end of 2024, supported by the country’s strategic focus on strengthening these markets that attract both regional and international investors.
According to Fitch, the UAE is considered a pivotal player in the global sukuk market, as it holds 6.6% of the total global sukuk, making it ranked fourth globally in all currencies, while it is one of the largest issuers of US dollar debt in emerging markets with the exception of China. With a share of 8.9% of the total in the first half of 2024.
S&P Global Ratings expects the continued strong growth of the Islamic finance sector in the UAE during the coming period, supported by the strong performance of the non-oil economy.
The “COP28” conference, which was held in the Emirates last year, contributed to highlighting the possibilities that Islamic finance can bring in the field of sustainability, and it has become clear to those concerned that there is compatibility between the principles of Islamic finance and sustainability, which enhances the opportunities for the growth of this industry in the future.
The UAE is an attractive global destination for Sukuk issuances, and Nasdaq Dubai is considered the largest global destination for listing Sukuks, as the total value of listed Sukuks reaches $98.9 billion, according to data issued by Nasdaq Dubai at the beginning of this December.

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