Global Islamic finance assets expected to hit $3.69 trillion in 2024

UAE ranks among top five developed countries in Islamic finance globally, Refinitiv and ICD data shows

Compared with conventional banks, Islamic banks are perceived to have lower fees and offer better finance and profit rates on savings. Getty Images

Global Islamic finance assets are expected to hit $3.69 trillion in 2024, up from $2.88tn in 2019, according to a new report by Refinitiv and the Islamic Corporation for the Development of the Private Sector (ICD).

The Islamic finance assets of Gulf countries reached $1.2tn in 2019, compared to $755 billion in the Middle East and North Africa outside the GCC, and $685bn in Southeast Asia, according to the 2020 Islamic Finance Development report.

The five most developed countries in terms of Islamic finance markets are Malaysia, Indonesia, Bahrain, the UAE and Saudi Arabia, the report showed.

"This market is worth nearly $3tn already and I’m excited about its future, particularly when it comes to sukuk and because Islamic finance has so much in common with sustainable finance – one of the most significant trends in global business today," David Craig, chief executive of Refinitiv, said.

Islamic finance can play a "major role" in easing the social and economic impact of the Covid-19 pandemic, Ayman Sejiny, the chief executive of ICD, said.

Global Islamic finance assets increased by 14 per cent year-on-year totalling $2.88tn in 2019.

The Islamic banking sector contributes the bulk of these.

The sector grew 14 per cent in 2019 to $1.99tn in global assets, according to the report. This compares with 1 per cent growth in 2018 and an average annual growth of 5 per cent between 2015 and 2018.

The report covers 135 countries and is based on five key metrics including quantitative development, knowledge, governance, awareness, and corporate and social responsibility.

Green and socially responsible investments (SRI) increased in the UAE and Southeast Asia in 2020, it showed.

The pandemic was a "game changer" as several Islamic banks reported losses and reduced profits throughout this year, it said. The pandemic has also led to growth in some areas of the industry as some regulators turned to Islamic finance to mitigate the economic impact.

Corporate sukuk issuance has also picked up after a cautious halt in the first quarter of 2020.

The report shows that companies are taking advantage of low borrowing costs to shore up their finances while the pandemic continues to weaken trade and economies.