UAE Islamic Banking Assets Exceed AED700 Billion For The First Time In 2023

The United Arab Emirates' Islamic banking sector has achieved a significant milestone, with its assets surpassing the AED700 billion mark for the first time at the end of 2023. This development underscores the growing prominence and resilience of Islamic finance within the UAE's banking landscape. According to the Central Bank of the UAE (CBUAE), the assets of Islamic banks stood at AED703.1 billion at the close of December 2023, marking an 11.5% increase from the previous year.

This growth is not just annual but also reflects a steady monthly increase, with assets climbing by 0.6% or AED4.2 billion from November 2023. The rise in assets is mirrored by significant growth in other key financial indicators for Islamic banks. For instance, bank credit at these institutions rose to AED428.9 billion, showing a 7.82% increase compared to December 2022. Moreover, deposits witnessed a robust growth of about 12.6%, reaching AED495.5 billion by the end of December 2023.

Investments by Islamic banks have also seen a remarkable uptick, with total investments hitting AED132.7 billion at the year's end, a substantial 27.1% increase from the previous year. These investments are diversified across various instruments, including bonds held to maturity and financial instruments representing debt on others.

In contrast, traditional banks in the UAE reported total assets of AED3.372 trillion at the end of December 2023, accounting for approximately 82.7% of the country's total banking system assets. While traditional banks continue to hold a larger share of the market, Islamic banks are steadily increasing their footprint, now representing 17.3% of total banking assets.

The performance metrics of conventional banks also show growth but at different rates compared to their Islamic counterparts. Total bank credit for conventional banks reached AED1.563 trillion, with deposits and total investments also recording significant increases.

The data provided by CBUAE highlights not only the robust health of the UAE's banking sector but also the vital role Islamic banking plays in its ecosystem. With both segments showing positive trends, the UAE's banking industry looks set to continue its trajectory of growth and innovation.

With inputs from WAM