According to recent data released by the Central Bank of the United Arab Emirates (CBUAE), the total assets of Islamic banks operating in the country reached an impressive AED650 billion by the end of March 2023. This figure reflects a substantial annual growth rate of 7.31 percent, equivalent to nearly AED44.3 billion, compared to about AED605.7 billion in March 2022.
The CBUAE’s figures indicate that gross assets of Sharia-compliant banks in the UAE have experienced steady expansion. The credit provided by Islamic banks rose to AED400.2 billion at the end of March 2023, demonstrating an annual increase of 2.51 percent compared to nearly AED390.4 billion in March 2022. Additionally, there was a month-over-month growth of 0.91 percent from AED396.6 billion in February.
Furthermore, the deposits in Islamic banks surged to AED453.4 billion in March 2023, exhibiting an annual growth rate of 6.2 percent from approximately AED427 billion in March 2022.
The CBUAE’s statistics also shed light on the total investments made by Islamic banks, which amounted to AED111.5 billion by the end of March 2022. This data underscores the increasing prominence of Islamic banks as vital contributors to the UAE’s financial landscape.
Comparatively, conventional banks based in the UAE recorded total assets of AED3.115 trillion during the same period. This figure represents a substantial growth of 14.1 percent from AED2.73 trillion in March 2022.
The conventional banks held approximately 82.7 percent of the total assets of the UAE’s banking sector by the end of March 2023, amounting to AED3.765 trillion. Meanwhile, Islamic lenders accounted for 17.3 percent of the sector’s total assets.
The remarkable growth in Islamic banks’ assets indicates the increasing popularity and significance of Sharia-compliant financial services in the UAE. The Islamic banking sector’s steady expansion underscores the confidence placed in these institutions by individuals and businesses seeking alternative financial solutions that align with their religious beliefs and principles.
Islamic banks adhere to principles outlined in Islamic law (Sharia) and operate in compliance with ethical and religious guidelines. These principles prohibit the payment or acceptance of interest (Riba) and discourage investments in sectors deemed unethical or non-compliant with Islamic values.
The UAE has been proactive in developing a robust Islamic banking sector, enabling it to cater to the financial needs of a diverse population. The country’s regulatory framework supports the growth of Islamic finance, providing a conducive environment for Islamic banks to thrive.
The CBUAE’s efforts to monitor and report the performance of Islamic banks demonstrate its commitment to transparency and financial stability. The latest data highlights the resilience and success of Islamic banking in the UAE, as evidenced by the notable growth in assets, credit, deposits, and investments.
As the UAE continues to strengthen its position as a global financial hub, the remarkable performance of Islamic banks contributes to the country’s reputation as a center for Islamic finance. The growing assets of Islamic banks signify the confidence that customers and investors have in these institutions, further bolstering the overall financial sector in the UAE.
Moving forward, it is expected that the Islamic banking sector will continue to expand, driven by increasing demand for Sharia-compliant financial products and services. The continued growth of Islamic banks in the UAE not only strengthens the country’s financial sector but also positions it as a leader in the global Islamic finance industry.
