Global Islamic Finance Market Size, Share, Trends, COVID-19 Impact & Growth Forecast Report – Segmented By Financial Sector (Islamic Banking, Islamic Insurance-Takaful, Islamic Bonds ‘Sukuk’, Other Islamic Financial Institutions (OIFI’s) and Islamic Funds) and Region (North America, Europe, Asia-Pacific, Latin America, Middle East and Africa) - Industry Analysis (2024 to 2029)

Updated On: January, 2024
ID: 13013
Pages: 150

Global Islamic Finance Market Size (2024 to 2029)

The global Islamic finance market is predicted to register a CAGR of 10.2% from 2024 to 2029, and the global market size is expected to grow from USD 2.46 billion in 2024 to USD 3.99 billion by 2029.

Islamic finance is the practice of raising cash in line with Sharia, or Islamic law, by enterprises and individuals. Islamic finance is a one-of-a-kind approach to socially responsible investing. This branch of finance is still developing. Even though Islamic finance dates to the seventh century, it has only been codified since the late 1960s. The vast oil wealth stimulated fresh interest in and demand for Sharia-compliant products and practices, which accelerated the process. Risk sharing is an important idea in Islamic banking and finance. Understanding the importance of risk-sharing in raising finance is critical. In Islamic law, a loan with interest payments is viewed as a relationship that benefits the lender, who charges interest at the expense of the borrower. Money, according to Islamic law, is a means for determining worth rather than an asset. As a result, it is necessary that one cannot rely just on money for income. Interest is considered riba, and it is forbidden under Islamic law. It is haram or forbidden because it is deemed usury and exploitative. Islamic banking, on the other hand, exists to help an Islamic society achieve its socioeconomic goals. Because of strong investments in Halal sectors, infrastructure, and Sukuk bonds, the worldwide Islamic financial market industry is quickly expanding, particularly through electronic modes in all products and services.

MARKET DRIVERS

The expanding Islamic banking services are primarily fuelling the growth of the global Islamic finance market.

Because of strong investments in Halal sectors, infrastructure, and Sukuk bonds, the worldwide Islamic financial business is quickly expanding, particularly through electronic modes in all products and services. Global Islamic Finance assets surged by double digits year over year in 2019, according to key industry stakeholder groups, across its three primary areas (banking, capital markets, and TAKFUL). The biggest contributor to this industry is the worldwide Islamic banking sector, which is worth USD 1.99 trillion and increasing at a rate of 14%. Islamic banking accounts for 6% of worldwide banking assets. We could see progress toward a uniform global legal and regulatory framework for Islamic finance, which would assist in addressing the industry's decades-long lack of standards and harmonization. In Saudi Arabia, where mortgages and corporate loans are likely to expand as the kingdom presses forward with aspirations to diversify its economy, the market is expected to receive some help in the following two years. As a result of the factors fuelling the Islamic Finance market's expansion, investment is being directed toward large development opportunities in promising Islamic sectors. According to key industry stakeholder groups, worldwide Islamic Finance assets increased by double digits year after year throughout its three primary areas (banking, capital markets, and TAKAFUL).

MARKET RESTRAINTS

The pandemic has slowed the expansion of the Islamic finance industry. Sukuk is one of the worst-affected segments, with a slowing trend expected.

The prolonged regularization process of Sukuk was one of the key reasons why many people chose regular bonds to raise money during the Pandemic. Sukuk growth is being hampered by the Covid-19 epidemic and falling oil prices. As the Covid-19 pandemic spread and oil prices plummeted, global markets experienced unprecedented levels of volatility in the first two quarters of 2020. During the first quarter, some of the largest sukuk issuers, often from oil-exporting countries, held off on issuing sukuk due to market turbulence.

REPORT COVERAGE

REPORT METRIC

DETAILS

Market Size Available

2023 to 2029

Base Year

2023

Forecast Period

2024 to 2029

Segments Covered

By Financial Sector and Region

Various Analyses Covered

Global, Regional and country Level Analysis, Segment-Level Analysis, Drivers, Restraints, Opportunities, Challenges, PESTLE Analysis, Porter’s Five Forces Analysis, Competitive Landscape, Analyst Overview of Investment Opportunities

Regions Covered

North America, Europe, Asia Pacific, Latin America, Middle East and Africa

Key Market Players

Bank Al-Rajhi, Dubai Islamic Bank, Kuwait Finance House, Bank Mellat Iran, Bank Meli Iran, National Commercial Bank Saudi Arabia, Bank Maskan Iran, Qatar Islamic Bank and Abu Dhabi Islamic Bank

 

SEGMENTAL ANALYSIS

Global Islamic Finance Market Analysis By Financial Sector

Islamic banking is the largest sector in the Islamic finance business, accounting for 69 percent of the industry's assets, or USD 1.992 trillion. Commercial, wholesale, and other sorts of banks contribute to the sector's success. Commercial banking, on the other hand, continues to be the primary driver of the sector's expansion. In 2019, there were 526 Islamic banks. The number of participants, on the other hand, is not always indicative of the size of the industry in terms of assets. The top three Islamic banking markets, Iran, Saudi Arabia, and Malaysia, accounted for 63 percent of global Islamic banking assets, with Morocco being the fastest-rising market, with assets doubling in 2021.

As a result of the economic consequences of COVID-19, Islamic banks around the world chose to protect their capital bases rather than increase operations in 2020. While Islamic banks' bottom lines in key markets have suffered because of the pandemic, this will be offset by liquidity injections from government bailout packages. Islamic banking assets are expected to exceed US$5.44 trillion by 2027 as global economies recover during the next five years.

Islamic banking has two advantages over traditional banking. The first is the belief that Islamic banks must adhere to a higher moral code. They will not take on unacceptably high levels of risk or lavish bonuses on their top bankers. The second point is that earnings are derived from identifiable assets rather than a jumble of derivatives and securities. Because Islamic banks cannot profit from interest, they rely on links to tangible assets like real estate and equity, charging ‘rent’ rather than interest.

REGIONAL ANALYSIS

Shariah-compliant assets account for a large share of the GCC's overall banking assets. Islamic Banking assets account for 14% of overall banking assets in the Middle East and North Africa (MENA). The market share of Islamic banking in the Gulf Cooperation Council (GCC) has surpassed 25%, indicating that Islamic banks have grown systemically important in these countries.

With new launches of Islamic exchange-traded funds (ETFs) in a number of countries and ESG-related financial assets made available through digital media that appeal to millennials, the asset class climbed 30% in 2021.

By 2022, GCC Islamic financial assets had grown to USD 1253 billion, accounting for 44% of total assets, with the MENA accounting for USD 755 billion, or 26.3 percent, Southeast Asia accounting for USD 24 percent, and Europe, Asia, America, and Africa accounting for the rest. In Kuwait, Saudi Arabia, and the United Arab Emirates, Islamic banking has reached systemic proportions, accounting for at least 15% of banking system assets, according to the IFSB's definition of systemic. With a 27 percent asset share in retail banking and a 13 percent asset share in total retail and wholesale banking, retail Islamic banking in Bahrain has reached systemic proportions. In late 2012, Oman became a member of the Islamic Banking Association.

With a higher degree of standardization, a better focus on the industry's social role, and meaningful integration of financial technology or fintech, COVID-19 provides a chance for more integrated and revolutionary growth.

KEY PLAYERS IN THE GLOBAL ISLAMIC FINANCE MARKET

Bank Al-Rajhi, Dubai Islamic Bank, Kuwait Finance House, Bank Mellat Iran, Bank Meli Iran, National Commercial Bank Saudi Arabia, Bank Maskan Iran, Qatar Islamic Bank and Abu Dhabi Islamic Bank are some of the key companies in the global Islamic finance market.

RECENT HAPPENINGS IN THE MARKET

  • The HBKU hosted a webinar titled "Islamic FinTechs and the Halal Economy," which discussed the prospects in the halal economy, which was valued $1.9 trillion in 2020 and is predicted to reach $3.2 trillion by 2024, generating significant opportunities in food, cosmetics, fashion, and tourism.
  • Fitch Ratings has raised Emirates Islamic Bank's (EI) Viability Rating (VR) to 'bb' from 'bb-' and affirmed its Long-Term Issuer Default Rating (IDR) at 'A+' with Stable Outlook. The VR has been upgraded to reflect increased asset quality that is now comparable to peers.

DETAILED SEGMENTATION OF THE GLOBAL ISLAMIC FINANCE MARKET INCLUDED IN THIS REPORT

This research report on the global Islamic finance market has been segmented and sub-segmented based on financial sector and region.

By Financial Sector

  • Islamic Banking
  • Islamic Insurance – Takaful
  • Islamic Bonds ‘Sukuk’
  • Other Islamic Financial Institutions (OIFI’s)
  • Islamic Funds

By Region

  • North America
  • The Middle East and Africa
  • South Asia
  • Asia-Pacific
  • Europe

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Frequently Asked Questions

What was the size of the global Islamic finance market in 2022?

The global Islamic finance market was valued at USD 2.02 billion in 2022.

Which countries contribute the most to the global Islamic finance market share?

Countries in the Middle East, such as Saudi Arabia, Malaysia, and the UAE, are significant contributors to the global Islamic finance market, along with growing participation from countries in Southeast Asia, Africa, and Europe.

What are the key drivers shaping the growth of Islamic finance market globally?

The growing demand for Sharia-compliant financial products, the expansion of Islamic banking, and the development of innovative financial instruments are primarily driving the growth of the Islamic finance market. 

Who are some of the key players in the Islamic finance market?

Companies playing a major role in the global Islamic finance market include Bank Al-Rajhi, Dubai Islamic Bank, Kuwait Finance House, Bank Mellat Iran, Bank Meli Iran, National Commercial Bank Saudi Arabia, Bank Maskan Iran, Qatar Islamic Bank and Abu Dhabi Islamic Bank.

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