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Islamic Finance
UAE sukuk market strengthens as Islamic finance assets grow 16% in early 2025

The United Arab Emirates’ Islamic finance sector continues to expand, supported by rising sukuk issuance and steady growth in Islamic banking assets, according to newly released government data.

Total credit granted by UAE Islamic banks reached 503.5 billion Emirati dirhams ($137 billion) as of February 2025, marking a 16% year-on-year increase, according to the Central Bank of the UAE. Deposits grew at an even faster pace, rising 16.9% year-on-year to 595.3 billion dirhams ($162 billion).

Jamal Saleh, director-general of the UAE Banks Federation (UBF), said in statements carried by Emirates News Agency (WAM) that the sector’s performance reflects the country’s broader efforts to develop its Islamic finance infrastructure as part of its national diversification strategy. “The UAE has made significant progress in Islamic banking, sukuk issuance and Shariah-compliant finance overall,” Saleh said.

The sukuk market has seen particularly strong momentum. Sukuk listed on Nasdaq Dubai totalled over $95.7 billion as of May 2025, positioning the UAE among the world’s leading centres for Shariah-compliant fixed-income instruments. The federal government’s 2023 launch of dirham-denominated Islamic Treasury Sukuk (T-Sukuk) has further strengthened market activity.

According to the 2023 Islamic Finance Development Indicator, the UAE ranked fourth globally in Islamic financial markets by total assets.

In May 2025, the UAE government approved a national strategy for the development of Islamic finance and the halal industry. The plan aims to create an integrated ecosystem across Islamic banking, takaful, sukuk, and non-banking Shariah-compliant financial services, in line with global standards.

Parallel to the financial sector, the UAE is advancing its halal industry ambitions. The government targets an increase in halal exports from 74 billion dirhams ($20 billion) to 315 billion dirhams ($86 billion) by 2031. The country’s halal food and beverage market is projected to exceed $31.27 billion by 2029, according to Bonafide Research.

Saleh Lootah, chairman of the UAE Food and Beverage Manufacturers Group, told WAM that growing demand for halal-certified products is encouraging more local manufacturers to expand into the sector.

The UAE’s geographic location and infrastructure continue to support its development as a global centre for both Islamic finance and halal trade.

Islamic Finance
Creating impact through future-first investments 

Impact investing is inherently forward-looking, offering a viable alternative to ESG investing

 

Criticism of pursuing ESG (environmental, social and governance) goals can be broadly condensed into two points. 

The first disapproval refers to the companies’ broader intent to generate profits without the distraction of ESG goals. 

Businesses are typically built to generate profits with little to no thought given to how low wages, overrun production lines, and subpar product quality often create negative social and environmental effects. On the flipside, recalibrating a company’s supply chain will yield higher costs, which prompts a debate on how much intent and effort must be reserved for ESG goals. 

The second challenge is the difficulty of calibrating the true impact of pursuing ESG goals. It is relatively easier to assess a firm’s performance through financial metrics, such as ROI, EBITDA, EPS, etc. Due to their qualitative nature, measuring the impact of ESG is difficult. 

The problems surrounding these two ESG challenges undermine a company’s resolve to pursue green goals. Shareholders can be convinced of fulfilling long-haul ESG goals, but they seek positive and preferably high returns in the short term. 

For all the odds, the ESG industry continues to grow. Nearly 9 out of 10 investors, who participated in a Bloomberg study, suggested that ESG leads to better returns, resilient portfolios and enhanced fundamental analysis. Ongoing pressure on companies to consider ESG initiatives is certainly leaving an impact on investors and corporations framing their commercial decisions. 

Yet there remains the risk of greenwashing, with companies feigning environmental consciousness to bolster credibility. Deutsche Bank’s asset manager DWS was fined €25 million earlier this year for “aggressive” advertising that “did not reflect reality”. 

This is not an isolated event, with several multi-national companies such as Nestle, Shell, Starbucks and Apple accused of similar transgressions. Often companies misrepresent their eco-friendly goals to generate demand. 

Indeed, most companies that embed ESG in their strategic decision-making were established on the pillars of profit maximization. This means that healthy bottom lines will be the touchstone of all commercial decisions.

For vocal thinkers such as Milton Friedman, the social responsibility of businesses is to increase profits, leaving ESG considerations to regulation. So long as companies are following the law of the land, claims Friedman, there is no need for them to consider this extraneous factor.  

Of course, the downside is that companies will look to circumvent laws to achieve what they wish to, not what they should. Intent, therefore, is key, which calls for an overhaul in a company’s approach. Environmental considerations must be embedded into a firm’s mission statement, diluting the notion of prioritizing financial returns as a core objective of ESG investing.

Viable alternative
Impact Investment represents a viable alternative to ESG, with the former aiming to achieve positive social good whilst generating financial returns. Rather than isolated activities such as planting a score of trees on abandoned land, impact investment conflates social good with the need to generate returns.

A good example would be investing in companies that manufacture smartphones but those that do not extract metals from conflict zones. Impact investment is inherently forward-looking. 

Impact Investment also maintains a strong focus on measurability, with enterprises measured on financial returns and the impact created. Unlike ESG where goals are subjugated to financial returns, impact investment looks to an initiative’s end goal.

It may be less attractive to investors as an asset class, but its focus on long-term outcomes does combat the short-termism of conventional capitalism, and falls in lockstep with holistic principles of Islamic finance. 

Rizwan Rahman is a UK trained lawyer based in Doha

Islamic Finance
Islamic finance roundup: Emirates Islamic partners with Swiss firm to unveil Shariah-compliant products

Here's a roundup of key developments across the Islamic finance ecosystem during June

 

Editor's Note: The Islamic finance space is humming, with lenders either launching innovative Shariah-compliant products or transitioning into full-fledged Islamic lenders. Bank Muamalat went a step ahead to launch Malaysia's first digital-only Islamic bank.  

 

Company News


UAE / Switzerland

Emirates Islamic partners with Leonteq to unveil Shariah-compliant products

Emirates Islamic, a UAE-based Islamic financial institution, has formed a new partnership with Leonteq Securities AG, a Swiss-based structured product issuer, to distribute Shariah-compliant structured products.

 

This collaboration aims to enhance Emirates Islamic's offering in the wealth management sector, combining relevant solutions that are aligned with customers’ evolving needs while adhering to Islamic principles. (Zawya)

 

Kyrgyzstan

EcoIslamic Bank transitions to an Islamic bank

On June 3, the National Bank granted EcoIslamic Bank a license to conduct banking operations in accordance with Islamic principles for both national and foreign currencies.

 

This new license replaces the previously issued one as part of the conversion of EcoIslamic Bank CJSC into a fully-fledged Islamic bank.

 

Since its establishment, EcoIslamic Bank has been operating under Islamic principles as part of a pilot project. (Akchabar)

 

Image Courtesy: Fintech Futures

 

Malaysia

Bank Muamalat launches Malaysia’s digital-only Islamic bank

Bank Muamalat has launched Malaysia’s first Islamic digital-only bank focused on faith and lifestyle alignment.

 

The initiative, developed in partnership with banking technology firm Backbase, is a significant step in Bank Muamalat’s efforts to redefine Islamic banking. (Fintech Finance News)

 

 

Trade Developments


Image Courtesy: The Star

 

Malaysia / Guinea-Bissau

Malaysia, Guinea-Bissau extend ties with focus on Islamic finance 

Malaysia and Guinea-Bissau have reaffirmed their commitment to strengthening bilateral relations, focusing on areas such as the halal industry, Islamic finance, the energy sector, and capacity building.

 

Prime Minister Anwar Ibrahim encouraged Malaysian corporations, including PETRONAS and FGV Holdings, to explore potential ventures in Guinea-Bissau. (The Star)

 

 

Investment


Singapore

Maybank leads in underwriting largest Islamic financing for data centres in Asia Pacific

Maybank is underwriting 2.5 billion Malaysian ringgits, which is equal to one-third of the largest syndicated Islamic financing for data centres in the Asia Pacific region.

 

The transaction is aimed at supporting DayOne Data Centers in the Johor-Singapore Special Economic Zone. (The Edge)

Islamic Finance
Qatar’s Islamic finance assets reach 683 billion riyals in 2024

Qatar’s Islamic finance sector grew 4.1% year-on-year in 2024 to reach 683 billion Qatari riyals ($187.5 billion), according to new data from Bait Al Mashura Finance Consultations.

Islamic banks accounted for 87.4% of total Islamic finance assets, followed by sukuk at 11.2%, takaful at 0.7%, with the remainder distributed across investment funds and other Islamic financial institutions, the report showed.

“In the past year, the Islamic finance sector experienced significant transformations and qualitative advancements in performance, expansion, and supporting technologies,” said Khalid Al-Sulaiti, vice chairman of Bait Al Mashura’s board of directors.

Islamic banking assets reached 585.5 billion riyals, marking a 3.9% increase, while deposits rose 8.2% to 339.1 billion riyals, with the private sector contributing 57% of total deposits. Financing increased by 4.9% to 401.5 billion riyals, primarily directed toward the real estate, government, and personal financing segments.

Banking sector revenues increased 12.6% to 29.5 billion riyals, while profits grew 6% to 8.7 billion riyals.

In the sukuk market, issuances rose by 161%. Islamic banks issued 9.5 billion riyals in sukuk, up 300% year-on-year, while Qatar Central Bank issued 16.9 billion riyals.

Takaful sector assets increased 7.1% to 5.1 billion riyals. Policyholders’ funds rose 6.3% to 2.6 billion riyals, while insurance subscriptions grew 18.6% to exceed 1.9 billion riyals.

Islamic finance companies recorded 0.8% growth in assets to 2.53 billion riyals, with financing increasing 5.7% to 1.9 billion riyals. Revenues rose 14.7% to 277.2 million riyals, while total profits reached 178.5 million riyals against 12 million riyals in losses.

Islamic investment firms posted a 5.2% increase in assets to 549.5 million riyals, with revenues growing 44.1% to 59.7 million riyals. Profits stood at 17.5 million riyals.

Shariah-compliant investment funds increased 1% to 944.6 million riyals. The Al Rayan Islamic Index rose 2.23% on the Qatar Stock Exchange during the year. Performance of listed Islamic finance companies was mixed, with share price movements ranging between a 19.6% decline and 2.3% growth.

According to the Qatar Financial Centre, Shariah-compliant finance now accounts for 27% of Qatar’s total financial system, placing it among the leading Islamic finance hubs globally alongside Saudi Arabia and the UAE.

Fitch Ratings earlier affirmed the credit profiles of Qatari Islamic banks, citing high oil prices, stable funding structures, and strong profitability as key strengths.

Globally, Islamic finance grew 10.6% in 2024, supported by banking asset growth and a 29% increase in foreign currency sukuk issuances, according to S&P Global Ratings.

Despite the sector’s growth, Bait Al Mashura’s report noted that challenges remain, including regulatory developments, oil price volatility, and macroeconomic uncertainties, though long-term prospects remain positive.

Islamic Finance
Malaysia’s first digital-only Islamic bank launched by Bank Muamalat

Bank Muamalat Malaysia has launched ATLAS, the country’s first digital-only Islamic bank, developed in partnership with Netherlands-based banking technology firm Backbase.

 

The platform aims to deliver fully Shariah-compliant banking services through a digital-first, lifestyle-aligned model.

 

The launch marks a key milestone in Bank Muamalat’s digital transformation strategy and responds to increasing demand among Malaysian consumers for faith-aligned financial services with digital convenience.

 

“ATLAS is more than a digital bank. It reflects our commitment to leading the next era of Islamic banking in a digital, inclusive, and purpose-driven manner,” said Khairul Kamarudin, president and chief executive officer of Bank Muamalat. “Our collaboration with Backbase has enabled us to deliver an experience that is seamless, secure, and rooted in faith.”

 

The platform currently integrates digital onboarding, DuitNow payments, and Islamic financing products. Bank Muamalat said early deployment has improved customer onboarding efficiency and accelerated the rollout of new offerings.

 

Additional features, including digital debit and credit cards, personal financing, and a Shariah-compliant gold investment account, are expected to be introduced in the coming months. A lifestyle rewards programme is also planned in partnership with selected brands.

 

The launch aligns with Malaysia’s broader financial sector blueprint 2022–2026, issued by Bank Negara Malaysia, which prioritises digitalisation and financial inclusion. It also positions ATLAS within Southeast Asia’s expanding market for digital Islamic banking, where providers and regulators are actively developing faith-aligned digital services.

 

Bank Muamalat is expected to continue expanding ATLAS’s offerings to capture a larger share of Malaysia’s Islamic banking sector, particularly among tech-savvy, faith-conscious consumers.

 

Islamic Finance
Oman’s Sharakah launches first Shariah-compliant financing solutions

Oman’s SME development fund Sharakah has launched a suite of Shariah-compliant financial products targeted specifically at small and medium-sized enterprises.

 

Sharakah, established in 1998, provides financial and advisory support to SMEs across Oman. The introduction of Shariah-compliant financing forms part of its broader strategy to expand access to inclusive and responsible funding solutions.

 

In doing so, Sharakah has become the first SME-focused entity in the country to offer Islamic finance solutions. These offering includes four products, namely Murabaha, Ijara Muntahia Bittamleek, Musharakah Muntahia Bittamleek, and Wakala Bil Istithmar.

 

These products are structured to meet the diverse needs of SMEs while complying with Shariah principles. Furthermore, they were developed following a market assessment that identified a gap in Islamic SME financing, which has so far been dominated by commercial Islamic banks and Islamic windows.

 

The products have been reviewed and certified by M/s Eltizam Sharia Financial Consultancy, which also advised on the legal, technical, and operational structures to ensure full Shariah compliance.

 

Eltizam will continue to provide oversight and staff training as part of the ongoing implementation process.

 

Among the offerings, Ijara Muntahia Bittamleek allows businesses to acquire assets through a lease-to-own model, while Musharakah Muntahia Bittamleek enables Sharakah to co-invest in SMEs and transfer ownership over time.

Murabaha offers cost-plus financing, and Wakala Bil Istithmar allows SMEs to manage entrusted funds for investment purposes under Shariah-compliant terms.

 

The financing options are structured to accommodate both short- and long-term needs and offer flexible repayment plans.

Islamic Finance
Qatar Islamic Bank named Islamic Bank of the Year in the Middle East

Qatar Islamic Bank (QIB) has been awarded the title of “Islamic Bank of the Year in the Middle East” by “The Banker”, part of the Financial Times Group, at the 2025 Islamic Banking Awards.

 

The award recognises institutions offering performance, innovation, and leadership in Shariah-compliant financial services across global markets.

 

The recognition highlights QIB’s position in the Islamic finance sector, particularly its continued investment in digital innovation and focus on offering Shariah-compliant financial solutions.

 

The bank has expanded its portfolio of digital services while maintaining strong financial performance in a competitive regional market.

 

In the first quarter of 2025, QIB reported a net profit of 985 million Qatari riyals, marking a 3.1% year-on-year increase. Total assets reached 212 billion riyals. The bank reported a cost-to-income ratio of 16.6%, the lowest in Qatar’s banking sector, and maintained a non-performing financing assets ratio of 1.76%.

 

QIB’s financing-to-deposit ratio remained within regulatory limits, reflecting what it described as a prudent approach to risk management. The bank also retained strong credit ratings: Fitch affirmed its ‘A’ rating with a stable outlook; Moody’s maintained its ‘A1’ long-term deposit rating; and Capital Intelligence kept the bank’s long-term rating at ‘AA-’, all with stable outlooks.

 

The bank has introduced several digital features in recent years, including real-time digital onboarding for new customers and instant personal financing through its mobile application. The QIB app now includes more than 300 features.

 

In addition to core banking services, QIB has launched digital marketplaces within its app. These include a platform for local SMEs and an auto marketplace allowing customers to browse, test drive, and finance vehicles.

Islamic Finance
Turkcell secures $150m Murabaha facility from Dubai Islamic Bank

Türkiye-based telecom operator Turkcell has secured a $150 million Shariah-compliant Murabaha financing facility from Dubai Islamic Bank PJSC to support its infrastructure projects and funding diversification strategy.

The five-year deal was signed in Istanbul and will be used to finance investment in digital infrastructure, including data centers, cloud services, and renewable energy, according to a company statement released on Monday.

The financing is part of Turkcell’s broader efforts to expand access to Islamic capital markets and diversify its debt portfolio. The company said it is utilising a mix of conventional and Islamic instruments, along with local and international debt sources.

Turkcell last year opened discussions with multiple regional investors, and the latest transaction with Dubai Islamic Bank adds to the company’s growing engagement with Gulf-based financiers. The Murabaha facility will also contribute to Turkcell’s existing funding base, which includes export credit agency-backed loans, development finance, and sukuk.

The deal comes amid increased investor interest in Türkiye from Gulf banks. Dubai Islamic Bank has identified Türkiye as a strategic market under its cross-border investment strategy.

Turkcell is listed on the New York Stock Exchange and Borsa Istanbul. The company is currently pursuing a multi-year capital expenditure plan focused on digital and telecommunications infrastructure.

Islamic Finance
Islamic finance roundup: UAE approves strategy for Islamic finance, halal industry

Here's a roundup of key developments across the Islamic finance ecosystem during May

 

Editor's Note: The UAE has signed off on a strategy that aims to double Islamic bank assets in the next six years. Meanwhile, Maldives has unveiled a vision to become a leading centre for Islamic finance. 

 

Company News


United States

APEX Capital Group launches $10m halal real estate fund

APEX Capital Group, a private real estate investment firm based in Princeton, NJ, has launched the Silk Road Properties Income Fund, a $10 million private real estate fund offering accredited investors the opportunity to earn passive income while adhering to Islamic finance principles.

 

The fund has received Shari'ah-compliance approval from Joe Bradford, a prominent Islamic finance scholar in the U.S. and is accredited by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). (Manila Times)

 

Saudi Arabia / Greece

Alrajhi Bank launches payable finance solution 

Alrajhi Bank has launched QUALCO’s ProximaPlus platform, introducing a fully digital Payables Finance solution based on the Goods Murabaha structure.

 

This milestone is part of the bank’s efforts to digitize its Sharia-compliant supply chain finance (SCF) operations.

 

The platform addresses operational challenges like manual processing, limited scalability, and lack of real-time data.

 

By adopting ProximaPlus, Alrajhi Bank now offers an automated, buyer-led SCF solution that enhances efficiency, invoice visibility, and supports regional expansion, while remaining compliant with Islamic finance principles. (IBS Intelligence)

 

 

Trade Developments


UAE

UAE approves strategy for Islamic finance, halal industry

The UAE Cabinet has approved a national strategy for Islamic finance and the halal Industry. 

 

The strategy focuses on developing the Islamic financial industry, leading global Islamic finance activities, and enhancing the export of halal products worldwide. It aims to double Islamic bank assets by the year 2031. 

 

(Gulf News)

 

Maldives

President launches Islamic social finance Iinitiative

President Dr. Mohamed Muizzu has unveiled his administration's vision to transform the Maldives into a leading financial center for Islamic finance, driven by digital economic transformation.

 

At the launch of the Maldives Islamic Social Finance Initiative, President Muizzu described the initiative as a key part of the upcoming National Financial Inclusion Strategy.

 

 The President called for collective action, aiming to foster partnerships between the financial sector and civil society to address social needs. (Ras Online)

 

Regulatory


Malaysia

Ph pushes 5-year deadline for Islamic banking units to convert into full banks

The Bangko Sentral ng Pilipinas (BSP) has proposed a new regulation requiring Islamic banking units (IBUs) operated by conventional banks to either transition into full-fledged Islamic banks or meet universal bank capital requirements within five years.

 

The proposal, under a newly introduced circular, gives conventional banks a five-year transitional period to meet capitalization standards if they continue operating an IBU.

 

After this period, banks must either convert the IBU into a stand-alone Islamic bank or comply with universal bank capital thresholds, necessitating additional investment. (Manila Bulletin)


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