Business

Islamic banking sector in UAE hits historic AED700 billion mark

Islamic banking in the United Arab Emirates has achieved a significant milestone, surpassing AED700 billion in assets by the end of 2023, marking a historic moment in the country’s financial landscape. According to the latest data released by the Central Bank of the UAE (CBUAE), Islamic banks recorded total assets of AED703.1 billion, representing an impressive annual increase of 11.5%. The statistics revealed a substantial growth trajectory, with Islamic banks witnessing a notable surge in assets compared to the previous year.

Islamic banking sector in UAE hits historic AED700 billion mark

In December 2022, these banks held assets worth approximately AED630.7 billion, indicating a substantial increment of AED72.4 billion over the span of 12 months. Bank credit within the Islamic banking sector also experienced an upward trend, reaching AED428.9 billion by the end of December 2023, reflecting a year-on-year increase of 7.82%. Deposits in Islamic banks climbed to AED495.5 billion, marking a significant annual growth rate of about 12.6%.

Investments within Islamic banks saw a remarkable surge, totaling AED132.7 billion by the end of December 2023, signifying an impressive annual increase of 27.1%. These investments were diversified across various avenues, including bonds, financial instruments, shares, and other investment channels. Breaking down the investments, Islamic banks allocated AED100.4 billion towards bonds held to maturity, AED18.7 billion in financial instruments representing debt on others (bonds), AED2.6 billion in shares, and AED11 billion in other investments.

Concurrently, traditional banks operating in the UAE witnessed substantial growth in their total assets, which reached AED3.372 trillion by the end of December 2023, reflecting an annual increase of 11%. These banks accounted for approximately 82.7% of the total assets of the banking system in the country, amounting to AED4.075 trillion, with Islamic banks holding a 17.3% share. Total bank credit within conventional banks rose to AED1.563 trillion, marking a 5.5% increase compared to the previous year, while bank deposits surged to AED2.026 trillion, indicating a robust annual growth rate of 13.7%.

Investments within conventional banks also demonstrated an upward trajectory, totaling AED488.8 billion by the end of December 2023, with allocations distributed across various avenues such as financial instruments, bonds held to maturity, shares, and other investments. The remarkable performance of both Islamic and conventional banks underscores the resilience and dynamism of the UAE’s banking sector, positioning it as a key player in the global financial landscape.

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