Strong banking and sukuk industry performance led to 10.6% growth for the global Islamic finance industry in 2024, with total sukuk outstanding surpassing $1 trillion for the first time, according to S&P Global Ratings.

 In 2025, amid increased uncertainty, we expect continued positive growth in the industry, but the sukuk market’s regulatory landscape is still evolving with the possible adoption of Sharia Standard 62, said the top ratings agency in a report published.

 “We expect $10 billion-$12 billion in sustainable issuance in 2025 and continue to think it could drive future growth, although short-term performance might be lower than our initial expectations,” it added.

 According to S&P Global Ratings, the Islamic finance industry experienced a rapid asset increase in 2024, mainly from growth in banking assets and sukuk owing to higher foreign currency-denominated issuances. 

 S&P Global Ratings expects this growth to continue in 2025 barring any significant macroeconomic or intrinsic disruption.

“We have recently revised our oil price assumption to $65 per barrel for the remainder of 2025 and

$70 per barrel from 2026. This will likely continue to support some growth in most core Islamic

economies,” said the ratings expert in its report. 

 Simultaneously, financing needs driven by economic transformation programs will remain high, and the inherent preference for Islamic finance will persist. As a result, despite growing uncertainty, we expect the Islamic finance industry to grow in 2025.

 However, a further decline in oil prices could reduce the growth prospects for core Islamic finance

economies and markets, it stated. 

 Islamic banking assets contributed 60% of industry growth in 2024 compared with 54% in 2023.

The GCC accounted for 81% of this growth, with Saudi Arabia alone responsible for two thirds of it, stated the expert. 

 This strong performance results from opportunities created by the Saudi government’s Vision 2030 program and the deep integration of the Islamic banking industry in Saudi Arabia, which represented about three-quarters of banking system assets at year-end 2024. 

 Bahrain also experienced significant Islamic finance industry growth, particularly due to Ahli United Bank’s (BBB+/Stable/–) conversion from conventional to Islamic banking. The UAE also contributed to this growth, thanks to the non-oil economy’s strong performance. 

 Elsewhere, we have observed some growth in other countries, particularly in Malaysia and Turkey.

Saudi Arabia’s Vision 2030 will continue to translate into significant banking system growth, provided it attracts sufficient refinancing sources, including sukuk issuances from the international capital market. 

 In the UAE, the non-oil economy’s performance, along with capital expenditure needs across various sectors will further support financing requirements and sukuk issuances in 2025, assuming current market volatility does not have a major impact, stated the expert. 

 In other GCC countries, we expect growth to continue thanks to reforms in Oman, Bahrain, and

Kuwait, as well as anticipated increases in gas production in Qatar, it added.