The COVID-19 pandemic majorly impacted the finance and non-finance sectors in the Middle East. The steep decline in oil prices and overall strain on the economic activities hindered the growth of the Islamic finance sector. However, the industry quickly recovered in the second half of 2020, which overall growth of 5% in Islamic banking and finance assets. Islamic finance is predicted to hold a significant share in the overall finance industry in the Middle East majorly in the areas of personal finance, thus, ensuring the growth of the industry.
The importance of the wider Middle East region continues to be clear, accounting for 77.4% of total sharia-compliant assets in the latest ranking, down slightly from 2019, when the region represented 79.5% of assets.
Iran and Saudi Arabia remain by far the largest markets when it comes to sharia-compliant assets, with both markets having more than $400bn in assets. Six of the 10 largest Islamic lenders come from those two countries, with only one, Malaysia’s Malayan Banking Berhad (Maybank), coming from outside the Middle East.
Islamic finance is deeply rooted in the Middle East, a region which continues to shape the modern Islamic finance industry globally. Commanding the lion share of global Islamic banking and finance assets and wielding enormous influence in the industry, the Middle East has always been an integral part of IFN.
The popularity of Islamic banking products has outpaced that of conventional banking in the UAE. While the popularity of Islamic banking among consumers has grown from 47% in 2015 to 60% in 2021, that of conventional banking is on a downward trend in the same period down from 70% to 61%.
According to 2021 Islamic Banking Index, for the first time since the launch of the index, the gap between the penetration of conventional and Islamic banking products in the UAE has narrowed to just 1 percentage point, with 61% of the surveyed customers say they have a conventional product compared to 60% who have an Islamic product.
Islamic Banking has come a long way over past few decades , maturing into a $2.4 trillion industry. Islamic finance has now become an important element in the development agenda of the Middle East countries. It is also gaining significance in the financial landscape of the region as well as of the individual countries.
The demand for Islamic banking is rising rapidly in the Middle East and globally, with the sector projected to reach $3.8 trillion by 2023, fuelled by the increasing shift in customers’ preference for social responsibility as a key motivation for using banking and financial sector products and services, a sector expert said.
The growth of the halal industry is also adding to the current momentum in the Islamic Banking sector.
“Islamic finance shares some core values with ESG (environmental, social and governance) and ethical banking, which could see it benefit from the broader appeal of sustainable finance. With social responsibility becoming a key motivation in the products and services customers use, we’re [currently] seeing a surge in the demand for Islamic banking.”
The report covers major international players operating in the Middle East Islamic Finance Market. In terms of market share, some of the major players currently dominate the market. However, with technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and by tapping new markets. Barwa Bank, Iraqi Islamic Bank of Inv & Dev, Mellat Bank, Post Bank of Iran and Bank Keshavarzi are a few of the major market players.
This product will be delivered within 2 business days.
The importance of the wider Middle East region continues to be clear, accounting for 77.4% of total sharia-compliant assets in the latest ranking, down slightly from 2019, when the region represented 79.5% of assets.
Iran and Saudi Arabia remain by far the largest markets when it comes to sharia-compliant assets, with both markets having more than $400bn in assets. Six of the 10 largest Islamic lenders come from those two countries, with only one, Malaysia’s Malayan Banking Berhad (Maybank), coming from outside the Middle East.
Islamic finance is deeply rooted in the Middle East, a region which continues to shape the modern Islamic finance industry globally. Commanding the lion share of global Islamic banking and finance assets and wielding enormous influence in the industry, the Middle East has always been an integral part of IFN.
Key Market Trends
Demand for Shari’ah Compliant Products from Financiers
The popularity of Islamic banking products has outpaced that of conventional banking in the UAE. While the popularity of Islamic banking among consumers has grown from 47% in 2015 to 60% in 2021, that of conventional banking is on a downward trend in the same period down from 70% to 61%.
According to 2021 Islamic Banking Index, for the first time since the launch of the index, the gap between the penetration of conventional and Islamic banking products in the UAE has narrowed to just 1 percentage point, with 61% of the surveyed customers say they have a conventional product compared to 60% who have an Islamic product.
Islamic Banking is the Largest Segment
Islamic Banking has come a long way over past few decades , maturing into a $2.4 trillion industry. Islamic finance has now become an important element in the development agenda of the Middle East countries. It is also gaining significance in the financial landscape of the region as well as of the individual countries.
The demand for Islamic banking is rising rapidly in the Middle East and globally, with the sector projected to reach $3.8 trillion by 2023, fuelled by the increasing shift in customers’ preference for social responsibility as a key motivation for using banking and financial sector products and services, a sector expert said.
The growth of the halal industry is also adding to the current momentum in the Islamic Banking sector.
“Islamic finance shares some core values with ESG (environmental, social and governance) and ethical banking, which could see it benefit from the broader appeal of sustainable finance. With social responsibility becoming a key motivation in the products and services customers use, we’re [currently] seeing a surge in the demand for Islamic banking.”
Competitive Landscape
The report covers major international players operating in the Middle East Islamic Finance Market. In terms of market share, some of the major players currently dominate the market. However, with technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and by tapping new markets. Barwa Bank, Iraqi Islamic Bank of Inv & Dev, Mellat Bank, Post Bank of Iran and Bank Keshavarzi are a few of the major market players.
Additional Benefits:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
This product will be delivered within 2 business days.
Table of Contents
1 INTRODUCTION
4 MARKET DYNAMICS
5 MARKET SEGMENTATION
6 COMPETITIVE LANDSCAPE
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Barwa Bank
- Iraqi Islamic Bank of Inv & Dev
- Mellat Bank
- Post Bank of Iran
- Bank Keshavarzi
- Abu Dhabi Commercial Bank
- Saudi British Bank
- Riyad Bank*
Methodology
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