The Islamic banking sector in the UAE has achieved a historic milestone, surpassing AED700 billion ($190.61 billion) in assets in 2023 for the first time. According to the latest Central Bank of the UAE (CBUAE) data, Islamic banks recorded significant growth in assets, credit, deposits and investments, solidifying their position in the country’s financial landscape.
Record-breaking growth
At the close of 2023, the assets of Islamic banks in the UAE stood at AED703.1 billion ($191.45 billion), marking an impressive annual increase of 11.5 percent. This surge reflects a substantial rise from AED630.7 billion at the end of December 2022, an increase of AED72.4 billion. Notably, Islamic banks experienced a monthly growth of 0.6 percent, adding AED4.2 billion from November 2023 to December 2023.
Credit and deposit surge
CBUAE’s data revealed that bank credit at Islamic banks increased to AED428.9 billion by the end of December 2023. This marks a year-on-year increase of 7.82 percent, compared to about AED397.8 billion in December 2022.
Meanwhile, deposits in UAE’s Islamic banks increased to AED495.5 billion by the end of December 2023. This marks an annual increase of around 12.6 percent, compared to about AED440 billion in December 2022. Meanwhile, deposits increased on a monthly basis by 0.9 percent compared to AED491.1 billion in November 2023.
Investments
CBUAE revealed that total investments of UAE’s Islamic banks reached AED132.7 billion at the end of December 2023, an annual increase of 27.1 percent or AED28.3 billion. Meanwhile, investments increased monthly by about 1 percent compared to about AED131.4 billion in November 2023.
The investments of UAE’s Islamic banks were distributed as follows:
- AED100.4 billion in bonds held to maturity
- AED18.7 billion in financial instruments representing debt on others (bonds)
- AED2.6 billion in shares
- AED11 billion in other investments
Read: Banks in Egypt see net profits soar to $6 billion in 2023
UAE’s traditional banks
While Islamic banks demonstrated robust growth, traditional banks also experienced significant expansion. Total assets of conventional banks reached AED3.372 trillion by the end of December 2023, reflecting an annual increase of 11 percent.
According to the CBUAE, traditional banks accounted for around 82.7 percent (AED4.075 trillion) of the total assets of the UAE’s banking system by the end of December 2023. Meanwhile, Islamic banks accounted for 17.3 percent of the UAE banking system’s total assets.
Total bank credit for conventional banks in the UAE reached AED1.563 trillion by the end of December 2023, an annual increase of 5.5 percent. Meanwhile, their bank deposits increased to AED2.026 trillion, an annual growth of 13.7 percent. Furthermore, their investments grew by 15.6 percent annually to AED488.8 billion by the end of December 2023.
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