UAE Islamic Banks Witness 11% Annual Asset Growth, Reaching $191.4 Billion
In a significant development, UAE Islamic banks have seen their asset values soar to 703 billion dirhams ($191.4 billion) by the end of 2023, marking an impressive 11 percent annual increase. This latest data, released by the Central Bank of the UAE, shows a substantial jump from 630.7 billion dirhams in December 2022, reflecting a growth of 72.4 billion dirhams over the span of 12 months.
Monthly Increase in Assets and Deposits Show Positive Trends
On a month-on-month basis, assets in Islamic banks grew by 0.6 percent in December, totaling 4.2 billion dirhams compared to November’s 698.8 billion dirhams. Additionally, deposits in these institutions witnessed a surge, reaching 495.3 billion dirhams by the end of 2023, reflecting a yearly growth of about 12.6 percent from 439.8 billion dirhams in December 2022. On a monthly basis, deposits increased by 0.9 percent compared to November 2023’s 491.1 billion dirhams.
CBUAE Licenses Several Islamic Banks for Operations
Islamic banks, which operate based on Shariah principles, provide diverse financial services such as investments and deposits, while avoiding interest-based transactions and upholding ethical standards. The Central Bank of the UAE has issued licenses to several fully-fledged Islamic banks, including Abu Dhabi Islamic Bank, Ajman Bank, and Al Hilal Bank. Other notable names in this sector include BOK International Bank, Dubai Islamic Bank, Emirates Islamic Bank, and Sharjah Islamic Bank.
Comparison with Traditional Banks and Investment Breakdown
In comparison to Islamic banks, traditional banks operating in the UAE witnessed substantial growth in their total assets, reaching 3.3 trillion dirhams by the end of last year. This marked an 11 percent annual increase from 3 trillion dirhams, reflecting a rise of 335.2 billion dirhams over the year. By December, conventional banks comprised roughly 82.7 percent of the total assets of the country’s banking system, totaling 4 trillion dirhams, whereas Islamic banks held a 17.3 percent share.
The breakdown of investments in Islamic banks includes 100.4 billion dirhams in bonds held to maturity, 18.7 billion dirhams in financial instruments representing debt on others, 2.6 billion dirhams in shares, and 11 billion dirhams in other investments within the portfolio. In comparison, the total investments of conventional banks grew by 15.6 percent annually to 488.8 billion dirhams by December, including 246.2 billion dirhams in financial instruments representing debt on others, 204.4 billion dirhams in bonds held to maturity, 13.2 billion dirhams in shares, and 37.9 billion dirhams in other investments.