UAE’s Islamic Banks’ Financing Expands Since 2021

Islamic financing has expanded in the UAE, increasing its share from approximately 21.5% of total bank financing in mid-2021 to 24% of the total by the middle of this year.

According to the data released by the Central Bank of UAE (CBUAE) recently, total financing from banks and Islamic banking units increased by more than 39% over the four-year period, reaching $141.93 billion by June this year.

The first half of this year accounted for approximately $16.07 billion in additional financing, representing a total growth rate of 12% over the first six months of the year, bringing the cumulative balance of Islamic financing to $148.94 billion by the end of the first half of 2025, the CBUAE data showed.

The private sector remained the largest beneficiary of financing from Islamic banks operating in the UAE, with a value of $99.5 billion, representing 67% of the total financing provided by Islamic banks and banking operating units until June 2025.

New loans issued to the private sector stood approximately at $5.99 billion in new loans from Islamic banks during the first half of this year, the data showed.

Share of Individual Borrowers

Individual borrowers were the largest beneficiaries of the private sector and the largest group with the largest share of Islamic financing in general, with the cumulative balance of their financing increasing by an additional $4.9 billion over the six months.

This increased the cumulative balance from more than $50.92 billion at the end of 2024 to more than $56.36 billion by the middle of this year.

Commercial sector institutions and industrial companies were the second largest beneficiaries of the private sector, as well as other categories, with their total borrowing balance increasing from $42.48 billion in December 2024 to more than $43.29 billion in June this year.

Government Funding

The total financing granted to government related entities increased slightly throughout the year, from $11.71 billion in 2024 to $13.51 billion in June 2025. Islamic bank financing to the public sector rose to $12.93 billion.

Loans from non-bank financial institutions reached $540 million, up from $460 million. Total financing obtained by non-residents in the country from Islamic banks increased by more than $7.08 billion, rising from a cumulative balance of $15.36 billion in December 2024 to $22.46 billion at the end of last June.

According to CBUAE, the UAE has been at the forefront of Islamic finance since its inception. The world’s first Islamic commercial bank was established in the UAE in 1975 to provide individuals and institutions with financial solutions aligned with Islamic Shari’ah principles.

The UAE has demonstrated that modern financial institutions, founded on a commitment to Shari’ah compliance, are capable of delivering innovative and Shari’ah-compliant financial products and services.

Today, the UAE stands as one of the most advanced countries in Islamic finance, supported by a well-developed banking industry that comprises Islamic banks, Islamic banking windows, Islamic finance companies, and Takaful insurance providers.

The CBUAE supervises 43 Islamic financial institutions which includes Islamic banks (9), Islamic banking windows (15), Islamic finance companies (9) and Takaful insurance companies (10).