The Islamic banking landscape of 2024 remains a study in contrasts between its two major heartlands of the Middle East and Asia-Pacific, which between them account for 96 per cent of global sharia-compliant assets. While Middle East lenders (excluding Iran) posted an asset increase of 11 per cent for 2023, underpinned by growth in Saudi Arabia and the UAE, banks in Asia saw their assets grow by just 3 per cent, thanks to challenging market conditions in the key markets of Malaysia and Bangladesh.
Taken as a whole, the 240 banks represented in The Banker’s Top Islamic Financial Institutions for 2024 registered a 9 per cent increase in sharia-compliant assets for 2023, compared with 5.4 per cent registered by this year’s Top 1000 World Banks.
The 104 fully-Islamic institutions in this year’s list registered an average 16 per cent increase in pre-tax profits, compared with the 14 per cent aggregate for the Top 1000. Kuwait Finance House, the world’s third-largest Islamic lender, registered a 55 per cent rise in pre-tax profits, higher than any lender with more than $50bn in sharia-compliant assets.
Middle East
The Middle East remains Islamic banking’s epicentre, with regional lenders accounting for 17 of the Top Islamic ranking’s top 20 and 73 per cent of global sharia-compliant banking assets. Saudi Arabia maintains its position as the region’s largest Islamic banking market, home to the world’s two largest Islamic banking institutions, Al Rajhi Bank and Saudi National Bank.
While Al Rajhi remains the world’s largest Islamic lender, the past year saw SNB gain ground on its domestic rival, which experienced lower growth due to a slowdown in the country’s retail mortgage market. Al Rajhi’s sharia-compliant asset base grew by just 6 per cent during the year, compared with 22 per cent in 2022, while pre-tax profits fell 3.1 per cent due to lower net financing, investment income and banking fees.
In the best performance rankings of the country’s four largest fully-Islamic lenders, Alinma Bank emerges on top for 2024, thanks to table-topping scores for growth and profitability, with Al Rajhi coming in second position.
Alinma, the country’s fourth largest lender by sharia-compliant assets, rises from seventh to sixth position in the overall rankings, posting the highest increase of any Saudi lender. The bank, which has narrowed the gap between it and Saudi’s third-placed Islamic lender Saudi Awwal Bank, saw its sharia-compliant asset base increase by 18 per cent during the year, thanks to an 18.5 per cent rising in financing and a 29.4 per cent rise in deposits. Pre-tax profits rose by 34.5 per cent, second only to SAB in the country.
While Dubai Islamic Bank remains the largest Islamic lender in the UAE (the second largest Islamic banking market in the Middle East), and fourth largest in the overall rankings, it is the country’s second largest Islamic lender, Abu Dhabi Islamic Bank, which rises to the top of the country’s Islamic performance table, thanks to table-topping scores for five of the eight metrics measured. ADIB rises from 10th to eighth in the overall rankings, its sharia-compliant assets increasing by 14.4 per cent on the back of a 26 per cent growth in investments, a 6 per cent growth in gross financing, and a 14 per cent rise in customer deposits.

Asia-Pacific
Last year was a challenging one for sharia-compliant lenders in Malaysia — the world’s second largest Islamic banking market — with currency weaknesses weighing on asset growth and intensifying competition to attract deposits. Lenders in the country, which accounts for 65 per cent of Asian sharia-compliant banking assets, registered a growth of just 1.9 per cent in dollar terms in 2023.
Maybank — the world’s largest non-Middle Eastern Islamic lender — saw its sharia-compliant asset base decrease by 5.1 per cent in dollars (one per cent in local currency terms), even as financing and advances increased by 6.7 per cent. The bank drops two positions to seventh in this year’s overall rankings. CIMB Islamic, which saw its financing and advances rise by 12.9 per cent, was the only one of the country’s top five Islamic lenders to register an increase in sharia-compliant assets for the year.
Banks in Bangladesh — Asia’s third largest Islamic banking market — saw their sharia-compliant assets fall by 1.2 per cent for the year; the country’s Islamic lenders — 35 of which feature in this year’s rankings — are widely seen as more vulnerable than their conventional counterparts, with a flight of deposits resulting in liquidity levels falling below regulatory requirements. Eight of Bangladesh’s top 10 lenders posted a drop in assets for 2023, including Shahjalal Islami Bank, which tops the country’s best performance rankings for the year.
Lenders in Indonesia — home to the world’s largest Muslim population — bucked the low growth trend for 2023, following a strengthening of the rupiah and the government’s ongoing commitment to strengthening the Islamic finance sector. A directive in February 2024 encouraging the spinning off of larger Islamic portfolios into standalone entities (or mergers with other Islamic banks) is only set to encourage further growth in the sector going forward.
After having overtaken Bangladesh as Asia’s second-largest Islamic banking market by assets in last year’s rankings, Indonesia recorded a 14 per cent increase in its sharia-compliant asset base in 2023, higher than any country in this year’s top 10 markets with the exception of Bahrain, whose figure is inflated somewhat by the conversion of Ahli United Bank to a fully sharia-compliant lender during the year.
Growth in Indonesia was propelled by Bank Mandiri, the country’s largest Islamic lender in its role as the owner of Bank Syariah Indonesia, which was created by the government in 2021 as the country’s flagship sharia-compliant lender from the merger of three smaller lenders. The bank’s asset base increased by 18 per cent, driven by a 15.7 per cent increase in disbursed funds for the year.
Of the country’s largest fully sharia-compliant lenders, Bank Aladin Syariah tops the performance tables, thanks to table-topping scores for growth, operational efficiency and return on risk. Bank NTB Syariah comes in second place, thanks to high scores for profitability, soundness and leverage.
Behind the Middle East and Asia-Pacific, Europe (excluding Central and Eastern Europe) ranks in distant third in terms of sharia-compliant assets, thanks to the presence of Turkey, the world’s ninth-largest Islamic banking market. Turkish sharia-compliant assets grew by 9 per cent in 2023, in spite of the further depreciation of the lira against the dollar, thanks to solid growth by Kuveyt Turk Katilim Bankasi and TC Ziraat Bankasi. The UK, Europe’s second-largest Islamic banking market, saw asset growth of 7.7 per cent.
Despite being home to some of the world’s largest Muslim populations, Islamic banking growth was limited in Africa, given currency issues in key markets such as Nigeria and Egypt. Central Asia saw a 90 per cent growth in sharia-compliant assets for the year, albeit from a very low base, thanks to a more than trebling of the assets of Kazakhstan’s Al Hilal Islamic Bank.
Source: THE BANKER