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Islamic finance to outpace conventional banking in GCC, Moody’s reports

Driven by growing demand for Sharia-compliant products and strong economic diversification, Islamic finance in the GCC is set for continued expansion, surpassing traditional banking.

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Rana Tabbara

Senior Business Producer

Rana Tabbara is a UAE-based reporter and content creator known for dynamic storytelling, impactful reporting, and high-profile interviews. She interviewed leaders including the UAE Minister of Energy, the Australian Prime Minister, the Saudi Minister of Tourism, the Armenian Minister of Economy, and CEOs of major companies. Rana covered big events like the World Government Summit, LEAP, Cityscape KSA, IDEX, among others. Her previous experiences include The New York Times, CNN Business Arabic, and L'Orient-Le Jour.

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Islamic finance to outpace conventional banking in GCC, Moody’s reports

Increasing demand for Sharia-compliant products fuels the growth of Islamic finance in the GCC.

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  • Islamic banks will maintain robust profitability and liquidity over the next 12 to 18 months.
  • Government initiatives to diversify economies will support Islamic finance growth through 2025.

    • Islamic financing in GCC countries is set to continue outperforming conventional banking, driven by increasing demand for Sharia-compliant products, according to Moody's Rating.

    The global rating agency also anticipates further growth in the sector through mergers, aimed at boosting revenue and cutting costs.

    "Islamic banks in the GCC are expected to maintain strong profitability over the next 12 to 18 months, supported by robust commercial activity fueled by government efforts to diversify regional economies," Moody's stated in its latest report.

    The agency emphasized that Islamic banks in the region will sustain strong capital and liquidity levels, allowing them to capitalize on the growing demand for Sharia-compliant financial services across the Gulf.

    Moody's also forecasts continued strength in non-oil economic growth for GCC countries through 2025. This growth is driven by ambitious government diversification strategies and strong business confidence.

    Badis Shubailat, assistant vice president and analyst at Moody’s, stated that Islamic finance in the GCC is set to outpace conventional banking, bolstered by sustained economic growth, government support for the Islamic finance sector, and rising demand for Sharia-compliant offerings.

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