Latest news with #ShariaStandard62
Zawya
22-04-2025
- Business
- Zawya
Islamic finance sector resilient amid upcoming headwinds: S&P
Strong banking and sukuk industry performance led to 10.6% growth for the global Islamic finance industry in 2024, with total sukuk outstanding surpassing $1 trillion for the first time, according to S&P Global Ratings. In 2025, amid increased uncertainty, we expect continued positive growth in the industry, but the sukuk market's regulatory landscape is still evolving with the possible adoption of Sharia Standard 62, said the top ratings agency in a report published today (April 21). "We expect $10 billion-$12 billion in sustainable issuance in 2025 and continue to think it could drive future growth, although short-term performance might be lower than our initial expectations," it added. According to S&P Global Ratings, the Islamic finance industry experienced a rapid asset increase in 2024, mainly from growth in banking assets and sukuk owing to higher foreign currency-denominated issuances. S&P Global Ratings expects this growth to continue in 2025 barring any significant macroeconomic or intrinsic disruption. "We have recently revised our oil price assumption to $65 per barrel for the remainder of 2025 and $70 per barrel from 2026. This will likely continue to support some growth in most core Islamic economies," said the ratings expert in its report. Simultaneously, financing needs driven by economic transformation programs will remain high, and the inherent preference for Islamic finance will persist. As a result, despite growing uncertainty, we expect the Islamic finance industry to grow in 2025. However, a further decline in oil prices could reduce the growth prospects for core Islamic finance economies and markets, it stated. Islamic banking assets contributed 60% of industry growth in 2024 compared with 54% in 2023. The GCC accounted for 81% of this growth, with Saudi Arabia alone responsible for two thirds of it, stated the expert. This strong performance results from opportunities created by the Saudi government's Vision 2030 program and the deep integration of the Islamic banking industry in Saudi Arabia, which represented about three-quarters of banking system assets at year-end 2024. Bahrain also experienced significant Islamic finance industry growth, particularly due to Ahli United Bank's (BBB+/Stable/--) conversion from conventional to Islamic banking. The UAE also contributed to this growth, thanks to the non-oil economy's strong performance. Elsewhere, we have observed some growth in other countries, particularly in Malaysia and Turkey. "We expect economic growth in Saudi Arabia and the UAE will continue supporting Islamic banking asset expansion in 2025, barring any significant disruptions from global trade tensions or a further decline in oil prices," stated the ratings agency in the report. Saudi Arabia's Vision 2030 will continue to translate into significant banking system growth, provided it attracts sufficient refinancing sources, including sukuk issuances from the international capital market. In the UAE, the non-oil economy's performance, along with capital expenditure needs across various sectors will further support financing requirements and sukuk issuances in 2025, assuming current market volatility does not have a major impact, stated the expert. In other GCC countries, we expect growth to continue thanks to reforms in Oman, Bahrain, and Kuwait, as well as anticipated increases in gas production in Qatar, it added.- TradeArabia News Service Copyright 2024 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Trade Arabia
21-04-2025
- Business
- Trade Arabia
Islamic finance sector resilient amid upcoming headwinds: S&P
Strong banking and sukuk industry performance led to 10.6% growth for the global Islamic finance industry in 2024, with total sukuk outstanding surpassing $1 trillion for the first time, according to S&P Global Ratings. In 2025, amid increased uncertainty, we expect continued positive growth in the industry, but the sukuk market's regulatory landscape is still evolving with the possible adoption of Sharia Standard 62, said the top ratings agency in a report published today (April 21). "We expect $10 billion-$12 billion in sustainable issuance in 2025 and continue to think it could drive future growth, although short-term performance might be lower than our initial expectations," it added. According to S&P Global Ratings, the Islamic finance industry experienced a rapid asset increase in 2024, mainly from growth in banking assets and sukuk owing to higher foreign currency-denominated issuances. S&P Global Ratings expects this growth to continue in 2025 barring any significant macroeconomic or intrinsic disruption. "We have recently revised our oil price assumption to $65 per barrel for the remainder of 2025 and $70 per barrel from 2026. This will likely continue to support some growth in most core Islamic economies," said the ratings expert in its report. Simultaneously, financing needs driven by economic transformation programs will remain high, and the inherent preference for Islamic finance will persist. As a result, despite growing uncertainty, we expect the Islamic finance industry to grow in 2025. However, a further decline in oil prices could reduce the growth prospects for core Islamic finance economies and markets, it stated. Islamic banking assets contributed 60% of industry growth in 2024 compared with 54% in 2023. The GCC accounted for 81% of this growth, with Saudi Arabia alone responsible for two thirds of it, stated the expert. This strong performance results from opportunities created by the Saudi government's Vision 2030 program and the deep integration of the Islamic banking industry in Saudi Arabia, which represented about three-quarters of banking system assets at year-end 2024. Bahrain also experienced significant Islamic finance industry growth, particularly due to Ahli United Bank's (BBB+/Stable/--) conversion from conventional to Islamic banking. The UAE also contributed to this growth, thanks to the non-oil economy's strong performance. Elsewhere, we have observed some growth in other countries, particularly in Malaysia and Turkey. "We expect economic growth in Saudi Arabia and the UAE will continue supporting Islamic banking asset expansion in 2025, barring any significant disruptions from global trade tensions or a further decline in oil prices," stated the ratings agency in the report. Saudi Arabia's Vision 2030 will continue to translate into significant banking system growth, provided it attracts sufficient refinancing sources, including sukuk issuances from the international capital market. In the UAE, the non-oil economy's performance, along with capital expenditure needs across various sectors will further support financing requirements and sukuk issuances in 2025, assuming current market volatility does not have a major impact, stated the expert. In other GCC countries, we expect growth to continue thanks to reforms in Oman, Bahrain, and
Al Etihad
17-04-2025
- Business
- Al Etihad
UAE and Saudi Arabia to drive Islamic finance expansion in 2025: S&P Global Rating
17 Apr 2025 18:44 A. SREENIVASA REDDY (ABU DHABI) Economic growth in Saudi Arabia and the UAE will continue supporting Islamic banking asset expansion in 2025, barring any significant disruptions from global trade tensions or a further decline in oil prices, the S&P Global Ratings said in a report.'In the UAE, the non-oil economy's performance, along with capital expenditure needs across various sectors, will further support financing requirements and sukuk issuances in 2025,' the report said, pointing to strong momentum across the Gulf's two largest Arabia's Vision 2030 program remains a key growth engine. The report noted that continued progress in economic transformation—coupled with the country's deep integration of Islamic banking—will result in 'significant banking system growth'. According to S&P Global Ratings, total sukuk issuance is expected to range between $190 billion and $200 billion in 2025, with foreign currency-denominated sukuk contributing $70 billion to $80 billion. As of the end of 2024, outstanding sukuk issuance had surpassed the $1 trillion mark.'We expect foreign currency-denominated issuances to remain elevated in 2025, provided there are no major disruptions due to the current volatility in global capital markets,' the report stated. It added that global liquidity conditions, supported by the anticipated easing of monetary policy by central banks, could help sustain issuance finance will also be a growing feature of the Islamic finance landscape. S&P Global projected sustainable sukuk issuance between $10 billion and $12 billion in 2025, a range in line with $11.9 billion issued in 2024. Despite a 60% decline in sustainable sukuk volume from UAE-based issuers in 2024—attributed to a post-COP28 slowdown—the country still accounted for 15% of global issuance. Saudi Arabia led the way, contributing 38% of total sustainable sukuk, primarily driven by its banking Saudi Arabia dominated Islamic banking asset growth in 2024, accounting for nearly two-thirds of the GCC's contribution, followed by strong performances from the UAE and Bahrain. The sector's total assets grew by 10.6% over the year, supported by robust expansion in both banking and the Islamic finance industry is projected to grow by 9%–10% in 2025, supported by continued demand in Southeast Asia and parts of the Middle East. S&P highlighted potential for further development in Malaysia, Indonesia, and Pakistan—although risks from local currency volatility persist. However, risks to sukuk market dynamics loom in 2026. The anticipated adoption of Sharia Standard 62 by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) could transform sukuk classification from debt-like to equity-like instruments, potentially raising issuance costs and deterring fixed-income investors. While implementation is likely to be phased over one to three years, market participants are closely monitoring the standard's final provisions.
Biz Bahrain
06-02-2025
- Business
- Biz Bahrain
Sukuk Market Will Likely Have More Time To Adopt AAOIFI Standard 62, Report Says
At the beginning of February, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held a couple of public hearings on Sharia Standard 62. In S&P Global Ratings' view, this standard will shape the future of the sukuk market. (See 'Sukuk Brief: More Time To Adopt AAOIFI Standard 62') The AAOIFI will likely give issuers more time to implement Sharia Standard 62. In its public hearing over the weekend, the AAOIFI mentioned that it is likely to approve Standard 62 in 2025, and that issuers will likely have between one and three years to implement the new requirements, depending on the AAOIFI's final decision. 'Depending on the final timeline that the AAOIFI gives the market, this development could give sukuk structurers more time to develop structures that strike a balance between complying with the new requirements and making the sukuk attractive to fixed-income investors, if this is still possible,' said S&P Global Ratings credit analyst Mohamed Damak. 'However, the adoption of the standard could cause a decline in sukuk issuance,' Mr. Damak added. If adopted as proposed, Sharia Standard 62 will, in our view, result in the sukuk market shifting away from structures in which the sukuk sponsors' contractual obligations underpin their repayments, to structures in which the underlying assets have a more prominent role. Notwithstanding the fact that issuers will have more time to adjust to the new requirements, investors will likely face new risks relating to asset performance and value. We continue to believe that if the standard is adopted as proposed, some investors and issuers may choose alternatives to the sukuk market, as issuing sukuk might become more onerous from a risk/reward perspective. This could also encourage some adopters to transition away from the standards if their ability to tap the capital markets is significantly restricted.
