Global Islamic Finance Market Grows Steadily at a CAGR of 9.15%

Introduction

Islamic finance operates according to the principles of Shariah (Islamic law), which forbids the payment or receipt of interest (riba) and emphasizes fairness, ethical conduct, and risk-sharing. Instead of earning interest, Islamic financial institutions engage in profit-and-loss sharing arrangements such as Mudarabah (a partnership between investor and entrepreneur) and Musharakah (a joint venture). Investments are restricted to halal (permissible) sectors, excluding industries like alcohol, gambling, and other prohibited activities. Financing is typically asset-based, using models like Ijara (leasing) and Murabaha (cost-plus sale).

Market Dynamics

Rising Muslim population and increasing awareness of Sharia-compliant financial products drive the global market

A major growth driver for the Islamic finance market is the expanding global Muslim population, along with increasing awareness and preference for Sharia-compliant financial solutions. As projected by Pew Research, Muslims are anticipated to comprise more than 30% of the world’s population by 2050. This demographic trend is bolstering the demand for ethical, interest-free banking systems rooted in Islamic principles.

• For example, Bank Syariah Indonesia (BSI), the leading Islamic bank in the world’s largest Muslim-majority nation, reported a 15.8% increase in financing disbursements in 2023.
• Likewise, Sharia-compliant fintech platforms such as Wahed, along with digital Islamic banks in countries like the UAE and Malaysia, are rapidly gaining popularity.

These advancements underscore the rising appeal of financial products that resonate with Islamic values and support broader goals of financial inclusion.

Expansion into untapped markets create tremendous opportunities

One of the key growth opportunities in the Islamic finance market lies in expanding into underserved regions, especially Sub-Saharan Africa and Central Asia. These areas have large Muslim populations but limited access to formal Islamic banking systems. As a result, there is increasing demand for ethical and Sharia-compliant financial services.

• For instance, in March 2024, Salaam Bank introduced Uganda’s first Islamic bank after the country legalized Islamic banking. This move targets Uganda’s Muslim population—around 14% of the total—and also seeks to attract Sharia-compliant investments to support infrastructure development.

Such developments highlight the strong potential for investment and expansion in regions that are actively seeking alternative, value-based financial solutions.

Regional Analysis

The Middle East and Africa (MEA) region holds a leading position in the global Islamic finance market, driven by its well-established Islamic banking systems and robust government backing. Nations such as Saudi Arabia, the United Arab Emirates, and Bahrain play a significant role, with major institutions like Al Rajhi Bank and Dubai Islamic Bank at the forefront of Sharia-compliant financial innovation. The region has seen a surge in Sukuk issuance, particularly for infrastructure and ESG-related initiatives, highlighted by Saudi Arabia’s Public Investment Fund issuing $3 billion in green Sukuk in 2023. Meanwhile, African countries like Nigeria and Sudan are making strides by developing Islamic banking frameworks aimed at boosting financial inclusion.

Key Highlights

• The global Islamic finance market size was valued at USD 3,384.1 billion in 2024 and is estimated to grow from USD 3,693.75 billion in 2025 to reach USD 7,441.43 billion by 2033, growing at a CAGR of 9.15% during the forecast period (2025–2033).
• By type of institution, the global Islamic finance market is segmented into Islamic banks, Islamic non-banking financial institutions (NBFIs), Shariah-compliant units within conventional banks, and Takaful (Islamic insurance) companies.
• By financial product, the global Islamic finance market is segmented into Sukuk (Islamic bonds), Murabaha (cost-plus financing), Musharaka (profit-sharing partnerships), and Ijara (leasing)
• By end-users, the market is segmented into individuals, corporations, governments, and sovereign wealth funds.
• The Middle East & Africa is the highest shareholder in the global market.

Competitive Players

1. Al Rajhi Bank
2. Dubai Islamic Bank
3. Kuwait Finance House
4. Abu Dhabi Islamic Bank
5. Qatar Islamic Bank
6. Bank Islam Malaysia
7. Maybank Islamic Berhad
8. Banque Saudi Fransi
9. Qatar International Islamic Bank
10. HSBC Amanah
11. Standard Chartered Saadiq

Recent Developments

• In April 2025, Ayan Capital, an Islamic FinTech located in London, obtained £25 million from Partners for Growth (PFG), a worldwide private credit firm.

Segmentation

1. By Type of Institution
   1. Islamic Banks
   2. Islamic Non-Banking Financial Institutions (NBFIs)
   3. Shariah-Compliant Units within Conventional Banks
   4. Takaful (Islamic Insurance) Companies
2. By Financial Product
   1. Sukuk (Islamic Bonds)
   2. Murabaha (Cost-plus Financing)
   3. Musharaka (Profit-Sharing Partnerships)
   4. Ijara (Leasing)
3. By End-User
   1. Individuals
   2. Corporations
   3. Governments
   4. Sovereign Wealth Funds
4. By Regions
   1. North America
   2. Europe
   3. Asia-Pacific
   4. Latin America
   5. The Middle East and Africa