Assets of fully-fledged Islamic banks grew by 5 percent during 2020, accounting for about 19 percent of UAE’s total banking system assets.

However, assets of Islamic windows at conventional banks fell by 2.4 percent accounting for approximately 5 percent of total banking system assets, the Central Bank of UAE (CBUAE) said in its Financial Stability Report.

The country’s Islamic financial sector, comprising fully-fledged Islamic banks, Islamic windows and Islamic finance companies, has total assets of 782 billion dirhams ($213 billion), the report said.

The 17 conventional banks with Islamic windows saw their asset size reach 166.2 billion dirhams in 2020.

There are 11 Islamic finance companies in the UAE, accounting for around 55 percent, or 17.6 billion dirhams, of the total assets of the finance companies’ sector in 2020.

“The strong growth of the fully-fledged Islamic banks in the UAE is reflected by a compounded annual growth rate over the last five years of 5.6 percent,” the report said.

Islamic banks’ assets comprised mainly of financing, accounting for about 65 percent of the total assets. Investments in financial assets accounted for of about 11 percent, while the remaining was made up of balances at the central banks, interbank financing and other assets.

While the financing portfolio comprised largely of private corporate and retail financing, financing to government and GREs have risen in recent times to hit 22 percent of the total in 2020.

In terms of financing by economic sector, construction and real estate sector financing exposure comprised about 21 percent of total financing portfolio, while trade and services sectors accounted for 16 percent.

Islamic banks in the UAE are largely funded domestically, with resident deposits accounting for about 93 percent of total deposits, the data showed.

(Reporting by Brinda Darasha; editing by Seban Scaria) 

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here

© ZAWYA 2021