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.

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In 2025, amid increased uncertainty, continued positive growth is expected 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 last week.

"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.