Islamic banks have become an increasingly important part of the UAE system making rapid strides along the way. Islamic banks have increased their share of total bank assets, from 8.8% at the end of 2002 to 13.4% at end of 1Q 2008 (as per recent newspaper reports).
A range of Shariah-compliant products was introduced in the market and Islamic products like Ijarah and Murabaha have become common in property transactions. The region has witnessed Islamic Sukuks attracting large investor volumes with subscriptions exceeding planned issuance, even in large-sized mandates.
The significance of Islamic banking was further underlined as a few of the major banks started an Islamic banking wing or in some cases converted themselves into Islamic banks.
For instance, EBI formed Emirates Islamic Bank by converting its subsidiary, Middle East Bank into an Islamic one. New issuance of licenses include Abu Dhabi-based Al-Hilal bank in 2007 and Ajman bank in 2008.
Major Islamic Banks
1 Abu Dhabi Islamic Bank
2 Dubai Islamic Bank
3 Sharjah Islamic Bank
4 National Bank of Sharjah
5 Emirates Islamic Bank
6 Dubai Bank
7 Al Hilal Bank
8 Ajman Bank
9 Noor Islamic Bank
Share in profits rising
With the inclusion of more Islamic banks (IB) into the finance system coupled with improving profitability of the existing IBs, the share in profits of IBs in total banking profits for UAE has increased from 10% in 2003 to 13% in 2006 and is expected to improve further going forward. This can be gauged from the fact that profits of IBs have been rising with a 4-year CAGR of 68% and may very well continue.
