The expansion of Islamic financing in the UAE has been notable, with its share increasing from approximately 21.5% of total banking financing in mid-2021 to 24% by mid-2023.
Recent data from the central bank reveals that the total financing from banks and Islamic banking units has surged by over 39% during the four-year period, amounting to an additional 154 billion dirhams by mid-2025.
In the first half of the current year alone, around 59 billion dirhams in additional financing was recorded, representing a total growth of 12% over the first six months, leading to a cumulative total of 547 billion dirhams in Islamic financing by the end of this period.
The data indicated that the private sector continues to lead as the primary beneficiary of financing from Islamic banks operating in the UAE, receiving funds amounting to 365.4 billion dirhams, which accounts for 67% of total financings issued by Islamic banks and operational units as of June 2025.
Approximately 22 billion dirhams were awarded as new loans to the private sector from Islamic banks during the first half of the year.
Individuals’ Share
Individual borrowers emerged as the largest beneficiaries within the private sector and the primary recipients of Islamic financing overall. Their cumulative financing rose by an additional 18 billion dirhams over the six-month period, increasing from a balance exceeding 187 billion dirhams at the end of 2024 to over 207 billion dirhams by mid-2023.
Commercial institutions and industrial companies followed as the second largest group benefiting within the private sector, with their total borrowing increasing from 156 billion dirhams in December of the previous year to over 159 billion dirhams in June.
Government Financing
The total financing extended to government entities has seen a slight rise over the year, growing from 43 billion dirhams in 2024 to 49.6 billion dirhams by June 2025, while financing from Islamic banks to the public sector reached 47.5 billion dirhams. Loans provided to non-bank financial institutions rose to 2 billion dirhams, up from 1.7 billion dirhams. Additionally, the total financing received by non-residents from Islamic banks expanded by over 26 billion dirhams, rising from a cumulative balance of 56.4 billion dirhams in December 2024 to 82.5 billion dirhams by the end of June.