MENA Newswire News Desk: Moody’s Ratings has projected robust growth for Islamic banking in the Gulf Cooperation Council (GCC) over the next 12 to 18 months, predicting that the sector will outperform conventional banking in profitability. The report emphasizes that Islamic banks will benefit from strong economic diversification efforts by governments in the region. According to Moody’s, the demand for Sharia-compliant financial products will continue to rise, as businesses and consumers increasingly opt for Islamic financing options. This trend is expected to drive the sector’s expansion and result in mergers aimed at boosting revenues and reducing operational costs.
The report indicates that Islamic banks in the GCC are well-positioned to capitalize on this growing demand due to their strong capital buffers and liquidity. These factors will allow the sector to maintain its competitive edge, even as global economic conditions remain uncertain. Badis Shubailat, Assistant Vice President and Analyst at Moody’s, highlighted that Islamic finance will outpace its conventional counterparts in the region, owing to sustained economic growth and the commitment of GCC governments to strengthen the broader Islamic finance industry. He also pointed out that government initiatives to diversify their economies away from oil dependence will further fuel the sector’s profitability.
Moody’s further noted that the region’s non-oil economic growth will remain strong through 2025, driven by ambitious economic plans and rising business confidence. This, in turn, will support the continued growth of Islamic banking across the Gulf. Islamic banks in the GCC are expected to maintain strong financial performance as they adapt to the changing economic landscape, Moody’s added, with mergers and acquisitions likely playing a significant role in the sector’s future growth strategy. The report concludes that Islamic finance in the Gulf region is set for sustained growth as it meets increasing demand for Sharia-compliant products, bolstered by government support and economic diversification initiatives.
