The IFSB issued the Eleventh Edition of its Annual Flagship Publication: The Islamic Financial Services Industry (IFSI) Stability Report 2023

15 August 2023, Riyadh, Saudi Arabia – The Islamic Financial Services Board (IFSB) officially launched the Islamic Financial Services Industry (IFSI) Stability Report 2023. This annual flagship publication was launched by H.E. Dr. Fahad Ibrahim Alshathri, Deputy Governor for Research & International, Saudi Central Bank (SAMA) and Dr. Bello Lawal Danbatta, Secretary-General of IFSB at the prestigious Fairmont Hotel in Riyadh on 15 August 2023. The launch was witnessed by governors and delegations from various central banks, professional industry experts, and other global industry stakeholders.

Since its maiden edition in 2013 and now entering into its eleventh year of publication, the report has over the years become a benchmark publication for the IFSB and numerous other stakeholders for tracking the growth, development, and stability assessment of the Islamic financial services industry.

The IFSB Secretary-General, Dr. Bello Lawal Danbatta stated that “the report amplifies comprehension of ongoing trends, structural shifts, regulatory considerations, and pertinent matters spanning diverse sectors and regions within the Islamic financial services industry (IFSI).” He stated further that “despite the challenging financial conditions, the global Islamic Financial Services Industry (IFSI) saw progress, witnessing its overall worth climb to approximately $3.25 trillion in 2022 from $3.06 trillion in 2021 primarily propelled by advancements in Islamic banking and Islamic capital markets within key markets.”

Dr. Bello also stated that “the industry’s financial stability gauges remained positive when assessed against previous years, conventional financial peers, and international benchmarks. With cautious optimism influenced by the existing downward risks, the report envisions favourable expansion in IFSI assets and robust financial well-being and resilience indicators in various segments of the Islamic finance sector for the year 2023.”

Key highlights of the IFSI Report 2023 include:

• The Islamic banking segment retained its dominance and accounted for 69.3% of the global IFSI assets in 2022. The segment registered a y-o-y growth of 6.9% in assets in 2022. The number of systemically important jurisdictions remains at 15.
• The ICM sector as at end of 2022 accounted for 29.8% of the global IFSI assets on the back of a positive performance due to the sovereign and multilateral ṣukūk issuances in key Islamic finance markets to support fiscal financing and eco-friendly environment projects.
• Islamic funds also recorded a slowed-down growth of 1.0% in terms of the total value of Assets under Management (AuM), while the Islamic equity indices experienced similar movements to the conventional market, but again outperformed their conventional counterparts in 2021.
• The share of the global takāful industry in the global IFSI saw a whopping growth at 16.1% y-o-y but remained marginal at 0.9% of global Islamic finance assets. The takāful segment remained strong despite financial market volatility, natural disasters, and their impact on the segment’s investment portfolio.
• Notwithstanding the potential downside risks and the lower global economic growth projection, the global IFSI is expected to remain resilient. This is based on the limited direct exposure of many Islamic finance jurisdictions to the impact of the Russia–Ukraine conflict, gradual recovery, and reopening of economies, an accelerated digital transformation process, and the improved financial soundness and resilience performance recorded in 2021.

The IFSI Stability Report 2023 is available for download from the IFSB website, www.ifsb.org.