Islamic Financial Services Industry Stability Report 2025: Need for Coordinated Action to Deepen Markets and Sustain Growth Momentum

Kuala Lumpur, 16 May 2025 – The Islamic Financial Services Board (IFSB) today released the 13^th edition of its flagship Islamic Financial Services Industry (IFSI) Stability Report 2025. Themed “Navigating Shallow Waters: Addressing Structural Vulnerabilities and Shoring Up Resilience to Global Shocks,” this year’s report reflects renewed momentum across the industry, with total global assets reaching USD 3.88 trillion in 2024—a 14.9% increase year-on-year. Broad-based growth was observed across Islamic banking, ṣukūk, and Islamic insurance, signalling deepening market participation, growing global relevance, and broadening geographical reach.

Key takeaways from the 2025 report include:

• Renewed growth momentum of the IFSI: High year-on-year growth across key sectors of the IFSI, registering double-digit growth rates. In 2024, total asset growth for Islamic banking and Islamic insurance grew by 17.05% and 16.9% respectively, while sukuk issuances increased by 25.6%.
• Emerging markets opening new frontiers: Africa and Central Asia posted the highest growth rates globally, representing important opportunities to deepen local financial markets and expanding the industry’s global footprint.
• Financial soundness indicators remained broadly stable: Capital, leverage, liquidity, and asset quality positions in both the banking and insurance sectors remain broadly sound. This reflects the positive impact of strengthened regulatory frameworks, wider adoption of IFSB standards, and growing investor confidence.
• While outlook remains positive, some structural vulnerabilities remain: The report underscores the need to address long-standing structural imbalances, particularly the underdevelopment of capital markets and insurance sectors, which can constrain the industry’s scalability and its ability to fully support investment, funding, and liquidity needs across sectors.
• Critical need to address structural limitations in ṣukūk markets: A key conclusion of the report is the need to deepen ṣukūk markets, which play a vital role in strengthening financial intermediation and supporting macro-financial stability. While 2024 saw a surge in ṣukūk issuance and growing issuer diversity, structural limitations remain, including underdeveloped market infrastructure, complex ṣukūk structures and limited local-currency sovereign issuances, investor concentration, and low trading volumes, among other factors. If unaddressed, these structural limitations may constrain the IFSI’s long-term growth and pose broader financial stability risks, while also affecting other segments of the industry that depend on capital markets to manage their funding, investment portfolios, and liquidity positions.

The report outlines a forward-looking set of policy priorities to address these limitations and unlock the potential growth of Islamic finance. It calls for coordinated action among regulators, policymakers, and industry stakeholders to address these challenges to ensure the sound development of the Islamic financial services industry.

First published in 2010, the IFSI Stability Report has become a key reference for global stakeholders, regulators, and market participants. It offers in-depth insights into industry trends, vulnerabilities, and evolving policy priorities shaping the future of Islamic finance.

The IFSB Islamic Financial Services Industry Stability Report 2025 is now available at www.ifsb.org/publications.