Islamic finance assets reached US$6.5 trillion in 2025, with regulatory reforms, digital innovation and expanding participation in emerging markets expected to drive the industry’s next phase of growth.
The global Islamic finance industry is projected to exceed US$10.5 trillion in assets by 2030, reflecting expanding adoption, stronger financial market infrastructure and growing demand for Shariah-compliant financial solutions, according to the 2026 Islamic Finance Development Report released by the London Stock Exchange Group (LSEG) and the Islamic Corporation for the Development of the Private Sector (ICD).
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Unveiled on 21 October at the Kuala Lumpur Islamic Finance Forum (KLIFF) in Malaysia, the report records continued growth across the industry, with total assets reaching US$6.5 trillion in 2025, representing a 9 per cent year-on-year increase. The findings point to an industry increasingly supported by the expansion of Islamic banking, record sukuk issuance, stronger Islamic fund performance and the introduction of new regulatory frameworks.
The report’s findings highlight the growing relevance of Islamic finance within the international financial system, particularly as governments, financial institutions and investors seek alternative financing structures that align with Islamic principles while supporting economic development.
Established Markets Maintain Their Lead
Malaysia, Saudi Arabia, the United Arab Emirates, Indonesia and Pakistan retained their positions as the world’s most developed Islamic finance markets, according to the report. Their performance reflects comprehensive regulatory systems, established financial institutions, active capital markets and stronger ecosystems for Islamic finance education and knowledge development.
However, the industry’s growth is no longer confined to its traditional centres. The report identifies Türkiye, Tanzania, Kenya, Benin, Azerbaijan and Uzbekistan among the markets recording notable gains in performance, signalling broader geographical participation.
For African economies, these developments present opportunities to strengthen domestic financial markets, mobilise private capital and expand access to financing for businesses and infrastructure projects. The report’s findings suggest that regulatory reforms and improved market infrastructure are becoming increasingly important in enabling countries beyond established Islamic finance hubs to participate in the industry’s expansion.
Digitalisation and Sustainability Reshape the Industry
Beyond asset growth, the report identifies digitalisation as a significant force influencing the future of Islamic finance. Financial technology, open banking and tokenised sukuk are beginning to reshape how financial products are developed, issued and settled, with the potential to improve efficiency and widen access to financial services.
Sustainability is also gaining prominence, with financial institutions increasingly prioritising sustainability guidelines. However, the report notes that activity remains concentrated in developed markets, indicating scope for broader participation across emerging economies.
Despite these advances, talent development remains a challenge. The report identifies a gap between the industry’s expansion and the availability of specialised expertise, underscoring the need for stronger education, professional training and knowledge-sharing systems.
The findings suggest that sustaining growth will require more than increased capital. Effective regulation, institutional capacity, technological innovation and a skilled workforce will be essential to translating market expansion into lasting economic benefits.
Financing Inclusive Economic Growth
Commenting on the findings, Khalid Khalafalla, Acting Chief Executive Officer of ICD, said the developments reinforce the importance of positioning Islamic finance as a practical instrument for inclusive and sustainable economic transformation.
He reaffirmed ICD’s commitment to advancing private-sector development across its member countries through targeted financing and the promotion of Islamic financial solutions.
Mustafa Adil, Head of Islamic Finance at LSEG, said the industry’s projected growth to more than US$10.5 trillion by 2030 would be supported by continued expansion in Islamic banking, sustained sukuk issuance, adoption in emerging markets and demand for sustainable and digital financial products.
The report draws on the Islamic Finance Development Indicator (IFDI), a global benchmark that assesses the industry’s development across 140 countries. It evaluates five dimensions: financial performance, governance, sustainability, awareness and knowledge. This framework provides stakeholders with a broader basis for assessing market maturity, identifying gaps and determining priorities for reform.
As Islamic finance continues to expand, the findings underline the importance of ensuring that growth is matched by stronger institutions, wider market participation and the capacity to deliver tangible economic outcomes.
The 2026 report was released by LSEG in collaboration with ICD, the private-sector arm of the Islamic Development Bank Group. ICD is a multilateral development finance institution established in 1999 to support private-sector development across its 56 member countries in accordance with Shariah principles.
Read the full report: https://apo-opa.co/3TTw9yq
