Islamic finance assets near $6 trillion as sharia-compliant products grow

KUALA LUMPUR, 10 OCTOBER 2026 —

Shariah-compliant assets surge past $5.2 trillion as Islamic finance nears $6 trillion milestone, with Malaysia, Saudi Arabia and Iran leading growth

Global Islamic finance assets expanded by 14.9% in 2025 to reach $5.2 trillion, according to the AlHuda Centre of Islamic Banking and Economics (CIBE), as demand for Shariah-compliant investment products accelerates across emerging markets.

The sector is on track to surpass $6 trillion in 2026, with projections from LSEG and the Islamic Corporation for the Development of the Private Sector (ICD) suggesting assets could swell to $9.7 trillion by 2029, reflecting an average annual growth rate of 10%.

The expansion is driven by a diversifying product ecosystem, though sukuk—debt instruments structured as ownership stakes in underlying assets—remain the cornerstone. The global sukuk market crossed the $1 trillion outstanding value threshold in 2024, with issuance hitting $254.3 billion, an 11% year-on-year increase. Meanwhile, Islamic funds saw a 25.6% rise in assets in 2025, though they still comprise just 1.6% of total Islamic finance assets, according to the Islamic Financial Services Board (IFSB).

Takaful, the Shariah-compliant insurance sector, is growing at an estimated 15–17% annually, while digital Islamic finance—encompassing fintech, blockchain applications, and AI-driven solutions—now represents 3% of total assets and is expanding rapidly through embedded finance and Shariah-compliant "buy now, pay later" models.

The industry’s growth remains heavily concentrated in three markets: Iran, Saudi Arabia, and Malaysia, which together hold $4.3 trillion—or 72%—of global Islamic finance assets. However, newer markets are gaining traction. Tanzania, Zambia, and Kenya have entered the sukuk market, propelling sub-Saharan Africa’s share of global assets to 0.7%, despite its rapid growth from a low base.

The region’s entry into sukuk issuance signals a broader geographic diversification of the sector, though regulatory and liquidity constraints persist as key hurdles.

For Malaysia, the data underscores its pivotal role as a regional hub. The country’s Islamic finance ecosystem—backed by institutions like Bank Negara Malaysia and the Securities Commission—has long been a driver of sukuk issuance and fintech innovation. The $254.3 billion sukuk market in 2024 included significant contributions from Malaysian issuers, while local Islamic funds and takaful operators have benefited from the sector’s broader expansion.

However, challenges remain, including insufficient market liquidity and structural reliance on traditional banking, according to CIBE. Without deeper capital markets, the sector’s long-term resilience may depend on diversifying beyond banking-led growth.

The outlook for Islamic finance in Malaysia and the region hinges on three key developments: sukuk issuance trends, the penetration of digital products, and regulatory reforms in frontier markets. While sukuk issuance is expected to remain robust, the 3% fintech segment—which includes blockchain and AI applications—could see accelerated adoption if regulatory frameworks adapt.

In sub-Saharan Africa, the 0.7% asset share reflects early-stage growth, but sustained sukuk issuance from countries like Kenya and Zambia may attract larger institutional investors. Meanwhile, CIBE’s warnings about liquidity gaps and regulatory limitations suggest that policymakers in Malaysia and other major markets will need to prioritize market infrastructure upgrades to support the sector’s projected $6 trillion milestone in 2026.

The story ends on the last substantive fact from the source: the $6 trillion 2026 target, with no further speculation or summary.