Profitability and earnings jump in 2023, with Islamic banks gaining the benefit of digital investment and service improvement.

Last year was a strong year for Islamic financial institutions [IFIs], with banks and their management capitalizing on investment in technology and digital capabilities to boost growth and gain customers. Progress in digital banking has helped to keep costs under control. It has led to increased customer drift from conventional banks to Shariah-compliant institutions, particularly among the younger generation. Retail banking remains a cornerstone of most IFIs, but many are strengthening their commercial banking products.

Despite rising interest rates over the past few years, which has in the past been challenging for Islamic banks, most IFIs were able to widen their margins in 2023 through better repricing of financing assets. The Islamic banking sector enjoyed better return on assets in 2023, rising to 1.8% from 1.6% in 2022.

Islamic banks’ balance sheets advanced by around 8% last year, slightly below the prior year’s growth, but remaining higher than conventional banks’ asset growth. The overall health of Islamic banks remains very good, with an average capital to risk-weighted assets ratio of 19% and nonperforming loan ratio around 3%.

The winners of Global Finance’s 2024 World’s Best Islamic Financial Institution Awards are banks that have excelled in product innovation, range and service quality; recorded good financial results, with sound balance sheets and have good governance. Award winners continue to innovate in delivery and access, strengthening their franchise and market position.

Global Finance’s World’s Best Islamic Financial Institution for 2024 is Kuwait Finance House. KFH is the second-largest Islamic bank globally, active in the Middle East, Asia and Europe. Last year was KFH’s first full year of integration following its 2022 acquisition of Ahli United Bank. In 2023, KFH launched Tam Digital Bank, Kuwait’s first Shariah-compliant digital bank. AbdulWahab Al-Roshood, acting CEO at KFH, says,

“Expanding our customer base and market share in the retail banking sector, KFH is moving forward with its digital transformation strategy, launching innovative digital financial solutions.”

Our winner for the Middle East is Al Rajhi Bank, the largest Islamic bank globally. Al Rajhi Bank has posted consistently strong performance, supported by leading-edge technology and a strong brand. Loan growth was very good in 2023. Abdullah bin Sulaiman Al Rajhi, chairman of the bank’s board of directors, says, “The bank continued its selective growth across businesses to achieve its strategic goals while maintaining its lead in customer experience and best-in-class digital solutions.”

Malaysia’s Maybank Islamic Bank wins the award for the best IFI in Asia. With a strong capital base and good returns, Maybank is frequently a first mover in bringing innovative Shariah-compliant financial products to the market. In its home market of Malaysia, it controls one-third of Islamic assets, but its activities extend across other Asian countries.

Global Winners

Best Islamic Financial Institution—Kuwait Finance House 

Kuwait Finance House (KFH) earned its recognition as Best Islamic Financial Institution worldwide thanks to innovation in Islamic financing, a wide geographical footprint and strong operations. KFH is the second-largest Islamic bank globally, providing services to customers in the Middle East, Asia and Europe through extensive distribution channels. It has subsidiaries in Kuwait, Turkey, Egypt, Bahrain, Iraq, Malaysia, the UK and Germany.

Last year was KFH’s first full year of integration following its 2022 acquisition of Ahli United Bank of Bahrain. Total assets stood at $124 billion at end 2023 as net profit jumped to $2.2 billion from $1.4 billion, for a return on average assets of 1.8%. The firm’s overall financial profile is solid, supported by good capitalization and liquidity. Its Islamic banking products and services cover commercial, retail and corporate banking as well as real estate, trade finance and investments.

During 2023, KFH launched Tam Digital Bank, Kuwait’s first shariah-compliant digital bank. It was also at the forefront in launching several digital services, including detecting biometric facial features in branches, instant printing for all types of cards, its Zaheb digital platform and KFHonline for corporates, digital portfolios to facilitate e-payment and a D-POS device for instant opening of bank accounts.

Best Islamic Corporate Bank—Kuwait Finance House

KFH maintains a leading position in Islamic corporate banking. Last year, the group successfully led and arranged sukuk issuances exceeding $4 billion for a diversified issuer clientele, embracing sovereign and corporate offerings across multiple sectors and geographies. Highlights included a $3 billion club financing deal for Saudi Electricity Company and a syndicated transaction for Ras Laffan Petrochemicals Company totaling $4.4 billion. KFH also participated in a $1.6 billion syndicated transaction for Dubai Aerospace Enterprise Funding.

KFH Treasury chalked up $38 billion worth of foreign exchange transactions in 2023 and onboarded several new corporate clients; the bank is also active in FX spot and Islamic derivatives hedging instruments. The group treasury executed sukuk transactions worth more than $13 billion during the year. 

Best Islamic Retail Bank—Al Rajhi BaNK

Al Rajhi Bank is a pioneer in provision of Islamic retail banking services, offering significant expertise in shariah consumer banking.  It takes the award for Best Islamic Retail Bank based on its strong retail performance and innovation and the size of its retail franchise. 

Al Rajhi is the world’s largest Islamic bank globally, with $216 billion in assets and equity of $28 billion. Along with its base in Saudi Arabia, it has operations in Jordan, Kuwait and Malaysia. It remains a profitable institution, with a 2.1% return on assets and 16.1% return on equity. It dominates the retail financing market in Saudi Arabia with a 41% share, handling over 800 million transactions and the largest share of remittances per month. Also rolled out in 2023 were new mobile applications, giving non-Al Rajhi Bank customers the ability to access its digital services as guests.

Best Islamic Bank for CSR—Boubyan Bank

Boubyan Bank distinguishes itself for the breadth of its commitment to corporate social responsibility; rather than applying a set of CSR performance standards to one or two departments or branches, all parts of the bank are considered key participants.

Areas of focus in 2023 included significant staff training, human capital management, customer advocacy, client empowerment, and the safety and wellbeing of all stakeholders. Social initiatives include youth development, female-focused product development, and embedding of social KPIs in employee performance evaluations. The bank is active in humanitarian and charitable causes, including initiatives such as the Noor Boubyan Campaign, which has succeeded in restoring the eyesight of thousands in many African countries. Domestically, the bank runs a successful e-waste collection operation.

Best Islamic Bank for ESG—Abu Dhabi Islamic Bank

ADIB maintained its MSCI ESG (environmental, social and governance) rating of “A” in 2023, retained its position on the MSCI ESG Leaders index, and earned an upgrade to its Sustainalytics ESG risk score. As one of the world’s leading Islamic financial institutions, it continued to play a crucial role in boosting sustainable finance in the Persian Gulf region, facilitating some $1.5 billion of sustainable projects in 2023. 

Best Islamic Private Bank—Dukhan Bank

Qatar’s Dukhan Bank’s Private Banking proposition emphasizes innovative customer-focused services supported by robust technology across an end-to-end portfolio of financing, banking and investment products and services for high-net-worth and ultrahigh-net-worth individuals. The bank’s focus on enhanced digital transformation is targeted particularly at capturing a larger and younger generation of clients.

Wealth management assets grew by 17% last year and helped Dukhan increase its market share in the local market, where it is the third-largest bank.  It launched online/mobile access modules for the wealth management last year and continued to enhance product sourcing capabilities.

Best Sukuk Bank—CIMB Islamic Bank

Leading the league tables for both global sukuk and ASEAN local currency bonds, Malaysia’s CIMB is also actively integrating sustainability practices into its business. The bank commands a nearly 13% market share in global sukuk and a 28% market share in ringgit sukuk. Last year, it successfully launched the largest US-dollar sukuk issue by an Asian sovereign. It also achieved the tightest five- and 10-year spreads at issuance by an ASEAN sovereign for the second year in a row. 

CIMB also led the pack as the largest Malaysian ringgit sukuk arranger in 2023. Notable issues in which it played a role included a $2 billion global sukuk for the Republic of Indonesia that included a $1 billion green tranche; a $750 million sukuk issued by Khazanah Nasional that was over six times oversubscribed; and a RM1.5 billion state guaranteed sukuk for Johor Corporation, the first-ever state-guaranteed transaction in the Malaysian ringgit debt capital market.

Best Islamic Investment Bank—GFH Financial Group

Based in Bahrain, GFH Financial Group stands out for its product development and placement, registering a string of successful deals in 2023, including a placement for the Healian regional health-care platform. Funds include GCC Logistics and US Opportunistic, the latter focused on inflation-hedged commercial real estate, REITs and structured equity in the US.

GFH expanded its global presence significantly last year. Its acquisition of Big Sky Asset Management, a major player in US health-care real estate, exemplifies GFH’s thematic focus on attractive and defensive markets. Big Sky marked the third international asset manager that GFH has acquired in recent years, after Roebuck Asset Management and SQ Asset Management, which capitalize on strong opportunities in European logistics and US student housing, respectively.

GFH also partnered last year with UK-based investment manager Equitix to invest in Aurora Infrastructure, which operates two major electricity networks in Finland. The investment was in line with several global new-energy-economy megatrends, including electrification, national grid infrastructure revitalization, and energy diversification. Complementing its Aurora Infrastructure stake, GFH co-invested in Saber Power, a profitable, high-growth supplier of electrical infrastructure services based in Houston.

Best Islamic Fund Manager—Sidra Capital

A leading alternative Shariah-compliant asset manager, Saudi Arabia’s Sidra Capital launched a series of new enterprises in 2023, including its maiden Singapore-domiciled variable capital company, Sidra Asian Opportunities. The VCC focuses on facilitating cross-border commodity supply chains via fully funded irrevocable letters of credit, specifically targeting high demand for solid fuel produced by select Indonesian producers.

At home, Sidra Capital specializes in creating innovative private-finance investment solutions; its portfolio includes a range of Shariah-compliant private finance investment products. Last year, it acquired the Eurocap industrial and trade park in northern France, a property adjacent to the Eurotunnel rail terminus and comprising 23 buildings on a 130-acre site, providing a wide range of property options for occupiers. Sidra also acquired London Square, an office building in Guildford, UK, for just over £40 million.

Best Islamic SME Bank—Maybank Islamic

Malaysia’s Maybank Islamic offers a “halal ecosystem” for small to midsize enterprises (SMEs), delivered through a digital, values-driven platform. It supports business growth via Islamic supply chain solutions that meet the needs of principal customers as well as their suppliers and buyers. The bank launched a Digital Supplier Financing Program in the fall to facilitate financing access for suppliers in the ecosystem and promote business growth abroad.

Maybank’s SME financing, as a result, has grown solidly over the past few years. Income uplift has occurred through Halal4wards, a Shariah-compliant financial solution that bundles product solutions for SME and business banking customers within targeted halal sectors. The bank also recently introduced a bespoke term fund for nonretail clients.

Best Islamic Asset Manager—Al Rajhi Capital

Al Rajhi Capital has exploited its link with parent company Al Rajhi Bank to establish a dominant position by value and market share as a trader in Saudi Arabia’s main stock market (Tadawul) as well as its alternative market (Nomu). In 2023, Tadawul chose it as the first market maker in the main stock market.

Al Rajhi REIT Fund made the largest secondary offering in Saudi Arabia last year, and its parent also plays a crucial role in issuance of sustainable Sukuk bonds. It offers a range of innovative investment solutions across all major asset classes including equities, real estate, money market, fixed income and multi-asset. The firm is also expanding its global outreach, which now encompasses 38 markets worldwide.

Best Islamic Trade Finance Provider—Maybank Islamic

Maybank Islamic’s trade finance business provides leading products for both SME and corporate trade finance clients. This includes both import- and export-focused products, from standard letters of credit to onshore foreign currency financing and export credit refinancing. The bank has achieved good expansion: Islamic financing grew 7% last year and trade financing volumes further expanded. Maybank Islamic has formulated its own Sustainable Product Framework to enable greater development of green, social and sustainable products; it is committed to mobilizing around $16 billion in sustainable finance by 2025, of which trade finance will be an important element.

Best Islamic Takaful—Etiqa Takaful Berhad

A unit of Maybank Group, Etiqa Islamic Berhad offers a range of general and family Takaful plans across multiple distribution channels in Malaysia, Singapore, the Philippines, Indonesia and Cambodia. It reports over 11 million customers, gross written premium assets of around $2 billion and total assets of $11 billion. Last year, Etiqa became the first insurance and Takaful company in Malaysia to become a signatory of the UN Principles for Sustainable Insurance.

Best Islamic Project Finance Provider—Kuwait Finance House

Locally, KFH acts as lead arranger on many syndicated project finance transactions, but it continues to expand its trade relations with core corporate clients in all sectors and throughout the MENA region for both SMEs and large companies. Besides last year’s club financing for Saudi Electricity Company, other major deals that KFH participated in included a $4 billion-plus syndicated offer for Ras Laffan Petrochemicals Company that will fund construction, development and operations of a petrochemicals project in Qatar and a $1.6 billion syndicated transaction for Dubai Aerospace Enterprise Funding.

Regional Winners

Asia—Maybank Islamic

With $73 billion in assets and a financing portfolio of $56 billion, Maybank Islamic is the largest Islamic bank in ASEAN and the fifth-biggest globally. With a strong capital base and good returns, it is frequently a first mover in bringing innovative Shariah-compliant financial products to the market. In its home market of Malaysia, it controls one-third of Islamic assets and 29% of the important Malaysian Islamic banking market. Its activities extend across other Asian countries; it ranks fourth in the global sukuk market, and its share of financing in Maybank Group’s consolidated loan portfolio continues to rise.

Middle East—Al Rajhi Bank

A key player in Islamic banking, Al Rajhi Bank has posted consistently strong performance, supported by good management, a clear strategy and leading-edge technology. The largest Islamic bank worldwide by both assets and market capitalization and with a strong brand image, Al Rajhi ranks No. 1 in Saudi Arabia for remittances, transactions and customers. It also offers the largest distribution network in the Middle East, ranked by number of branches, POS, ATMs and remittance centers.

Country Winners

Bahrain—Bank ABC Islamic

A subsidiary of Arab Banking Corporation, Bank ABC Islamic provides a wide portfolio of Shariah-compliant products and services, supported by good technology and the backing of its parent. Bank ABC Islamic caters to retail customers through alburaq’—an exclusively digital Islamic banking portal—that ABC made available last year through its ila Bank subsidiary.

Brunei Darussalam—Bank Islam Brunei Darussalam Berhad  

Bank Islam Brunei Darussalam is the sultanate’s largest Islamic bank, with $9 billion in assets, good capital backing and a wide product range, including its mobile banking NexGen Wallet and the first Shariah-compliant ESG mutual fund in Brunei.

Egypt—Abu Dhabi Islamic Bank Egypt   

A domestic Islamic finance market leader, Abu Dhabi Islamic Bank Egypt continued to build its franchise and market position in 2023, posting a 31% rise in net profit to $152 million. In addition to mainstream Islamic financing, ADIB Egypt, which has $5.2 billion in assets, offers investment banking, leasing, asset management and microfinance.

Indonesia—Bank Syariah Indonesia

The country’s largest Islamic bank, and its seventh-largest bank overall with assets of $23 billion, Bank Syariah Indonesia boosted its balance sheet strongly in 2023, led by Islamic financing. The field is growing rapidly in the Muslim-majority nation, and BSI has established itself as a strong competitor to the country’s conventional domestic banks.

Jordan—Jordan Islamic Bank

Jordan Islamic Bank, which already controls nearly half of the kingdom’s Islamic banking market, boasts a growing 9% of Jordan’s total banking sector assets. Loans and deposits grew last year, along with accounts, supported by a high capital adequacy ratio. Islami Digital, JIB’s digital self-service offering, expanded in 2023, and the bank carried out further development and modernization in areas of banking technology. JIB continued to expand its menu of new services through its channels and platforms, including via mobile phone.

Kuwait—Boubyan Bank  

Focused on retail banking and technology, Boubyan Bank is increasing its market share against both conventional and Islamic banks in Kuwait, aided by its focus on creating innovative digital products and services for its customers. Widely regarded as an innovator with a strong brand and excellent customer service, it has established itself as a leader in catering to the under-30 bracket. That helped the $27 billion-in-assets institution to boost net profits by 44% to $254 million last year. It continues to look for new ways to tap its information resources; Boubyan’s data group in 2023 augmented its ability to merge external and internal customer data through the App Store sentiment analysis dashboard, leveraging customer feedback from In-App, iOS Store, and Google Play Store. 

Malaysia—Maybank Islamic Berhad

Maybank Islamic is Malaysia’s flagship Islamic institution, with a market share of 30% in assets and loans. Product innovation is strong, including its “myImpact Card”—the first card in the market that enables a tangible, positive impact through responsible and ESG-friendly spending. It also incorporates a built-in Carbon Footprint tracker and provides the ability to offset carbon footprints. It also launched Malaysia’s first EV financing solution. In nearly all Islamic financing areas, it holds a dominant market position.

Morocco—Umnia Bank

Established in 2017, Umnia was Morocco’s first Islamic bank. Shareholders include Qatar International Islamic Bank, CIH Bank (Credit Immobilier et Hotelier) and CDG (Caisse de depot et de gestion). With 50 branches, it remains the country’s largest Islamic banking network as well as its largest by total assets, with a 50% market share in financings and a 40% market share in deposits. Payment apps were introduced last year, including Apple Pay.

Oman—Bank Nizwa 

The fastest-growing Islamic bank in Oman, Bank Nizwa’s expansion in retail and corporate banking is supported by product innovation and its use of electronic channels. The bank recently launched a suite of Islamic green financing solutions for home, automotive and personal finance. Bank Nizwa also enhanced its retail platform by teaming up with Avanza Unison Ace and tapping its state-of-the-art digital platform. Net profit increased to $44 million in 2023 and total assets reached $4.1 billion, giving Bank Nizwa an approximately 25% share of the sultanate’s Islamic banking sector.

Pakistan—Meezan Bank  

With an asset base of $11 billion, Meezan is Pakistan’s largest Islamic bank. Its range of products and services targeted at the retail sector and mid-tier and premium banking customers helped it to nearly double its net profit last year to $306 million.

Qatar—Dukhan Bank

The product of the successful merger of Barwa Bank and International Bank of Qatar in 2019, Dukhan is enjoying growth in assets, customers and net profit with help from good infrastructure and technology-led solutions. Dukhan recently launched its “Himyan” prepaid card, the first Qatari prepaid card, enabling customers to make secure payments. Dukhan also unveiled Apple Pay, Samsung Wallet and Google Pay services, operating via its contactless payment platform. Total assets at year-end stood at $31 billion, with net profit of $358 million.

Saudi Arabia—Al Rajhi Bank

A pioneer in Islamic retail banking services, Al Rajhi has substantial expertise in Shariah banking—including a strong home mortgage financing franchise—supported by innovative technology. It remains a profitable bank with good margins, strong risk metrics and high capitalization.

Sri Lanka—Amana Bank

Founded in 2009, Amana Bank was the first licensed commercial bank in Sri Lanka to conduct all its operations under the principles of Islamic banking. Today, while still a small player in the island’s financial landscape, it is growing on the back of a full spectrum of retail, SME and corporate banking, and treasury and trade finance services.

Tunisia—Al Baraka Bank Tunisia

A unit of Bahrain’s Al Baraka Banking Group, Al Baraka Bank Tunisia offers a range of Islamic banking products and services in the North African country, including the Masken Al Baraka (a savings product for home financing), Sayarat Al Baraka (car financing), and Yasmine Pack (designed for Tunisians residing abroad).

Turkey—Kuveyt Türk Katilim Bankasi

The largest Islamic bank in Turkey with $24 billion in assets and $1.8 billion in equity, KTKB operates throughout the country, supported by a relatively large branch network. An office in Bahrain serves as a bridge between Turkey and the Gulf Cooperation Council states, supported by parent bank KFH. KTKB also operates an Islamic bank in Germany under the label KT Bank. Net profit rose by 37% in 2023 to $1.3 billion and return on average assets was a very high 5.2%.

United Arab Emirates—Abu Dhabi Islamic Bank

ADIB’s digital drive enabled it to grow market share by attracting over 200,000 new customers last year, helping boost total assets to $53 billion, and digital remains at the heart of the bank’s 2025 strategy. The bank’s contingent of digitally active customers increased steadily in 2023, and currently 80% are digitally active. Its mobile app is very well regarded, and 50 new features were added last year.

All of which helped ADIB post robust 2023 financial results. Net profit jumped 45% to $1.4 billion on the back of strong revenue growth, an increase in transaction volumes and improved margins, while return on equity reached a very high 27%.