LSEG (London Stock Exchange Group), in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD), a member of the Islamic Development Bank (IsDB) Group, has announced the release of the 2025 Islamic Finance Development Indicator (IFDI) Report. This comprehensive report assesses the progress of the Islamic finance industry across 140 countries, positioning itself as a global benchmark for industry development.
According to the 2025 report, Malaysia has retained its position as the leading Islamic finance market globally, followed by Saudi Arabia and the United Arab Emirates. These countries continue to demonstrate strong government support, strategic investments, and robust policy frameworks that are fostering dynamic Islamic finance ecosystems. The top 10 list also includes Indonesia, Pakistan, Kuwait, Bahrain, Iran, Qatar, Türkiye, and Bangladesh, reflecting the sector’s wide-reaching growth and diversity.
One of the most notable findings in this year’s report is the strength of governance, which received the highest average score globally. This was largely due to improvements in regulatory frameworks, transparency, and disclosure standards – all of which are essential for building investor trust and market resilience.
The future of Islamic finance appears highly promising. Based on current growth trends, global Islamic finance assets are projected to reach US$9.7 trillion by 2029, growing at an average annual rate of 10%. Mustafa Adil, Head of Islamic Finance at LSEG, noted that the industry’s evolution will be increasingly driven by cross-border collaboration, regulatory innovation, and national strategies. He emphasized that Islamic finance is becoming an integral part of the global financial system, playing a vital role in promoting financial inclusion and sustainable development.
Commenting on the findings, Khalid Khalafalla, Acting CEO of ICD, stated that the IFDI remains a valuable tool for both policymakers and market participants. He highlighted that the indicator reflects the long-term efforts of governments and institutions to build inclusive, resilient, and ethically driven financial systems. These goals align closely with ICD’s mission to support private sector development and advance Islamic finance across its member countries.
The report also highlighted the resilience of the global sukuk market, which surpassed US$1 trillion in outstanding value in 2024, despite challenging macroeconomic conditions. Total sukuk issuance reached US$254.3 billion, an 11% increase year-on-year. In addition, the growing demand for ethical and green finance was reflected in the surge of ESG (Environmental, Social, and Governance) sukuk, which exceeded US$50 billion in outstanding value. New ESG sukuk issuances totaled US$15.4 billion, demonstrating the sector’s deepening integration with sustainable finance principles.
Islamic banking continues to dominate the Islamic finance landscape, accounting for 72% of the industry’s total assets. The sector has expanded significantly, now operating in 84 markets globally. Particularly notable is its momentum in sub-Saharan Africa, where 104 Islamic banks and windows are now active across 28 countries. The three largest markets – Iran, Saudi Arabia, and Malaysia – collectively hold US$4.3 trillion, which represents 72% of total global Islamic finance assets.
The Islamic Finance Development Indicator (IFDI) is a composite, weighted index that measures industry progress across five core dimensions: Financial Performance, Governance, Sustainability, Awareness, and Knowledge. It offers a comprehensive view of the industry’s alignment with Islamic principles and serves as a key resource for identifying growth opportunities and regulatory reform needs.
This year’s IFDI report confirms that Islamic finance is not only expanding rapidly but also becoming more mainstream, sustainable, and globally interconnected.