Bahrain’s Islamic Finance Assets Set to Pass $100 Billion by 2027, Fitch Says

Fitch Ratings expects Bahrain’s Islamic finance industry to surpass $100 billion in assets by 2027, according to a research note the agency published this month, as Islamic banks continue to take market share from their conventional counterparts in the kingdom.

Bahrain’s total Islamic finance industry stood at approximately $94 billion at the end of the first half of 2026, Fitch estimated, made up of Islamic banking (75% of the total), outstanding sukuk (22%), and the remainder in Sharia-compliant collective investment undertakings and takaful. Outstanding sukuk alone surpassed $20 billion in the first half of the year, per Fitch.

Islamic Banks Are Outgrowing Conventional Rivals

The forecast rests on a widening gap in growth rates. Islamic banks’ total assets grew 12% year-over-year as of end-May 2026, Fitch said, while conventional bank assets in Bahrain fell 0.6% over the same period. That divergence has pushed Islamic banks’ share of the kingdom’s domestic banking sector assets to about 42% at end-May 2026, up from 40.7% a year earlier, according to Fitch. Other segments of the industry grew even faster: sukuk expanded 16% year-over-year, Sharia-compliant collective investment undertakings grew 24.5%, and the takaful sector grew 28%, Fitch reported.

Fitch attributed the sector’s momentum to rising public demand for Sharia-compliant products, a supportive regulatory environment, broadly stable operating conditions, and sukuk’s continued role as a primary funding tool for the Bahraini sovereign.

A Regional Pattern, Not an Isolated Case

Bahrain’s trajectory mirrors a broader pull of banking assets toward Sharia-compliant products across the Gulf. The Halal Times has previously reported on Islamic banking’s market-share gains in Oman and on Dubai’s push to position itself as a hub for the industry. Within that field, Bahrain’s case rests on the regulatory environment Fitch cited as a driver of the sector’s growth, alongside standard-setting bodies such as the IFSB and AAOIFI that convened in the kingdom’s orbit this month.

Central Bank Reaffirms Its Role at IFSB Meetings

The forecast landed the same week the Central Bank of Bahrain hosted the Islamic Financial Services Board’s Annual Meetings 2026, held virtually and comprising the 48th IFSB Council Meeting and 24th General Assembly. Nearly 100 high-level participants attended, according to a CBB statement.

CBB Governor Khalid Humaidan, who currently chairs the IFSB Council, told the gathering that Islamic finance has ‘become an integral part of financial systems worldwide’ and reaffirmed ‘Bahrain’s commitment to supporting the IFSB’s mandate and contributing to the development of Islamic finance’ through ‘a regulatory environment that encourages innovation while safeguarding stability and sustainable growth.’ Humaidan also pointed to Bahrain’s ‘pioneering role over the decades in the development of Islamic finance.’

Global Islamic financial assets reached approximately $4.4 trillion in 2025, according to the IFSB’s latest Islamic Financial Stability Report cited at the meetings. Participants at the gathering focused on strengthening cooperation across Islamic banking, takaful, and capital markets, and on aligning national regulatory frameworks with international standards set by bodies such as the IFSB and AAOIFI.

What to Watch

Fitch’s $100 billion threshold implies Bahrain’s Islamic finance industry needs to add roughly $6 billion in assets from its mid-2026 base to hit the mark by 2027, a pace broadly consistent with the growth rates the agency has already logged this year. Sukuk issuance, which Fitch flagged as a key sovereign funding tool, will be one signal to watch: outstanding sukuk already topped $20 billion in the first half of 2026 and grew 16% year-over-year. The other is the market-share gap itself. If Islamic banks keep growing assets at 12% annually while conventional banks contract, as they did through May 2026, the 42% domestic share Fitch measured this year is likely to keep climbing before 2027 arrives. The next concrete data points are Bahrain’s full-year 2026 banking sector figures and any updated market-share readings the CBB publishes.