Safest Islamic Banks In The GCC 2018

Islamic finance is expanding, though its strength is built in the Gulf.

Islamic finance is growing fast in Middle Eastern countries as well as globally. Some 1,400 institutions now practice Islamic finance, and assets grew to a total of $2.4 trillion in 2017, with forecasts estimating $3.8 trillion by 2022.

Banks in this segment abide by shariah law, which forbids payment or collection of interest. Debt issuance must be backed by underlying assets, and transactions cannot involve derivatives. The issuance of sukuk bonds, which are structured to comply with shariah, rose 45% to $98 billion in 2017, with $9 billion in corporate and sovereign sukuk bonds emanating from Saudi Arabia alone—the largest total to date from any single nation.

As oil revenue has declined in recent years, many Gulf governments issued more sukuk bonds to close funding gaps. However, new deals are forecast to decline to around $70 billion to $80 billion in 2018 as recent issuance improves liquidity, higher oil prices buoy state revenues and the higher cost of borrowing due to rising interest rates dampens the incentive for issuers.

Britain was the first Western government to sell an Islamic bond, in 2014, and this segment of Islamic finance continues to expand globally. Standardization of shariah compliance—interpreted by various councils—may contribute to further growth. Blockchain technology may help streamline document automation and standardization, reduce transaction costs and make it easier to negotiate legal complexities, including enforcement of contract terms.

This year, Kuwait Finance House nudges Al Hilal Bank out of the top spot. Fitch’s downgrade of Qatar, and consequently of Qatari banks, resulted in Qatar Islamic Bank, Barwa Bank, and Qatar International Islamic Bank sliding a bit in our 2018 rankings.

The 13 banks included in our 2018 ranking of the Safest Islamic Banks represent institutions that conduct only shariah-compliant finance. Eligibility criteria are consistent with our overall methodology, which limits candidates to the world’s largest 500 banks that are not wholly owned by other banks, and requires a minimum of two agency ratings. We also include a ranking of nine additional banks that received ratings from only one agency and thus are not eligible for inclusion in the broader ranking.

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Safest Banks in the GCC (GCC Banks with Two Ratings)

Rank	Company Name	Country	Fitch	Moody’s	S&P	Total Score	Assets ($ Mil.)	Statement Date
1	Kuwait Finance House	Kuwait	A+	A1	NR	17	57,524	31-Dec-2017
2	Al Hilal Bank	UAE	A+	A1	NR	17	12,195	31-Dec-2017
3	Abu Dhabi Islamic Bank	UAE	A+	A2	NR	15.5	33,568	31-Dec-2017
4	Ahli United Bank	Kuwait	A+	A2	NR	15.5	12,148	31-Dec-2017
5	Qatar Islamic Bank	Qatar	A	A1	A—	15	41,213	31-Dec-2017
6	Barwa Bank	Qatar	A	A2	NR	14	13,362	31-Dec-2017
7	Boubyan Bank	Kuwait	A+	A3	NR	14	13,158	31-Dec-2017
8	Qatar International Islamic Bank	Qatar	A	A2	NR	14	12,807	31-Dec-2017
9	Al Rajhi Bank	Saudi Arabia	A—	A1	BBB+	13	91,498	31-Dec-2017
10	Dubai Islamic Bank	UAE	A	A3	NR	12.5	56,457	31-Dec-2017
11	Warba Bank	Kuwait	A+	Baa2	NR	11	5,876	31-Dec-2017
12	Sharjah Islamic Bank	UAE	BBB+	A3	BBB+	10	10,426	31-Dec-2017
13	Bank Aljazira	Saudi Arabia	BBB+	Baa1	NR	8	18,210	31-Dec-2017

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Safest Banks in the GCC (GCC Banks with One Rating)

Rank	Company Name	Country	Fitch	Moody’s	S&P	Total Score	Assets ($ Mil.)	Statement Date
1	Masraf Al Rayan	Qatar	NR	A1	NR	N/A	28,267	31-Dec-2017
2	Kuwait International Bank	Kuwait	A+	NR	NR	N/A	6,330	31-Dec-2017
3	Alinma Bank	Saudi Arabia	BBB+	NR	NR	N/A	30,651	31-Dec-2017
4	Bank AlBilad	Saudi Arabia	NR	A3	NR	N/A	16,854	31-Dec-2017
5	Noor Bank	UAE	A—	NR	NR	N/A	11,616	31-Dec-2017
6	Al Baraka Banking Group	Bahrain	NR	NR	BB	N/A	25,453	31-Dec-2017
7	Bank Nizwa	Oman	NR	Ba2	NR	N/A	1,809	31-Dec-2017
8	Bahrain Islamic Bank	Bahrain	NR	B1	NR	N/A	3,258	31-Dec-2017
9	Khaleeji Commercial Bank	Bahrain	NR	B1	NR	N/A	2,082	31-Dec-2017

Asset figures from Fitch, Moody’s, and company reports. Ratings valid as of Aug. 17, 2018.