According to the Kuwaiti Islamic bank, the service is integrated into its mobile banking application. It is intended to simplify routine transactions, improve operational efficiency, and provide automated digital banking support around the clock.

The launch takes Warba’s use of AI beyond customer information and financial advice towards conversational banking, in which an AI system can interpret what a customer wants, and initiate an eligible transaction within the bank’s established security and control framework.

Bdr AI supports Arabic, including conversational Kuwaiti Arabic, as well as English. Customers can communicate through voice or text rather than navigating multiple menus or manually entering transaction details.

Anwar Badr Al-Ghaith, Deputy Chief Executive Officer for Digital Transformation and Operations at Warba Bank, said, ”The launch of Bdr AI expands how customers interact with the bank’s digital services by providing a faster and more flexible way to complete supported transactions.”

He added that continued investment in scalable digital infrastructure remains a priority as the bank seeks to improve efficiency while maintaining security and control across its digital channels.

The development comes as Warba expands its engagement with the international digital economy.

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However, as per the ratings agency, gaps remain relative to conventional banks, more so in countries where Islamic banks remain niche and developing. The ongoing Iran war has also reinforced the importance of effective Islamic liquidity management.

“Many GCC Islamic banks have expanded their funding toolkits through certificates of deposits, Islamic syndications, and private placements. Islamic repurchase agreement (repo) is gaining momentum in several markets, supported by Islamic banks’ holdings of sovereign sukuk which have expanded across the GCC and ASEAN in recent years and serve as eligible repo collateral,” said Bashar Al Natoor, Managing Director, Global Head of Islamic Finance at Fitch.

“However, lack of standardization remains a challenge. The International Islamic Financial Market and the International Capital Market Association announced plans to develop standardized Islamic repo documentation, which could reduce operational costs and sharia-related complexities. Fitch also notes the first Islamic repo transaction executed on blockchain by Saudi Awwal Bank (A-/Stable), he said further.

Central bank Islamic liquidity facilities are being offered in most core markets, including Gulf countries, Malaysia, Turkey, Indonesia, Pakistan, Bangladesh, and Tunisia. Since the beginning of the Iran war, some GCC central banks have also introduced stimulus packages and loan-deferral programs, including those for Islamic banks. However, these sharia-compliant facilities, which could help avert a liquidity crunch, are lacking in markets such as Morocco, Egypt, and Kazakhstan.

“Islamic interbank markets are shallower than conventional markets, particularly in countries with few Islamic banks. Differences in sharia contract acceptance can also create obstacles. For example, in Indonesia, where regulators do not permit tawarruq-based contracts, Islamic banks face limitations in conducting interbank transactions with GCC Islamic banks that rely on tawarruq. In some markets, such as Oman, regulations prevent Islamic banks from placing funds with conventional banks, limiting counterparty choice. Bangladesh’s central bank plans to launch a dedicated Islamic interbank money market amid market gaps,” said Saif Shawqi, CFA, FRM, Fitch’s Director of Islamic Finance.

Wider sovereign sukuk availability, as per Shawqi, has granted Islamic banks avenues to invest excess liquidity in high-quality liquid assets.

“Sukuk accounted for significant shares of the debt capital market outstanding in the GCC (42%), Malaysia (59%), Indonesia (18%), and Türkiye (8%) as of end-1H26. Markets such as Egypt, Bangladesh, and Algeria are also progressing and recently began issuing sukuk. The government of Pakistan’s hybrid-sukuk structure adoption in 2026 could enable more sukuk supply,” he remarked further.

While medium-term sukuk are more widely available, short-term sukuk, according to Fitch, have remained absent in most Gulf countries, along with Jordan, Nigeria, and other markets, constraining Islamic banks’ liquidity-management options.

“Only 3% of Fitch-rated sukuk have tenors of up to one year, mainly International Islamic Liquidity Management 2 SA’s asset-backed commercial paper program (F1sf),” Al Natoor said.

“In some markets like Jordan, Islamic banks do not earn any return on balances held with the central bank. The Bank of England expanded its Alternative Liquidity Facility size in 2025 to support UK Islamic banks’ liquidity management,” he added further.

As per Fitch’s Islamic Finance Survey 2026, managing liquidity and funding constraints was ranked the most significant challenge that Islamic financial institutions were dealing with.

According to Redmond Ramsdale, Senior Director and Head of Fitch’s Middle East Banks Ratings and Islamic Banking, weak access to liquidity due to shallow markets or regulatory policies is likely to have a negative effect on the agency’s assessment of an Islamic bank’s funding and liquidity and “Viability Rating.”

“Alternatively, strong access to liquidity, for example, on deep and liquid repo markets (including from official sources), could be supportive for the credit profile,” Ramsdale said.

Talking about the bigger picture, about 62% of Fitch-rated Islamic banks have remained investment-grade as of H1 2026, with around 85% of them carrying Stable Outlooks (excluding national ratings).

“GCC Islamic banks are well buffered if the Iran war remains contained, with sound financial metrics going into the war, ample capital and liquidity buffers, and sound asset quality,” the Fitch analysts concluded.

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Taking note of Islamic banking’s rise at the global level, the ratings agency also said that the sector represented about 76% of the Gulf major’s banking assets.

From a retail-led model, S&P found Islamic banks expanding into corporate, project finance, and small and midsize enterprises (SMEs) in order to support the ongoing diversification efforts and mega-projects.

“The development of Islamic finance is part of Saudi Arabia’s Vision 2030 objectives and broader capital market reforms, with the country being one of the largest sukuk issuers globally,” S&P said.

“Over the past five years, the combined total assets of the four major Islamic banks more than doubled (2.1 times), outpacing the six largest conventional peers (1.8 times),” it noted further.

S&P also said that since 2018, Islamic banking’s growth in the Gulf nation has been driven primarily by the rapid expansion of Sharia-compliant residential mortgage financing.

“Islamic banks have also increasingly expanded into corporate financing, linked to the development of non-oil sectors, and large-scale government and infrastructure projects,” it added.

“SME financing has also gained traction, supported by the Kafalah guarantee program, with SMEs now accounting for more than 11% of total credit. At year-end 2025, Saudi Islamic banks’ loan books were largely exposed to the retail segment (about 53%), followed by corporates (38%), S&P remarked.

“This large share reflects mainly Al Rajhi’s dominant retail franchise, while peers (in particular Alinma) maintain a more corporate-focused profile,” according to S&P.

While talking about the strong influence Islamic banks having in Saudi’s retail segment, the ratings agency said, “Customer deposits accounted for approximately 87% of Islamic banks’ funding as of March 31, 2026, compared to 82% for conventional banks. Wholesale funding remains contained at about 14%, compared with 21% for conventional banks, despite Islamic banks’ faster expansion.”

Profitability, on the other hand, remains broadly in line with that of conventional peers, based on both types of banks having a return on average assets of about 1.8% at the end of March.

“Islamic banks’ net intermediation margin (NIM) reached about 2.8% at year-end 2025. Concerning asset quality, the rating company said the average nonperforming financing (NPF) ratio across both types of banks was about 0.95% at year-end 2025,” S&P said.

Direct exposure to cyclical real estate and construction is estimated at less than 10% of loans for Islamic banks.

S&P expects Islamic banks, in the coming days, to focus on balancing growth with capital requirements, given tighter funding conditions and the relatively lower availability of Islamic liquidity.

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As per the rating agency’s estimates, the industry was worth about USD 94 billion by the end of the first half of 2026, with Islamic banking accounting for 75% of that total and sukuk outstanding making up a further 22%. Sharia-compliant collective investment undertakings (CIUs) and takaful companies comprised the remainder.

Islamic banks have been gaining ground on their conventional counterparts, now holding around 42% of domestic banking assets, according to Fitch. Growth is being underpinned by strong public demand, a supportive regulatory environment, and broadly stable operating conditions.

“Sukuk’s share of Bahrain’s debt capital market climbed to 37% by the end of the first half of 2026, up from 35% a year earlier. Outstanding sukuk surpassed $20 billion in the period, a 16% annual rise that outstripped growth in conventional bonds. “We forecast government debt, including sukuk, to continue to grow. The net asset value of Bahrain’s sharia-compliant CIUs reached USD 2.5 billion by the end of the first quarter of 2026, up 24.5% year on year,” Fitch said.

The forecast comes even as the broader sukuk market has had a rougher year. Fitch noted separately that global sukuk issuance fell 36% year on year in the first half of 2026 across the GCC, Malaysia, Indonesia, Turkiye and Pakistan, to USD 125 billion, as volatility and rising yields tied to the Iran war weighed on activity. Global sukuk outstanding nonetheless grew 11% to USD 1.1 trillion, with the trajectory for the rest of the year hinging on whether the ceasefire holds.

In Bahrain specifically, Fitch said the Kingdom’s banking system faces limited immediate credit risk from the conflict. The Central Bank of Bahrain has already rolled out a loan deferral and liquidity support program covering all banks in the country.

The sector is also undergoing consolidation, with authorities encouraging mergers to address a market that remains highly concentrated. Fitch said this presents a challenge for both Islamic and conventional lenders, many of which are competing for a limited pool of deposits and lending opportunities in a small domestic economy.

Bahrain continues to host key Islamic finance standard-setting bodies, including the Accounting and Auditing Organization for Islamic Financial Institutions and the International Islamic Financial Market, reinforcing its role as a regional hub even as growth increasingly comes from sukuk issuance rather than balance-sheet expansion alone.

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It was followed immediately by the UAE Ministry of Finance, which got its inaugural “Sovereign Retail T-Sukuk Programme” successfully launched and listed at the exchange.

The Arab Energy Fund, which shares longstanding engagement with Nasdaq Dubai by contributing heavily to the latter’s Sukuk market, got its Sharia-compliant financial certificate issued under TAEF’s Trust Certificate Issuance Programme through APICORP Sukuk Limited. The Sukuk comprises USD 500 million in trust certificates due in 2031.

The senior unsecured issuance carries a profit rate of 4.686% and was priced at a spread of 70 basis points over SOFR.

Arab Energy Fund’s issuance attracted orders exceeding USD 900 million and was 2x oversubscribed, enabling pricing to tighten from initial guidance. The transaction saw strong and well-diversified demand across geographies and investor types, with high-profile institutions such as central banks, sovereigns, supranational institutions, and agencies (SSAs) taking part in the process, underscoring the strength of TAEF’s credit profile and market positioning.

Stating that “Trust Certificates” are rated Aa2 by Moody’s and AA+ by Fitch, reflecting Arab Energy Fund’s strong credit profile, Vicky Bhatia, the entity’s chief financial officer (CFO), said, “This transaction shows both the strength of our credit profile and our ability to work through difficult market conditions.” Achieving pricing at SOFR+70bps with no new issue premium, despite the challenging market, demonstrates the confidence investors have in the Arab Energy Fund and its mission.”

Hamed Ali, CEO of Nasdaq Dubai and DFM, said, “The Arab Energy Fund’s latest Sukuk listing adds to the depth of Nasdaq Dubai’s Sukuk market and reflects continued activity from supranational issuers in regional debt capital markets. As the Fund’s fourth listing on the exchange, the transaction highlights the role of established issuers in supporting market development and broadening investment opportunities for regional and international investors.”

The latest issuance follows the Arab Energy Fund’s USD 500 million 10-year Sukuk listing earlier this year and forms part of its diversified funding strategy to support sustainable energy development across the Gulf region.

Shifting the focus to the UAE Ministry of Finance’s listing of its inaugural sovereign retail T-Sukuk programme, the event marked the culmination of the Gulf country’s comprehensive strategic effort to broaden its Islamic financial ecosystem, apart from providing innovative sovereign investment instruments that foster a culture of saving and long-term investment across the nation.

“The UAE continues to advance a resilient and inclusive economic model built on a sophisticated financial and legislative infrastructure that aligns with the highest international standards. The listing of the country’s inaugural Sovereign Retail T-Sukuk Program reflects the ministry’s strategic vision to strengthen the efficiency of domestic capital markets and diversify sovereign funding sources, ensuring sustainable financial resources while providing highly secure investment solutions that reinforce the UAE’s long-term financial stability,” said Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs.

The inaugural retail T-Sukuk offering recorded exceptional investor demand, as it exceeded official expectations, with subscription requests reaching AED445 million, achieving an oversubscription of nearly nine times the target issuance size of AED50 million. Responding to the strong investor demand, the ministry has increased the issuance size to AED100 million.

The programme also attracted a broad and diverse base of retail investors, as the latter subscribed up to AED10,000, thereby accounting for 76% of the total subscriber base. At 72%, UAE nationals accounted for the largest share of subscribers.

By generating strong participation from young investors under the age of 25 and women, who together accounted for 45% of the total subscriber base, the “Retail T-Sukuk Program” has become successful in terms of advancing financial inclusion.

“The exceptional investor demand for the inaugural offering, which exceeded expectations and achieved record levels of oversubscription, reflects the growing financial and investment awareness among members of society. It also demonstrates the programme’s success in broadening participation in government investment instruments and advancing financial inclusion by providing secure and trusted investment opportunities for all segments of society,” Al Hussaini added.

“This issuance represents an important strategic instrument for deepening the integration between fiscal policy and the country’s key economic sectors by mobilising national capital and directing it towards initiatives that support comprehensive and sustainable development. The Ministry of Finance remains committed to fostering an enabling environment for financial innovation through close collaboration with the Central Bank of the UAE and the country’s financial markets, further strengthening the UAE’s global competitiveness as a leading and sustainable financial centre offering trusted saving and investment opportunities that meet the aspirations of all segments of society,” he concluded.

The inaugural listed issuance carries significant strategic value, with an initially announced issuance size of AED50 million, which was upsized to AED100 million to capitalise on strong investor demand and broad market participation, and a minimum investment threshold of AED1,000, making sovereign investment opportunities more accessible and enabling broader participation by individual investors.

The “Sovereign Retail T-Sukuk Program” has a two-year tenor, offering a profit rate of 4.30% per annum, with returns distributed every six months. The sukuk, now available for trading on the secondary market through authorised exchange brokers, is also supported by dedicated market makers and liquidity providers to ensure efficient price discovery, enhance market liquidity and facilitate seamless trading.

The filings have further strengthened Nasdaq Dubai’s role as one of the world’s leading international venues for Sukuk and fixed-income listings. The exchange currently hosts over USD 98.6 billion in outstanding Sukuk listings and over USD 141 billion in outstanding debt securities, supporting issuers from across the region and international markets while reinforcing Dubai’s position as a global centre for Islamic finance.

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Uganda is raising funds for the 2.7-billion-euro project, which has already won ⁠backing from lenders including the World Bank and the African Development Bank (ADB). Citibank has been appointed to help ‌mobilise financing.

Construction ⁠of the ⁠railway, which began in 2024, is being carried out by Turkish ‌firm Yapi Merkezi.

Apart from financing the crucial infrastructure project, ⁠IsDB has already consolidated its position as one of the African country’s biggest sources of external financing and, as of the end of May 2026, had projects in the East African country worth USD 896.5 million, government data showed.

The 272-km (169-mile) line will ‌reportedly link landlocked Uganda to Kenya’s rail network, ⁠providing crucial access to the Indian Ocean port of Mombasa, through which the African nation imports most of its goods.

Apart from the key funding support from Uganda, it is preparing to issue its first sovereign sukuk, which will partly address the African country’s financing requirements for the construction of a standard-gauge railway (SGR) linking capital Kampala with the Kenyan border town of Malaba.

Talking about Kampala’s upcoming maiden sukuk issuance, it will finance 15% of the estimated 2.7-billion-euro (USD 3.16 billion) cost of the SGR. Export credit agencies, on the other hand, are expected to provide 60% of the project financing, while development finance institutions (IsDB, World Bank, and ADB) would contribute the remaining 25%.

A month back, Deputy Treasury Secretary Patrick Ocailap launched a regional investor roadshow across East African Community (EAC) member states, including Kenya and Tanzania, to build the anticipation ahead of the sukuk issuance. However, not many details have emerged about the size or launch date of the sukuk.

Ocailap said, “The roadshow was intended to test the market, determine pricing and build investor relationships to ensure the success of the operation.” A delegation including representatives from Yusra Sukuk, the lead arranger for the transaction, as well as representatives from Stanbic Bank Uganda and the Bank of Uganda, was reportedly present during the investor roadshow.

While the railway construction contract was awarded to China Harbour Engineering Company in 2015, under an arrangement requiring the contractor to secure financing from the Chinese government, repeated funding delays since the last decade forced the Ugandan government to cancel the contract in January 2023. Authorities later signed a new agreement in October 2024 with Yapi Merkezi to build the connectivity between Kampala and Malaba.

Kenyan President William Ruto in March 2026 inaugurated construction works on a new phase of Kenya’s SGR linking Naivasha to Kisumu, with a later extension planned towards the Ugandan border. The standard gauge railway network has been the lifeline when it comes to travelling between Mombasa and Nairobi and onwards to Naivasha since 2019.

Over the longer term, Kenya and Uganda aim to extend the rail corridor towards Rwanda, South Sudan and the Democratic Republic of the Congo as part of efforts to strengthen regional trade and logistics integration across East and Central Africa.

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“The majority of rated Islamic banks have deployed Islamic derivatives, but adoption is rare amongst rated Islamic insurance companies. Islamic securitisation and sukuk issuances are beginning to embed Islamic derivatives into their structures. However, the Islamic derivatives market still lags conventional derivatives in most core Islamic finance markets. There is a lack of sharia-compliant alternatives to credit, equity, commodity, futures, and digital asset derivatives,” the rating agency noted.

Key barriers to the wider adoption of Islamic derivatives include sharia restrictions, limited standardisation, infrastructure gaps, awareness gaps, and still-evolving financial systems in many OIC (Organisation of Islamic Cooperation) countries.

“The conventional derivatives market is also underdeveloped across most OIC countries compared to other regions. The combined turnover of over-the-counter (OTC) interest-rate derivatives in Saudi Arabia, the UAE, Bahrain, Malaysia, Indonesia, and Türkiye accounted for less than 1% of global volumes in April 2025 (BIS data),” Fitch noted further.

About 75% of Fitch-rated Islamic banks used or offered Islamic derivatives in 2025–1Q26. The list included 100% adoption at rated GCC Islamic banks. These financial products are primarily profit-rate swaps, forward foreign-exchange contracts, and cross-currency swaps, and, in some cases, commodity hedging solutions.

“These instruments perform similar economic functions as conventional derivatives, supporting risk mitigation and potentially enhancing credit profiles. The remaining rated Islamic banks that did not actively deploy derivatives were mainly in Indonesia, Jordan, Iraq, Nigeria, and Tunisia,” Fitch observed.

When it comes to deploying Islamic derivatives, Malaysia has created its niche space as one of the most advanced Islamic banking and financial jurisdictions, offering both OTC and exchange-traded derivatives. However, conventional derivatives still dominate the market, with Fitch estimating that only 1% of such products were Islamic in 2025.

“In GCC countries (excluding Oman), OTC Islamic derivatives are more accessible, while exchange-traded Islamic derivatives are largely absent or nascent. No derivatives were traded on the Saudi Exchange in 1Q26 and most of 2025, the region’s largest stock exchange, despite their introduction in 2020,” Fitch noted further.

The UAE has become the leader among emerging markets in terms of global OTC interest-rate derivative turnover. Volumes reached a daily average of USD 68 billion in 2025, up sharply from USD 4 billion in 2022 (including the Dubai Financial Services Authority), positioning the Gulf major as the 11th largest globally. In April 2026, Dubai’s Virtual Assets Regulatory Authority further advanced the market by announcing a regulatory framework for exchange-traded derivatives in virtual assets.

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The opinion emerged during the recently concluded “Third Global Islamic Economy Summit” in Istanbul, with participants discussing about how capital in Islamic economics should be shaped by ethical principles, financial inclusion and social benefit.

The summit, organized as part of the AlBaraka Summit Series, happened at Halkbank’s headquarters in the Istanbul Financial Center. During this, a panel discussion titled “Foundations of Capital in Islamic Economics: Concept, Principles and Purpose,” addressed the conceptual basis of capital in Islamic economics, principles shaping it and the ethical and sustainability dimensions of capital allocation.

Moderated by Umar Oseni, secretary general of the OIC Arbitration Center, the panel discussion saw Malek Khodr Temsah, general manager of Albaraka Turk Participation Bank, stating that the world has gone through major geopolitical and macroeconomic shocks in the last six to seven years, with concrete effects on countries, societies and individuals.

“Such periods create challenges and opportunities and the responsibilities of capital providers and banks extend beyond financing,” Temsah remarked.

As per Temsah, financial institutions should look to live up to the expectations of supporting financial inclusion, expanding the reach of capital to underserved communities, facilitating cross-border trade and investment during difficult periods and most importantly, making sure that the distribution of the overall growth is even among all the layers of the existing socio-economic structure.

He further underlined the need to provide access to finance and participation banking tools for disadvantaged groups that remain outside financial systems.

Khurram Hilal, CEO of Islamic banking at Standard Chartered Bank, said the Muslim world faces significant challenges, including a shortage of leadership.

“The global economy has come under pressure from tariffs, geopolitical conflicts and energy and commodity disruptions, which have deepened supply-side pressures and fuelled inflation. Sanctions, blockades and similar measures have effects beyond macroeconomic indicators, directly affecting people’s lives through higher prices and economic hardship,” he noted.

While issuing warning about the Islamic banks’ historical tendency to maintain a largely domestic and narrow focus, which leaves them more exposed during regional crises, Hilal suggested the financial institutions to adopt a broader and more diversified outlook instead of relying heavily on local markets.

Rafe Haneef, group CEO of MBSB Holding, which includes MBSB Bank and MIDF Group, said capital should be assessed through its social effect as well as its profitability.

“Capital must not create social harm and should be directed toward increasing social benefit,” he noted, while adding that the broader objectives of Shariah, including the protection of religion, life, intellect, family and property, should guide capital allocation.

“While capital is often managed with a focus on generating double-digit returns, profit should remain aligned with the ethical and social objectives of Islamic finance,” Haneef concluded.

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