Fitch assesses liquidity using Bloomberg’s Liquidity Assessment (LQA) scores, which indicate security-level liquidity. The ratio can range from one to 100, with 100 signifying the highest liquidity. Generally, a score of 100 is assigned to securities with the lowest liquidation costs within an asset class, while securities with the highest costs get a score of one.

According to Fitch, LQA is a data-driven model that produces a daily security-specific liquidity surface that captures the relationship between volume, cost, and time.

“The LQA decline for investment-grade sukuk has been less severe than for speculative-grade sukuk on average,” the agency stated further.

“While LQA scores have declined in most GCC debt capital markets since the Iran war’s beginning, as well as for sukuk issuers in Turkey, Egypt and Indonesia. On the other hand, many rated Malaysian, Omani, and supranational sukuk have shown resilience in their LQA scores,” Fitch noted.

“Sukuk in the ‘BB’ and ‘B’ categories have the lowest LQA scores among all Fitch-rated sukuk globally on average, with the steepest liquidity fall compared to other rating categories since the war began. Sukuk in the ‘F1sf’, ‘AAA’, ‘BBB’, ‘AA’, and ‘A’ categories held the highest liquidity of all rated sukuk, but also faced declines, except ‘F1sf’,” it stated.

Sector-wise, corporates, infrastructure and project-finance sukuk had the lowest LQA scores among all rated sukuk globally, with the steepest liquidity falls. Asset-backed, supranational and sovereign sukuk, in contrast, maintained the highest liquidity levels, except asset-backed sukuk, whose scores increased.

“Fitch also analysed liquidity for 52 comparable sukuk and bonds from the same issuers. Liquidity was broadly similar in 50% of cases, sukuk were less liquid than bonds in 31%, and more liquid in 19%. GCC US dollar sukuk and GCC US dollar bonds have displayed broadly similar liquidity trends, with both declining since the war began. The average LQA score for GCC US dollar sukuk fell to 45 on 23 March from 56 at the end of 2025. The average score for GCC US dollar bonds dropped to 48 from 53 in the same timeframe,” the ratings agency remarked.

“About 64% of Fitch-rated sukuk had an LQA score above 50 on 23rd March, down from 82% in January 2025 (excluding local ratings and sukuk without an LQA score). Investment-grade sukuk are generally more liquid, with an average score of 65 as of March 23 (January 2026: 73), compared to 33 for speculative-grade sukuk (January 2026: 48). Historically, GCC DCMs have rebounded fairly quickly when tensions eased following previous Middle East geopolitical episodes, but the impact this time will depend on the scale and duration of the war,” it concluded.

The post Fitch sees varying effects on Sukuk, Gulf debt market liquidity appeared first on International Finance.

“Historically, regional DCM issuances have typically rebounded swiftly once tensions eased following previous geopolitical conflicts in the Middle East. However, the ultimate effect will depend on the scope and duration of the Iran war. While some yield widening is visible in GCC bonds and sukuk since the war began, there have not been market-wide selloffs,” the agency stated.

Before the conflict’s beginning, issuance activities in the Middle East were displaying strong investor appetite. While about 84% of Fitch-rated sukuk in the GCC countries were rated investment grade, 63.2% was in the ‘A’ category, while 90% of issuers were on Stable Outlooks. Most importantly, there were no defaults by the end of 2025.

“GCC issuances were strong at the start of 2026, with many entities aiming to benefit from favourable conditions ahead of the typical Ramadan slowdown. GCC debt capital market (DCM) outstanding reached USD1.2 trillion as of March 9, 2026, up 14% year on year, with 63% of issuance denominated in US dollars. Sukuk issuance rose to a record 41% share of GCC DCM volumes, with Saudi Arabia and the UAE making up the majority of GCC DCM outstanding, followed by Qatar, Bahrain, Kuwait and Oman. Sukuk in EMs rose to 16% of all dollar DCM issuance in 2025 (excluding China; 2024: 12%). Local-currency GCC sukuk and bonds continue to be issued, mainly by sovereigns,” Fitch remarked.

While funding needs and diversification priorities remain key focus areas for Gulf countries, governments and issuers are now seeking broader liquidity channels.

Fitch sees issuers planning their funding activities well in advance, particularly for large maturities, which will help limit immediate refinancing pressure.

“Despite heightened geopolitical challenges in recent years, GCC issuer activity has rebounded quickly once tensions eased, with market access broadly maintained for many issuers. However, the duration and scale of the conflict in the Middle East have already surpassed the 2025 Twelve-Day War, testing new levels of market uncertainty,” the agency noted.

MENA (Middle East and North Africa) sukuk continues to trade tighter than bonds originating in the region, reflecting sustained and broader demand, including from Islamic banks, with yield widening more pronounced among non-investment grade issuers. The yield-to-maturity (YTM) on the S&P Global High Yield Sukuk Index rose to 6.61% on 10th March 2026, up from 5.82% on 27th February (a 79bp increase).

“Similar periods of yield widening have occurred, particularly in times of heightened geopolitical or Sharia-related uncertainty. However, the current YTM movement remains below the peak levels recorded in earlier episodes,” Fitch concluded.

The post Middle East tensions: Fitch issues outlook for sukuk issuances appeared first on International Finance.

As Gulf countries ⁠diversify their economies away from oil, investing billions in sectors like financial services, hubs ⁠like the Dubai International Financial Centre have ‌been attracting an increasing number of companies. The total number of actively registered firms at the centre stood at around 8,840 ⁠as of the end of December 2025, up 28% from 2024. Active company registrations also increased by 2,525, a rise of 39% from the 2024 tally.

These included 557 wealth and asset management firms, which in recent years have been setting up base or ⁠expanding their footprint in Dubai and neighbouring Abu Dhabi as the UAE attracts high-net-worth individuals, helped by factors such as the relative ease ‍of doing business and low tax status.

“We had a slight uptick in the UK, and that probably has been a reflection of the growth in hedge funds that have been brought from that country,” DIFC Governor Essa Kazim told the media, while speaking about the geographical breakdown of firms at the centre. The Dubai International Financial Centre, meanwhile, is set for an around USD 27 billion expansion to be delivered by 2040, with the hub reaching full capacity, apart from seeking to welcome new firms.

Asked about funding for the project, Kazim said that the Dubai International Financial Centre achieved ⁠a net profit of around USD 400 million in 2025, remarking, “That is really the future cash flow that will contribute to the expansion, together with internal resources as well as a potential return ‌to capital ⁠markets. Definitely, the market is open. In the past, we issued sukuk, and that’s ⁠one possibility.”

In terms of operational profits, DIFC reported record annual results for 2025, posting double-digit growth in company registrations, revenue and net profit. Combined revenues rose 20% to Dhs2.13 billion (USD 580 million) in 2025 from Dhs1.78 billion in 2024, while net profit increased 28% to Dhs1.48 billion from Dhs1.16 billion. Dubai International Financial Centre has remained the region’s largest regulated financial services ecosystem, with 1,052 financial services firms operating in the hub.

The post Dubai International Financial Centre new registrations rise nearly 40% in 2025 appeared first on International Finance.

The demand will also be driven by supportive economic environments in core Islamic finance countries and by the United States Federal Reserve’s likely continuation of monetary easing policies.

“Overall, we expect issuance to reach USD 270-USD 280 billion, including foreign currency issuance of USD 100-USD 110 billion,” said the rating agency’s Islamic Finance Head Mohamed Damak.

In 2025, the sukuk market remained concentrated among a few issuers, with GCC countries Saudi Arabia and the UAE accounting for 45% of issuance volume, followed by Malaysia.

“While we do not expect this structure to change significantly, we have seen interest from new issuers, with some successfully entering the market, such as Egypt,” the senior official added.

S&P expects new issuers to tap the Islamic finance market in 2026 to diversify their investor base and secure more competitive pricing than conventional bonds.

Also, global sukuk issuance increased to USD 264.8 billion during the year, up from USD 234.9 billion in 2024, underpinned by strong performance from Malaysia, Saudi Arabia, Turkey, the UAE and Bahrain.

In fact, Saudi Arabia was the second-largest contributor to last year’s growth tally, with USD 72.5 billion in sukuk issuance, including USD 38 billion in foreign currency, rising 35% from 2024. Additionally, the Kingdom’s banking sector issued more than USD 15 billion in sukuk, including nearly USD 12 billion in foreign currency-denominated sukuk, to continue funding “Vision 2030” initiatives.

The UAE, on the other hand, contributed USD 22.1 billion in issuance, of which USD 19 billion was in foreign currency.

“Real estate developers, particularly in Dubai, were among the UAE’s top issuers as they sought funds to finance land acquisition and launch new construction projects amid favourable demand trends. The report also highlighted downside risks to the outlook, including the possibility of a major spike in geopolitical risk, which could reduce investors’ appetite for sukuk and bond issuances from the GCC,” Damak concluded.

The post UAE, Saudi Arabia to lead sukuk issuances in 2026: S&P appeared first on International Finance.

Islamic funds are expected to remain the dominant category. However, the AMI remains exposed to oil-price sensitivity, local, regional and global market volatility and geopolitical risks. Equity-linked fee and performance income was weighed down by a circa 13% yoy fall in equity market capitalisation by the end of August 2025.

“Saudi Arabia’s AMI is on a steady growth path, supported by ongoing reforms and deeper local capital markets. Sharia-compliant funds remain the majority, with product breadth widening across areas such as new IPOs, sukuk and bonds, ETFs and private credit. New initiatives, such as voluntary pension and savings schemes, should enhance access and liquidity. Although market volatility and oil-price sensitivity pose near-term risks, foreign participation is rising and Saudi sukuk largely carry investment-grade ratings, supporting resilience,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.

Fitch Ratings further reported that PIF’s recent MoUs with global asset managers such as BlackRock, Franklin Templeton, Neuberger Berman, and Northern Trust Asset Management would amount to about USD 12 billion and facilitate foreign capital and expertise inflows.

The share of Saudi bank-affiliated asset managers was 63.5%, while international and regional institutions rose to about 15%, it said. At the end of Q1 25, the industry AUM grew 21% yoy to USD 306.1 billion, with about half in private funds, followed by discretionary portfolio management, and public funds.

“The government aims for AUM to reach 31% of GDP in 2025 and 40% by 2030, from about 23% in 1H25. Foreign investors held 7.6% of government local debt issuances in June 2025 (2023: 5.2%),” the report noted further.

Talking about the steady emergence of Saudi Arabia’s AMI industry, a recent report from S&P Global Ratings predicted the Kingdom’s total AUM to surpass USD 500 billion by 2030, while citing factors like continuous regulatory reforms, development of debt and equity markets, increasing availability of exchange-traded funds (ETFs), real estate investment trusts (REITs), and various other retail and institutional products behind the phenomenon.

The post Saudi asset management sector on upward trajectory, say ratings agencies appeared first on International Finance.

In addition to continuing to face local difficulties, the ratings agency further stated that the sultanate’s DCM is still among the smallest in the Gulf region and is not immune to the general slowdown in primary market dollar issuance and the ongoing global uncertainty.

According to the report, Oman has limited private sector options and primarily draws on banks, rather than a broader spectrum of investors. Additionally, there is little activity or trading in debt that is valued in the local currency.

“The Omani DCM is still developing…It faces issues such as limited private sector issuance, investor base concentrated with banks, shallow Omani rial market and low secondary market liquidity,” the ratings agency said.

Additionally, according to Fitch, sukuk continues to dominate the funding mix, making up 63.4% of the DCM issuance. As of 2024, the remaining portion was made up of conventional bonds, except for treasury bills. Fitch assigned a BB+ rating to approximately USD 7.2 billion in outstanding Omani sukuk during the first three months of the year.

More than half (55.2%) of the sukuk were owned by corporations, whereas sovereigns owned 44.8%. The issuance of sukuk increased by 124 points to USD 2.09 billion last year, surpassing that of conventional bonds, which also increased by 45 points to USD 7.04 billion.

In 2025, the Omani government hopes to raise USD 1.09 billion from the local market. According to the Ministry of Finance, USD 6.3 billion will be needed for financing this year, of which 53.2% will come from external debt, 30.5% from local borrowing, and 16.3% will come from reserve withdrawals.

Oman recorded a fiscal surplus and moderate economic growth in 2024, driven by higher oil revenues and an expansion in non-oil activities, official data from the National Centre for Statistics and Information (NCSI) showed.

Meanwhile, the Sultanate’s gross domestic product (GDP) at constant prices grew by 1.6% year-on-year to RO 37.7 billion (USD 98.1 billion), while GDP at current prices fell by 3.0% to RO 40.7 billion, largely due to lower oil activity. Non-oil activities expanded by 3.7%, led by a strong performance in manufacturing (+8.5%), wholesale and retail trade (+7.1%), and financial services (+3.5%). Oil-related activities declined 3.6% on a real basis, as crude output and prices softened.

While manufacturing value added rose on the back of refined petroleum products and basic chemicals, the construction sector showed modest gains. Average daily crude production in January and February 2025 stood at 987,000 barrels, down 1.4% from the same period in 2024. However, the average price of Omani crude rose 1.0% to USD 72.8 per barrel in February.

Natural gas production, including imports, rose 3.0% in the first two months of 2025, driven by increased use in oil fields (+24.2%). Government revenues rose 4% to RO 10.2 billion by end-October 2024, supported by oil revenues (+11%), goods and services taxes (+18%), and relatively stable non-oil receipts. Public spending increased 8% to RO 9.68 billion, including higher allocations for development projects and sectoral subsidies. The overall budget recorded a surplus of RO 520 million, compared to RO 830 million in the same period of 2023.

Merchandise exports rose 6.8% to RO 24.2 billion in 2024, with oil and gas exports up 18.4% to RO 16.3 billion. However, non-oil exports fell sharply by 16.3%, with declines across minerals, chemicals, and live animals. Imports, meanwhile, climbed 12.1% to RO 16.7 billion, reflecting higher demand for electrical machinery, mineral products, and transport equipment.

Foreign direct investment (FDI) reached RO 30.04 billion by the end of 2024, up 18% from the previous year. The United Kingdom remained the top investor, contributing RO 15.3 billion (+22.9%), followed by the United States (RO 7.67 billion) and China (RO 1.29 billion).

The post Oman’s debt market to slow down in 2025-2026: Fitch appeared first on International Finance.

Even with its increasing popularity, a lot of investors still think it’s complicated or restrictive. Some people think it only matters to Muslim investors, while others think its performance is inferior to that of traditional markets.

The truth is different. Asset-backed strategies have flourished in industries like real estate, logistics, healthcare, and technology, which have experienced significant growth under Sharia principles and are therefore appealing to a far wider range of investors.

Sharia finance focuses on structure rather than limitations. Since global markets are dealing with uncertainty, the emphasis on openness, moral investing, and risk sharing makes it particularly pertinent today.

Competitive Asset Class

The idea that Sharia finance is a conservative, sluggish industry is out of date. These days, sharia-compliant investments are dynamic and span a variety of asset classes, including exchange-traded funds, stocks, sukuk, and real estate investment trusts.

Their competitiveness is more significant. In the last ten years, Sharia-compliant stocks in the United Arab Emirates (UAE) have produced returns that are on par with, and occasionally better than, those of traditional indices.

The Sharia Index of the Dubai Financial Market (DFM) is one example. During financial downturns, it has outperformed general market trends by avoiding highly leveraged companies, providing investors with a degree of protection against crises that frequently result from excessive debt.

The Islamic bond substitute known as sukuk has also gained popularity, offering yields comparable to those of conventional bonds while taking advantage of the UAE’s sound economic policies and state-sponsored infrastructure initiatives. Because they are asset-backed, Sukuk are protected from the increase in interest rates that can affect traditional bonds.

Expats And Sharia Investments

The idea that Islamic finance is only available to Muslim investors is among the most pervasive misconceptions about it. Nothing could be further from the truth than that. Anyone searching for moral, interest-free financial products can make sharia-compliant investments, and the United Arab Emirates, which is home to one of the biggest expat communities worldwide, provides a flourishing environment for these kinds of opportunities.

A wide variety of Sharia-compliant investment options are available to foreigners living in the United Arab Emirates, such as equity portfolios, real estate funds, and exchange-traded funds (ETFs) listed on prominent exchanges such as DFM and Nasdaq Dubai.

In contrast to certain nations where nationality or residency status restricts access to Islamic financial products, the regulatory framework in the UAE facilitates seamless participation. Additionally, investors can confirm compliance by using financial apps that search for compliant stocks, investing in mutual funds that adhere to Sharia law, or seeking certification from reputable Sharia boards.

The post Rethinking Islamic Finance: Breaking free from outdated stereotypes appeared first on International Finance.

Due to recent rate reductions, indications of declining inflation, strong corporate sell-side participation, and the wider Middle East’s faith in Turkey’s leadership, investors have been placing large wagers in the nation’s bond market.

Between June 2023 and January 2024, Turkey issued 64 bonds and sukuk from corporations, financial institutions, and the government. Volumes increased by 89% to $33 and 6 billion in 2024.

HSBC priced 21 deals at that time, but Emirates NBD Capital, the investment banking division of Emirates NBD, the biggest lender in Dubai, priced four deals in January 2025 and 26 deals in Turkey in 2024.

“Last year was super busy for us in Turkey. We priced 26 deals in Turkey last year. In 2021 we did two deals. The years 2021, 2022 and 2023 to some extent were very quiet because of orthodox policies and geopolitics. But now we are seeing a significant jump in volumes,” Ritesh Agarwal, Head, Debt Capital Market at Emirates NBD Capital, said.

Turkey’s annual volumes, which were mostly made up of sovereign funding, averaged $13 billion between 2015 and 2022. Over the past 18 months, bond yields in Turkey have increased significantly. At the moment, its bond yields are rising by 250 basis points. Around 500 bps was its peak in October 2023.

The renewed interest from investors is not just a yield story. To put it in perspective, Khaled Darwish, MD, Head of Debt Capital Market, CEEMEA Region at HSBC, said, “Since the country’s presidential election, the Turkish bond market has been strong; macro risk has significantly decreased in Turkey. The government’s policies to address inflation, the fiscal deficit, the current account deficit, and other issues have garnered significant investor confidence. The international market now has more faith in the government and its bonds as a result of everything mentioned above.”

Why are GCC banks active in Turkey?

Numerous GCC banks maintain subsidiaries in Turkey and aim to expand their loan and asset portfolios in the Turkish market.

The banks were able to take part in syndicated loans in the country, according to Darwish, and their operations were not concentrated on the bond and sukuk markets. Emirates NBD’s subsidiary DenizBank has a significant presence in Turkey.

“Now it’s become a full bank and we can showcase our strength across product suites. We used to primarily work on FI transactions, but now we are adding it up with corporates. We do a lot of loans as well. We are very active on the loans as well in Turkey,” Ritesh Agarwal said.

Qatar National Bank has a presence in Turkey through QNB Finansbank, and Kuwait Finance House has a subsidiary that operates in Turkey. Middle Eastern investors currently make up 15–25% of the Turkish bond market. It was 1-2% before. Next, which makes up 40–50%, are the United Kingdom and the larger European region.

“Middle Eastern investors have become very active players in the Turkish bond market in the last two years. We have spent a lot of time with regional investors over the last few years to educate them on the Turkey story, including reverse roadshows in Turkey, and the effort is paying dividends now,” Ritesh Agarwal added.

To diversify funding sources, the government has actively promoted Islamic finance by encouraging the issuance of sukuk and other Shariah-compliant securities.

Abdeslam Alaoui, MD, Head of CEEMEA Capital Markets at Deutsche Bank, said, “This is reflected by Turkey’s DCM being one of the third largest among the core Islamic jurisdictions, with a 15% share after Indonesia (24%) and Malaysia (20%) at end-3Q24, and it is one of the three G20 countries active in the sukuk market.”

In what seems to be another boost for Turkey’s banking sector, UAE’s biggest Islamic bank, the Dubai Islamic Bank raised its stake in TOM Group, from 20% to 25%, in January 2025. The move followed the initial stake acquisition in September 2023, further cementing DIB’s presence in that country’s “dynamic financial landscape.”

“Turkey continues to be a pivotal market for DIB, given its sizeable population, rapidly expanding digital infrastructure, and impressive economic growth trajectory. The move aligns with DIB’s vision to drive financial inclusion and bring innovative Sharia-compliant financial services to underbanked and non-banked segments,” said a statement from the UAE-based venture.

“The increased shareholding not only solidifies DIB’s position as a key stakeholder in Turkey’s thriving digital banking sector but also underscores our deep-rooted belief in the country’s strategic intent around tech-based economic development. The partnership with T.O.M. Group goes beyond our financial growth aspirations. It reflects the larger objective of building a comprehensive, future-proof and tech-rich global Islamic financial model with built-in intelligence to evolve with the fast-changing customer mindsets of today,” said Dr. Adnan Chilwan, Group CEO at DIB, during the occasion.

Debut corporate issuances

Despite anticipated fiscal consolidation, sovereign financing is still anticipated to be the primary source of DCM issuance in Turkey. Experts assert that banks and corporations, however, have enormous potential to expand their market presence.

“While government funding makes up most of the supply, we have seen a major increase in corporate and FI issuers accessing markets. In 2024, FI supply increased 298% YoY and corporate supply increased by 332% YoY. The share of supply has greatly changed in 2024 versus 2023, where we started seeing more of a balance between the makeup of government supply from Turkey vs Corp/FI,” Alaoui said.

HSBC’s Darwish noted that the corporate sector is bringing a larger share of debut issuers compared to the banking sector, where HSBC already has the majority of banks as existing issuers.

“On the corporate side, we had at least four-five new debuts last year and will continue to get more debuts this year, including from new sectors that previously relied on bank lending,” Darwish concluded.

This shift towards a more diverse mix of issuers indicates that Turkey is moving towards financial stability, where corporate and financial institutions are increasingly tapping into the capital markets. As a result, there is greater opportunity for investors seeking new avenues for growth.

The continued success of Turkey’s bond and sukuk markets will depend on the country’s economic steadiness, the government’s commitment to fiscal reforms, and the ongoing global demand for Sharia-compliant securities. With a strong track record and a supportive environment, Turkey remains an attractive destination for international investment.

The post Middle East investors bet big on Turkey appeared first on International Finance.

All Green Banks have the mission to address climate change, though many also have additional objectives, such as improving resiliency or addressing underserved markets.

With the mission of combating the impacts of climate change becoming the new normal in the 21st-century socio-economic setup, the financial sector has become a pivotal force in driving sustainability. Banks, too, are aligning their lending, investment strategies, and product offerings with environmental, social, and governance (ESG) objectives.

While ESG has become integral to achieving global net-zero carbon emissions, green banking, on the other hand, has transformed itself from a niche concept to a central strategy for financial institutions aiming to support the green transition and safeguard the planet.

The new normal: Challenges ahead

Becoming “Green Banks” has become the policy imperative for 21st-century financial institutions. Take HSBC, for example, which has made a bold commitment to align its portfolio with the Paris Agreement’s goal of net-zero financed emissions by 2050. The London-headquartered bank in 2024 made significant strides on the ESG front.

Prominent among them was the collaboration with Google Cloud, as part of which new initiatives were launched to support the burgeoning climate tech sector. This partnership, particularly through the Google Cloud Ready-Sustainability (GCRS) programme, will offer tailored financial products and services in the United States and the United Kingdom, designed to propel the growth of innovative startups.

In 2024, HSBC also partnered with Dun & Bradstreet (D&B), a global provider of business decision data and analytics, to support Hong Kong businesses in enhancing their resilience and competitive edge through environmental, social, and governance (ESG) reporting.

Last but not least, HSBC’s Hong Kong division partnered with Cathay Pacific and biofuels platform EcoCeres started a new initiative aimed at helping to decarbonise air travel by supporting the use of sustainable aviation fuel (SAF) in the Chinese administrative region.

HSBC will now purchase 3,400 tonnes of SAF produced by EcoCeres for use by Cathay Pacific on flights departing from Hong Kong International Airport. The transaction marks HSBC’s largest SAF purchase to date, and the initiative will support Cathay Pacific’s goal to scale the use of SAF to 10% of its fuel consumption by 2030.

In 2024, German giant Deutsche Bank announced a series of finance and due diligence commitments aimed at strengthening its ocean protection policies, including the implementation of a freeze on direct financing of deep-sea mining projects.

The new announcement forms were part of Deutsche Bank’s commitment to the #BackBlue initiative. Backed by the United Nations (UN) and led by the blue economy-focused organisation the Ocean Risk and Resilience Action Alliance (ORRAA), the Blue Finance Commitment (#BackBlue) initiative was launched in 2021 to incorporate ocean considerations in finance and insurance decisions.

In Asia, too, ESG is rapidly capturing the attention of financial institutions and governments. Across the continent, a number of new regulations were introduced recently, increasing scrutiny of corporate operations. China announced in 2024 that listed companies would be required to publish sustainability reports by 2026. A similar rule for reporting is already in place for companies on the Hong Kong Stock Exchange.

Singapore, too, took steps with the creation of the Green Finance Industry Taskforce (GFIT). The GFIT is divided into workstreams, with focuses on developing a taxonomy with clear sustainability objectives, improving environmental risk management, and supporting green financing solutions.

In response, banks operating in Asia are now becoming innovative in their way of supporting their clients in their environmental, social, and governance goals, tying the products and services they offer to environmental targets. Standard Chartered launched an ESG-linked cash account for their corporate banking clients, tying the interest rates and fee pricing to the company’s performance.

According to Elizabeth Girling, head of sustainable finance products and frameworks at Standard Chartered, the accounts will incentivise clients at the organisational level to work sustainability into their treasury management arrangements.

As companies began to focus on their Scope 3 emissions (which track the indirect carbon emissions throughout the length of a company’s value chain), banks are developing products to support their decarbonisation goals.

Uzayr Jeenah, partner at McKinsey, noted that DBS has supported fashion retailer H&M in developing financing tools to assist with the decarbonisation of their supply chains. H&M’s suppliers are now able to access financing via DBS and technical support from sustainability consultant Guidehouse to reduce their climate impact through initiatives like upgrades to factories.

Jeenah termed these initiatives, which are focused on value creation, as ones that go beyond the trend of “green lending for the sake of green lending” and are driven by the corporate customer base, which has become increasingly demanding evidence of their net-zero progress.

The Banker reported that the “banks are being further assisted in gaining greater oversight of the companies across a value chain by the integration of data-rich messaging systems, which increase transparency and accountability.”

Jeenah also pointed to the move from MT standards to ISO 20022 standards used in transaction messaging, saying it will “unlock use cases,” such as decarbonising the supply chain. Through these messages, greater detail is given on the recipient of funds, allowing for further traceability along a supply chain and across borders.

ESG expands in MENA too

As per June 2024 research titled “Sustainability Reporting for Banks: The Climb Starts Here,” The London Institute of Banking & Finance (LIBF) noted that sustainability is becoming a key focus area in the financial sector of the MENA (Middle East and North Africa) region, driven by regulatory frameworks, market demand, and technological advancements.

Initiatives like the “Unified ESG Metrics for GCC Listed Companies” and national sustainability agendas in the UAE and Saudi Arabia are setting standards for transparency and comparability.

“Consumer and investor pressure for sustainable financial products is pushing banks to integrate ESG principles into their strategies. The rise of green bonds, sustainable loans, and FinTech solutions is further advancing the sector’s commitment to environmentally and socially beneficial projects.

Moreover, partnerships with educational institutions like the London Institute of Banking & Finance (LIBF) are enhancing the knowledge and capacity of financial professionals in ESG practices,” the study noted.

Financial institutions are strengthening corporate governance and ethical leadership to support sustainability goals. Leadership commitment and enhanced governance structures have become crucial for driving the sustainability agenda. Regional partnerships and the adoption of global benchmarks are promoting best practices and improving local sustainability efforts.

Additionally, there is a growing emphasis on comprehensive and transparent ESG reporting, financial inclusion, and social impact investments. By diversifying investment portfolios towards sustainable assets and regularly assessing their environmental and social impacts, the financial sector in MENA aims to achieve long-term risk management and positive social outcomes.

ESG has become even more important in MENA, considering it is a region vulnerable to environmental challenges. According to a report by the World Economic Forum, temperatures here rise twice as fast as the global average.

This harsh reality calls for an urgent pivot to sustainable practices, which extend well into the finance space. In early 2023, PwC identified green financing as a key economic theme to watch. Green finance focuses on raising funds to tackle environmental problems, such as reducing emissions, climate change, and restoring biodiversity. It is part of sustainable finance, a broader approach that involves considering ESG factors in investment decisions.

In the MENA model of green finance, we have green bonds, which, issued by governments or private companies, are a kind of loan created to fund projects that help the environment. Green sukuk is similar to a green bond, while remaining compliant with Islamic law. According to OECD (The Organisation for Economic Co-operation and Development) data from 2020, the region has consistently received between $2 and $3 billion each year in climate finance since 2012.

“While the inflow of climate finance has been steady, it falls short of meeting the region’s demands, prompting several MENA countries to innovate and expand their green finance mechanisms. After all, green finance offers vital opportunities for the region, especially those belonging to the Gulf Cooperation Council (GCC). An analysis by Strategy& revealed that by 2030, green investments in six major GCC industries could significantly boost the economy. These investments could contribute up to $2 trillion to the cumulative GDP, generate over 1 million jobs, and attract foreign direct investment (FDI),” reported The Middle East Economy.

Closing the financial gap in MENA’s transition toward a more sustainable economy, governments in this part of the world have begun enacting laws and regulations driven by sustainability goals. Take the UAE, for example, where the Securities and Commodities Authority mandates that public joint-stock companies on the Abu Dhabi Exchange or Dubai Financial Markets issue an annual sustainability report. Such an initiative aims to boost investor confidence and ensure companies disclose and manage important ESG factors effectively.

The year 2023 marked a significant surge in green social, sustainable, and sustainability-linked bonds (GSSB) issuances in the MENA region. Total sales reached a new high of $24 billion, equivalent to a 155% increase from the previous year. Leading the way were the UAE and Saudi Arabia. Together, these two powerhouses accounted for 77% of the total issuances in MENA. Egypt also made a mark with the Green Panda Bond, the first from the region to be issued in China. It raised RMB 3.5 billion ($479 million) to fund public transit projects and received a partial guarantee from the Asian Infrastructure Investment Bank (AIIB).

The same year also turned out to be an important one for green sukuk in the region, as Islamic issuances made up more than a quarter of the total regional output for the first time. MENA also dominated the global market in green sukuk, achieving sales of around $6.5 billion.

In 2024, MENA further solidified its position in the global green finance market. While Oman introduced a sustainable finance framework, this allowed for the issuance of various financial instruments, including green bonds and sukuk, to fund renewable energy projects.

The Saudi Ministry of Finance also unveiled its Green Financing Framework, a detailed plan supporting projects across clean transportation, renewable energy, and climate change adaptation. Fitch Ratings projected that ESG sukuk would exceed $50 billion globally within two years.

The end of Q1 2024 marked a significant milestone, with ESG sukuk reaching $40 billion, demonstrating a year-on-year growth of 60.3%. Saudi Arabia and the UAE further consolidated their positions at the forefront of this growth, holding the largest shares of Fitch-rated ESG sukuk — 45% and 33%, respectively.

The rise of green financial products

Businesses are now realising that integrating sustainability into core operations is not just about fulfilling social responsibility, but is also critical to long-term business viability. However, these commitments come with significant risks, particularly for banks with substantial exposure to high-emission sectors like energy and mining.

“Reducing exposure to carbon-intensive industries can weigh on short-term profitability, but financing the shift to a low-carbon economy presents enormous long-term opportunities,” said Peter Panayi, Head of Global Go-To-Market at BuildingMinds, while explaining, “Banks are finding that while reducing exposure to carbon-intensive sectors may affect short-term profits, financing green transitions opens new growth avenues and positions them as leaders in the future of green finance.”

For banks, the green transition requires a fundamental rethinking of traditional business models, where profitability and sustainability are no longer mutually exclusive. Instead, they are interdependent. As demand grows for sustainable products and investments, financial institutions that successfully integrate ESG factors into their business strategies will outperform their competitors, both in terms of market share and profitability.

This shift, however, comes with its challenges. Banks must address risks associated with greenwashing and navigate complex regulatory frameworks, which pose significant obstacles in balancing profitability with sustainability commitments. To tackle this multifaceted landscape, financial institutions are creating new financial products, utilising innovative technologies, and investing in transparency and data verification to achieve their financial and sustainability objectives.

When it comes to developing and deploying green financial products, banks are employing strategies like green bonds, sustainability-linked loans (SLLs), and ESG-focused instruments, which are at the forefront of this financial innovation. These products enable banks to fund projects that support sustainability objectives while maintaining strong financial performance.

The global green bond market, for example, has seen exponential growth in recent years, reaching hundreds of billions of dollars in annual issuances. Richard Bartlett, co-founder and CEO of GreenHearth, a fintech focused on financing renewable energy projects, shared his thoughts about the increasing importance of these products.

He said, “Sustainability-linked loans and green bonds are essential in meeting the growing demand for sustainable investments. They offer performance-based financing that encourages companies to meet their ESG targets while maintaining financial viability.”

However, despite green financial products holding some potential, challenges remain. Banks must manage the reputational risks associated with accusations of greenwashing (companies falsely claiming to meet ESG standards) and navigate an evolving regulatory environment. Frameworks like the “EU Green Taxonomy” and the UK’s “Sustainability Disclosure Requirements” (SDR) demand that banks provide detailed ESG data and ensure that their products align with sustainable finance principles.

Banks now require robust systems for collecting and verifying ESG data. Without transparent and measurable outcomes, these financial institutions also risk losing credibility and investor confidence.

Rajul Sood, Managing Director and Head of Banking at Acuity Knowledge Partners, highlighted the importance of data in this process, as he said, “Banks monitor green loans through impact reports and key metrics, such as renewable energy projects financed, energy efficiency improvements, and carbon emissions reductions. This data is essential for ensuring that investments are both financially sound and aligned with sustainability goals.”

The issue of greenwashing has become a significant concern for banks and their stakeholders. Greenwashing is a phenomenon where companies/financial institutions exaggerate or falsely claim their environmental credentials to attract capital. Regulatory bodies are tightening the rules around sustainable finance to ensure transparency and prevent misleading claims. The EU’s Green Taxonomy, for instance, now provides a clear framework for what constitutes a ‘green’ investment, making it more difficult for institutions to claim green credentials without substantiating them.

In the United Kingdom, the Sustainability Disclosure Requirements (SDR) aim to increase transparency around ESG reporting. However, Bartlett notes that the UK lags behind the EU in implementing comprehensive regulatory frameworks.

Driving sustainability with innovation

Fintech solutions like digital twin software are enabling banks to monitor the financial and environmental performance of green projects in real time, apart from helping these businesses provide stakeholders with clear, measurable outcomes, enhancing both transparency and accountability. The same technology is also helping banks streamline compliance with regulatory frameworks.

Automating the reporting process allows banks to efficiently meet regulatory requirements, thereby reducing the risk of non-compliance and the penalties that may follow. The rapid growth of sustainable finance offers numerous opportunities for banks, especially in creating innovative financial products. Among the most promising options for banks aiming to support the green transition while remaining profitable are sustainability-linked loans and green bonds.

By availing of sustainability-linked loans, companies are receiving financial incentives to meet specific ESG targets, such as reducing carbon emissions or improving energy efficiency. If the company meets these targets, it benefits from lower interest rates, making the loan more affordable. This performance-based financing model has become increasingly popular as companies strive to align their operations with global sustainability goals.

Green bonds have become another powerful tool, allowing banks to raise capital for projects that have a positive environmental impact, such as renewable energy or sustainable infrastructure. The success of these products demonstrates the strong demand for ESG-aligned investments, delivering financial returns and contributing to a more sustainable future.

Stakeholders are increasingly demanding that banks not only talk about sustainability but also demonstrate genuine commitments to ESG principles through their actions.

Beyorch CEO Dre Villeroy, a wealth management firm specialising in ESG investments, emphasised the importance of authenticity in green finance. He said, “You can talk about improving society or the environment, but unless you make a real difference, it’s just talk.”

Villeroy further highlighted that at Beyorch, investments are evaluated not only on their financial returns but also on their impact on society and the environment. This focus on authenticity shows that there is a broader shift in the financial industry, where ESG investments are increasingly judged by their real-world impact, rather than just their token financial performance. Banks that balance profitability with meaningful sustainability contributions will be well-positioned to thrive in the green finance landscape.

The post Green Banking: Promising future, yet challenging appeared first on International Finance.

“Let’s Own Tomorrow”: A Bold Vision For An Innovative Future

The bank’s new identity and slogan, “Let’s Own Tomorrow,” reflect Warba’s commitment to providing comprehensive financial solutions that serve a diverse customer base, from individuals and entrepreneurs to investors and large corporations. This identity embodies the bank’s evolution over the years, marked by a transformative shift in digital services that enhances the customer experience and positions Warba as a trusted partner.

Al Sunbula Account 2025: Unique Opportunities And Exceptional Benefits

Warba Bank launched the Al Sunbula Account 2025 Campaign, making it the largest prize account of its kind in Kuwait in terms of both the number of winners and the total prize value distributed. The account offers weekly draws, where 20 customers each win 1,000 Kuwaiti dinars, in addition to six grand prize draws throughout the year, each awarding a lucky winner with 250,000 Kuwaiti dinars.

Royal Banking: Exclusive Banking Services For Premium Customers

To provide a tailored banking experience, the bank introduced Royal Banking, offering a niche account and services to high-net-worth customers. These customers benefit from a dedicated relationship manager who serves their individual needs, as well as advanced digital services and exclusive banking lounges across multiple branches, ensuring they always receive a premium banking experience.

Digital Transformation: Innovation In Customer Service

Warba Bank became the first bank in Kuwait to introduce an AI-powered personal financial advisor, the “Warba Advisor.” This service provides customers with personalised financial advice, leveraging data analysis and machine learning to help them make informed decisions. Additionally, Warba introduced Beyond for small and medium enterprises (SMEs), offering them comprehensive banking solutions, including multi-currency accounts, a payment gateway, and point-of-sale (POS) devices.

Green Financing And Sustainability

Warba Bank issued $500 million in green sustainable Sukuk, becoming the first Islamic bank in Kuwait to launch this type of Sukuk. The funds are directed toward financing eco-friendly projects that support the green economy and sustainable development.

Gold Account: Flexible Investment Options

The bank recently introduced new features to the Gold Account, allowing customers to track historical price changes and make informed investment decisions through the Warba app, which offers a reliable and advanced investment tool.

Global Recognition For Excellence

Warba Bank has earned numerous international awards, including “Most Sustainable Bank in Kuwait 2024,” “Best Islamic Digital Banking Services,” and the “Highest Growth in Credit Card Activation on Digital Wallets” from Mastercard.

Social Responsibility: Investing In The Community

Warba Bank prioritises youth empowerment through initiatives like the Rowad programme, while also supporting environmental sustainability programmes such as carbon footprint reduction, health awareness campaigns, and financial literacy education.

A Promising Vision For 2025

As Warba Bank enters a new phase of growth and expansion, it remains committed to enhancing its investments in technology and digital banking services, in line with its ambitious vision for a brighter future.

The post Warba Bank: Driving innovation & sustainable growth appeared first on International Finance.