The IFSB Prudential Database Makes Available 12 Quarters of Islamic Banking Sector Data, Now Covers 20 Countries
Date posted: 15 May 2017
Kuala Lumpur, 15 May 2017 – The Islamic Financial Services Board (IFSB) announces its sixth dissemination of country-level data for Q2-Q3 of 2016 on financial soundness and growth of the Islamic banking systems from 17 IFSB member jurisdictions, and the addition of three new country contributors to the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) project. The new countries – The Bank of England, Central Bank of Lebanon (Banque du Liban) and Palestine Monetary Authority – bring the number of contributors to the PSIFIs project to 20 jurisdictions.
This sixth dissemination presents a total of 12 quarters of Islamic banking sector data, from Q4 of 2013 to Q3 of 2016, from 17 member countries – Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, Turkey, and United Arab Emirates.
The Acting Secretary-General of the IFSB, Mr. Zahid ur Rehman Khokher stated, “I am pleased that the coverage of IFSB PSIFIs database project is extending to a new region as The Bank of England joins this project. Similarly, the participation of banking supervisors from Lebanon and Palestine will further strengthen the coverage of this project from the Middle East region.” Mr. Khokher further announced that with the approval of the IFSB Council in its last meeting in April 2017, “the IFSB will extend the coverage of this PSIFIs project to the takāful and Islamic capital market sectors. The IFSB will work closely with its member RSAs from these two sectors and multilateral organisations on the selection of the relevant soundness indicators and the preparation of a Compilation Guide for the reference of contributing organisations and users”.
A summary of key PSIFI indicators is given below.
Growth of Islamic Banking
Based on the available data, the total assets of the Islamic banking industry grew from USD 1,299 billion in 2015Q3 to USD 1,441 billion in 2016Q3 (calculated from country-wise aggregated data converted into USD terms using end-period exchange rates). Total funding/liabilities increased from USD 1,205 billion in 2015Q3 to USD 1,318 billion in 2016Q3. Financing by Islamic banks from the jurisdictions participating in the PSIFIs project reached USD 939 billion in 2016Q3 from USD 826 billion in 2016Q3. The data on “financing by type of Sharīʻah-compliant contracts” reveals that five major financing contracts used by the Islamic banking industry as of 2016Q3 were: Murābaḥah (37.6%), commodity Murābahah/Tawwaruq (22.5%), Ijārah/Ijārah Muntahia Bittamlīk (13.8%), Bayʻ Bithaman Ajil (11.0%), and Salam (5.6%).
Capital adequacy provides an important indication of the health and financial soundness of the banking industry in a jurisdiction. As of the 2016Q3, the weighted-average capital adequacy ratio and weighted-average Tier 1 capital ratio from available data of full-fledged Islamic banks of 13 jurisdictions were 17.5% and 16.3 % respectively, significantly higher than the regulatory requirements, while these ratios were 12.6% and 10.1% at the same period of the previous year (2015Q3) respectively.
On asset quality indicators, gross non-performing financing ratio (gross non-performing financing to total financing) showed a slight improvement with a decrease from 5.9% in 2015Q3 to 5.3% in 2016Q3. However, a deterioration is apparent in the net non-performing financing to capital ratio which increased sharply from 16.1% in 2015Q3 to 25.6% in 2016Q3.
Islamic banks and Islamic windows in the PSIFIs member countries generally maintained comparable rates of return on assets (ROA) and return on equity (ROE) during the periods under report. Overall, the ROA and ROE were 1.45% and 11.94% in 2016Q3 as compared to 1.36% and 13.86% in 2015Q3 respectively.
On the liquidity indicators, the liquid assets ratio (liquid assets to total assets) and liquid assets to short-term liabilities ratio decreased over the period from 39.6% and 15.1% in 2015Q3 to 35.6% and 13.9% in 2016Q3 respectively. Five PSIFIs member countries reported the newly introduced Liquidity Coverage Ratio (LCR), which all exceeded the 100 percent benchmark.
Size of Islamic Banking
The number of full-fledged Islamic banks and Islamic windows of conventional banks in 17 countries stood at 170 and 83 in 2016Q3 as compared to 169 and 85 in 2015Q3 respectively. At the end of 2016Q3, a total of 380,040 staff members were working in 29,733 branches of full-fledged Islamic banks, an increase of 243 branches but a decrease of 8,381 staff over the year from 2015Q3.
The PSIFIs Database (full set of data with metadata) is available on the PSIFIs portal at the IFSB website http://psifi.ifsb.org.
The Task Force of PSIFIs project includes representatives from all 17 participating regulatory and supervisory authorities that work as coordinators for regular submission of data of the respective countries and work with the IFSB during the due processes of data collection, compilation, revision, and approval. Three international organisations – the International Monetary Fund (IMF), Islamic Development Bank (IDB) and the Asian Development Bank (ADB) are also members of the Task Force.
The first set of PSIFIs data was released on 27 April 2015 covering the period of December 2013. The second, third, fourth, and fifth sets of data released on 24 November 2015 and 14 March 2016, 1 July 2016 and 28 November 2016.
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