Thursday March 22, 2007

Islamic banking assets 20.5% higher in 2006

Islamic banking assets expanded by 20.5% in 2006 to account for 12.2% of the banking system's assets. This was underscored by the 12.3% growth in financing, which now account for 13.2% of banking system lending.

Deposits mobilised by the Islamic banking system also grew at a robust rate of 18.2% to account for 12.2% of banking system deposits.

The risk-weighted capital ratio recorded a strong level of 16.6% while the core capital ratio was 12.6%.

Preliminary unaudited pre-tax profit of the Islamic banking system amounted to RM1.7bil, posting a growth of 9.6%.

The higher profit was contributed largely by growth in financing income (13%), income from funds placement (75.1%) and recoveries from non-performing assets (22.8%).

Consequently, the return on assets and return on equity for the Islamic banking sector were 1.3% and 16.4% respectively.

As at end last year, total financing extended by the Islamic banking sector was RM78.5bil. The level of non-performing financing continued to fall steadily as net non-performing assets as at the end of 2006 declined almost 25% to RM3.4bil to account for 4.5% of net financing.

Investment deposits (general and specific) rose by 10.3% to account for 49.6% of Islamic banking deposits, the bulk of which was concentrated in the short-term maturity profile of below one year (95.2%).

Savings and demand deposits expanded by 16.7% and 38.8% respectively, mainly attributed to the expanding retail customer base of Islamic banking.