Qatari Islamic banks have consistently enjoyed the lowest cost-to-income ratios throughout the 2017-18 analysis period, the Islamic Financial Services Board (IFSB) has said in a report.
With consistent record-low non-performing financing (NPF) rates, asset returns above the Islamic banking industry average, and provisions set-aside covering over 80% of NPF, Qatari Islamic banks' cost-to-income ratio has ranged between 22% and 24% during the period.
Qatar accounted for 6% of global Islamic banking assets during the review period, IFSB said in its ‘Islamic Financial Services Industry: Stability Report 2018’.
Islamic banking assets constitute 26% of the total banking assets in Qatar, .
According to a recent report by Bait Al-Mashura Finance Consultations, the country's Islamic banking sector achieved a growth of 9.1% in 2017 compared with the previous year.
Despite the fact that withdrawals were made in the non-resident deposits, total deposits in the sector achieved a growth rate of 13.2% supported by governmental deposits, the report said.
Additionally, finance resources granted by the Islamic banks have achieved a growth rate of 7.6% mainly by the private and retail sectors within the domain of consumer and real estate sectors through financing concentrated on Murabaha, Musawama and other modes.
The performance of these banks was more profitable since they achieved profits exceeding QR6bn with a growth rate of 4.6% enhanced by revenues with a growth rate of 13.1%, the report said.
The IFSB report said despite two years of assets’ growth stagnation, the global IFSI – covering Islamic banking, Islamic capital market and Islamic insurance (takaful) sector – has surpassed the milestone $2tn mark in 2017, marking an 8.3% growth in assets in dollar terms.
The robust growth was contributed actively by all sectors of the IFSI, but the key rebound in performance was experienced by the Islamic capital markets.
Most Asian countries reported growth rates of between close to 10% and well above 20% in Islamic banking assets. On the other hand, Gulf Cooperation Council (GCC) economies are feeling the strain from persistently low oil prices, with most Islamic banking growth rates below the average of 4%, IFSB said.
Several countries in North and sub-Saharan Africa are making efforts to introduce Islamic banking services which would enhance the industry’s growth prospects in the future.
Global Islamic banking has “sustained its resilience,” IFSB noted and said “most of its stability indicators are in comfortable compliance with the minimum international regulatory requirements.”
However, global Islamic banking can no longer claim to be superior to conventional banking in all the stability dimensions. For example, Islamic banks clearly outperform European Union (EU) banks in terms of return on assets (ROA), return on equity (ROE) and cost-to-income, but the capitalisation of EU banks is now stronger than that of Islamic banks and the non-performing loans ratio of EU banks is better than the NPF ratio of Islamic banks.