Financing from Islamic banks crosses US$1t mark, says IFSB

IFSB releases country-level data on financial soundness and growth of Islamic banking systems for 21 nations, including the UK


The global Islamic banking industry of 21 nations — including Malaysia, the United Arab Emirates (UAE) and the UK — stood at US$1.7 trillion (RM6.98 trillion) as at the end of the first quarter of 2018 (1Q18), up 8% from the same period in 2017.

Financing by Islamic banks from the same set of nations grew by 6.7% and reached US$1.03 trillion in 1Q18, crossing the US$1 trillion mark.

The figures come from newly released data by the Islamic Financial Services Board (IFSB), representing 95% of the global Islamic banking sector.

IFSB has released country-level data on financial soundness and growth of the Islamic banking systems for 1Q18 from 21 member jurisdictions.

The 10th dissemination includes data from four new members — Qatar, Palestine, Lebanon and the UK.

In a statement, the Kuala Lumpur-based outfit said the number of full-fledged Islamic banks and Islamic windows of conventional banks in the 21 IFSB member participating countries stood at 188 and 85 at 1Q18 respectively, compared to 184 and 84 in the same quarter last year.

Since the Islamic banking data- base is already covering over 95% of global Islamic banking activity, IFSB said its next focus is to establish a global database which will provide detailed sector-level financial statements for each participating country.

Similarly, it said while completing the background work for extension of the project to Islamic capital market (ICM) and takaful sectors, the IFSB secretariat will invite selected ICM and takaful regulatory and supervisory authorities (RSAs) for participation in this project in 4Q18.

The countries currently participating in IFSB’s prudential and structural Islamic financial indicators (PSIFIs) database project include Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Lebanon, Malaysia, Nigeria, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Sudan, Turkey, the UAE and the UK.

PSIFIs are important due to the limited availability of accurate, reliable and consistent statistical information on the Islamic financial services industry worldwide, according to a brief on the indicator at the IFSB website.

PSIFIs are collected from the RSAs of participating jurisdictions, which ensure the reliability of the data presented. PSIFIs are benchmarked against the financial soundness indicators programme of the International Monetary Fund (IMF).

As such, it helps to provide greater comparability and consistency with the available data on conventional financial systems in the respective jurisdictions, the brief added.

IFSB secretary general Dr Bello Lawal Danbatta said with the dissemination of Islamic banking data of the UK for the first time, the PSIFIs database have achieved an important step in extending its outreach to another important Islamic finance market.

Under phase four of the project, he said the current template for data collection for the Islamic banking

sector is being extended to the template of detailed sector-level financial statements for more granular data on income statements, as well as financial positions — which provides more in-depth understanding to data users on the trends and stability of Islamic banking activities in participating jurisdictions and at the global level.

“IFSB has also undertaken several efforts to expand the database coverage to ICM and takaful sectors, including conducting an industry-wide survey, finalisation of the list of indicators and compilation methodologies,” he said in a statement.

The PSIFIs project task force includes representatives from 21 participating RSAs that work as coordinators for regular submission of data from their countries and work with IFSB during the due processes of data collection, compilation, revision and approval.

Three international organisations — the IMF, Islamic Development Bank and Asian Development Bank — are also members of the task force.