First quarter 2010 figures for various market indicators
show strong growth compared with the same period in 2009. Total Islamic banking
deposits, according to Bank Negara, for instance, increased from 156,580.5
million ringgit at end March 2009 to RM192,141.1 million at end March 2010.
Similarly, total assets of the Islamic banking system increased by some RM46
billion for the same period from RM194,450.9 million to RM240,565.2 million.
Similarly, total Islamic banking financing for the above
period increased from RM110,281.7 million to RM141,253.3 million with an
increase of RM40 billion, suggesting that while Malaysian banks did cut back on
lending and financing, it was not as severe in other countries especially those
in the West and in the GCC countries. The two largest financing segments were
higher purchase (Ijara of Bai Bithaman Ajil) financing especially of cars and
housing financing. Higher purchase in first quarter 2010 accounted for RM40.91
billion of financing extended, while housing finance accounted for RM24.361
billion.
In this respect the three most popular modes of Islamic
finance in first quarter 2010 were Bai Bithaman Ajil (deferred payment)
comprising RM45.936 billion; Ijara Thumma Al-Bai comprsing RM40.232 billion;
and Murabaha (cost-plus financing) comprising RM23.427 billion. Musharaka
financing (equity partnerships) accounted for a paltry RM2.837 billion while
trust financing (Mudaraba) was even more woeful at RM295 million for the first
quarter of 2010.
The total capital of the Islamic banking sector in Malaysia
increased from RM16.977 billion at end March 2009 to RM 20.903 billion at end
March 2010, with TIER 1 capital increasing from RM14.281 billion to RM17.305
billion for the same period. The total risk weighted assets similarly increased
from RM115.126 billion to RM140.452 billion respectively.
In terms of capital adequacy ratio, Malaysian Islamic banks
remained steady and strong. Risk weighted capital ratio changed slightly from
14.7 percent to 14.8 percent, while core capital ratio (CAR) decreased
marginally from 12.4 percent to 12.3 percent for the above period.
Not surprisingly, because of tough market conditions, the
performance returns of Malaysian Islamic banking sector for savings deposits at
commercial banks decreased to 0.91 per centon investment accounts at end March
2010 as opposed to 0.95 percent in 2009 and 1.15 percent in 2008.
The Takaful (Islamic insurance sector) also grew but
modestly once again suggesting that the sector is finding it difficult to
penetrate the general insurance market in Malaysia. There are eight Takaful
providers licensed by Bank Negara in Malaysia. Their number of offices fell by
157 in 2008 to 104 in 2009, reflecting the impact of the global recession and
the financial crisis. Even the number of Takaful sector employees hardly
increased by much totaling 2,499 in 2009 compared with 2,411 in 2008.
Total Takaful fund assets increased from RM10.569 billion in
2008 to RM12.445 billion which is modest compared to the conventional insurance
market. Similarly total net contributions income increased from RM3.025 billion
in 2008 to RM3.521 billion in 2009.
However net benefits and claims payments, according to Bank
Negara Malaysia, jumped from RM866.1 million in 2008 to RM1.208 billion in
2009.
