Professional Documents
Culture Documents
Operation I
Prof. Saiful Azhar Rosly saiful@incif.org
International Center For Education in Islamic Finance (INCEIF)
Content
1. Introduction to Islamic Banking Operations
2. Shariah Framework
g y
3. Regulatory Framework
4. Legal Framework
5. Financial Statements of Islamic banks
6. Islamic Banks in the Muslim World
7. Lessons from Subprime Crisis and Financial Turmoils
Islamic Financial Market
Islamic Financial Market
Islamic Financial
Market
Direct Financial
Indirect Financial
Indirect Financial
Market
market
(Capital Market)
Two Approaches
General Framework of Islamic
1. Shari’ & Tabi’
Finance
Fiqh Academy
Basel II
Basel II
M k h
Mekah
Islamic Financial
AAOIFI B h i
AAOIFI, Bahrain S i B d
Service Board
(IFSB)
Bank Negara
Shariah
Sh i h Bank Negara
B kN
Supervisory Board, Malaysia
Malaysia
Shariah Framework
Shariah
Man with Allah
swt Man among
5 Pillars of Iman
5 Pillars of Iman
Man
5 Pillars of Islam
Shariah Framework
Shariah Framework
5 Shariah Principles
5. Prohibition on
3.Avoidance 4.Prohibition the production and
1 Prohibition 2.Application
of Gharar in of Gambling servicing of
of Riba of Al‐Bay prohibited
Contracts ((maisir)) commodities
New Parameters in Shariah Compliance
FFramework: Consistency is Critical
k C i i Cii l
‘AQAD
Principles
LEGAL/CONTRACT
MAQASID DOCUMENTATION
Benefits vs disbenefits
Benefits vs disbenefits P t ti
Protection of Rights
f Ri ht
FINANCIAL
REPORTING
AAOIFI/IFSB/IFRS
Approved Islamic Finance Products
Approved Islamic Finance Products
• BBA Home Financingg
• Bay Inah Home Financing
• Bay Inah Personal Financing/Overdraft/credit card
• Tawaruk munazam personal financing
• Commodity murabaha
• Ij h th
Ijarah thumma al‐bay
lb
• Bai‐bithaman Ajil Islamic Debt Securities (BAIDS)
• Discounted Bay al‐dayn MuNif
Discounted Bay al‐dayn MuNif
• Sukuk Ijarah
• Sukuk Musharakah
Challenging issues in AQAD‐based Islamic
Fi
Finance Products
P d
• Benchmaking profit rate against interest rate (LIBOR,KLIBOR).
• Profit Equalization Reserve (PER) –
( ) displaced commercial risk
• Sale with condition to buyback at predetermined price
between two and three parties.
• Profit generated over installment payments –
Profit generated o er installment pa ments time value of
time al e of
money
• Penalties on delayed payments
• Benchmaking sukuk rates against LIBOR
Benchmaking sukuk rates against LIBOR
• Musharakah with Purchase undertakings – fixed profit to
one party only.
• Ijarah Sukuk
Ijarah Sukuk ‐ Sale with repurchase agreement at par value
Sale with repurchase agreement at par value
and not mark‐to market
• Ijarah Sukuk – Ownership of asset by SPV
• Profit‐rate swaps –
p speculation or gambling?
p g g
Method #1: The AQAD‐BASED
Method #1: The AQAD BASED
• Shariah compliance implies fulfilling the
Shariah compliance implies fulfilling the
requirement of AQAD.
4 Requirement of Contracts
4 Requirement of Contracts
1. Agents of Contract
2 Objective of Contract
2. Objective of Contract
3. Subject Matter of Contract
Pi
Price
4. Offer and Acceptance
Aqad
q
Agents of
Agents of Objective
Objective Subject
Subject Offer &
Offer &
Contract of Contract Matter Acceptance
Sale (Al‐Bay’)
Transfer of
Price set on the
Price set on the
Buyer & Seller Ownership from Property
spot
Buyer to Seller
Contract of Sale
Contract of Sale
• Example: Murabaha/BBA Sale
1. Buyer and Seller
eg. Seller owns
S ll asset/subject matter before making
t/ bj t tt b f ki
sale
2. Subject matter
j
eg. Mal mutaqawim – property with usurfruct
3. Price
eg. Set on the spot
S h
4. Offer & Acceptance
eg Verbal or in writing
eg. Verbal or in writing
Method #2: Maqasid al‐Shariah/Objective
Method #2: Maqasid al Shariah/Objective
of Shariah
To protect the interest of the public (society)‐ maslahah al‐
ammah by:
1. Removing the harm ( ibqa)
1 Removing the harm ( ibqa)
2. Securing of benefits (tahsil)
Maqasid
Shariah
Protecting
Public Interest
Removing the
Removing the Securing the
Securing the
Harm Benefit
Objective of Shariah
Objective of Shariah
Islamic financial products as defined by AQAD
p y Q
methodology, should contain more benefits
(masalih) and less or no harm (madarah).
“ in gambling (maisir) and liqour (qimar), there
are some sins and some profits But the sins
are some sins and some profits. But the sins
are greater than the profits” (Al‐Baqarah:
168).
)
Manfaat Mudarat
“ in gambling (maisir) and liqour (qimar),
there are some sins and some profits. But
the sins are greater than the profits”
f (Al-
(
Baqarah: 168).
Manfaat Mudarat
Riba
“ in Gambling (maisir) and Liqour (qimar),
there are some sins and some profits. But
the sins are greater
g than the profits”
p (Al-
(
Baqarah: 168).
Mudarat Manfaat
Sins Profits
Mudarat Manfaat
Riba
Mudarat Manfaat
Mudarat >
>
Manfaat
HARAM
Mudarat <
<
Manfaat
HALAL
Downside (Madarrah) of Credit‐Financing
Downside (Madarrah) of Credit Financing
MACRO MICRO
Economic Bubbles Bankruptcy
Subprime Loans Foreclosure
Financial Turmoil
Financial Turmoil Unemployment
The upside (Manfaat) of Credit‐
Financing
MACRO MICRO
Allocation of Capital
p Wealth creation
Economic Growth Rich becoming richer
• What if, it was proven than they (ABP) contain more harm than good?
eg Abandon projects customer cannot make recourse against bank
eg. Abandon projects – customer cannot make recourse against bank
as selling party?
Defaulted BBA customer are required to make settlement based on the
selling price.
gp
Sale with no transfer of ownership.
Giving away clean inah personal financing at high profit rates– a way
towards subprime inah?
Conflict between Aqad and Maqasid?
Method #3: Financial Reporting
Method #3: Financial Reporting
• Proper recording of transactions to evident TRUE SALE.
• IFRS – Transparent, consistent and comparable
information
• BBA – bank must put BBA asset on balance sheet prior to
sale. I week, 1 month it depends.
l I k 1 th it d d
• Once sold, it is recorded as BBA receivables.
• AITAB assets should be on banking book as leasing assets
b
but now treated as “financing and advances”.
d “fi i d d ”
• External auditors (PWC, KPMG etc.) are not required by
the authority to conduct Shariah audit. And they may not
be not capable to do so
be not capable to do so.
Conflict between AQAD and financial reporting?
Islamic Bank Average Balance Sheet
Islamic Bank Average Balance Sheet
Assets Liabilities
Murabaha/BBA Wadiah Dhamanah deposits
AITAB Profit Sharing Investment Acct
Islamic Securities/Sukuk Capital
1st October 2008
Assets Liabilities
FIXED ASSET
1. BBA asset
15 October 2008
Assets Liabilities
CURRENT ASSET
2. BBA Receivables Profit in‐Suspense
• Ijarah should be documented as operating lease and not
a loan (Tinta Press vs. BIMB)
• Islamic bank has not practice fairness compared with
conventional bank (Affin bank vs Zulkifli).
Conflict between AQAD and documentation of AQAD?
‘Do
Do not Sell what you don not Own”
Own
Hadith (Sahih Bukhari)
High Court Judge Datuk Abdul Wahab Patail says that the
sale element in BBA sale is not a bona fide sale
1. Sale and Purchase Agreement (SPA)
2. Property Purchase Agreement (PPA)
3
3. Property Sale Agreement (PSA)
Property Sale Agreement (PSA)
4. Deeds of assignment/Charge
2. Bank do not have
legal + beneficial ownership
1. No transfer of title from Customer to Bank of property to make a valid sale
Regulatory Framework
Regulatory Framework
Basel 2, IFSB, AAOIFI, Central Banking
Islamic Financial Market
Islamic Financial Market
Shariah Regulatory
Framework Framework
Fiqh Academy
Basel II
Basel II
M k h
Mekah
Islamic Financial
AAOIFI B h i
AAOIFI, Bahrain S i B d
Service Board
(IFSB)
Bank Negara
Shariah
Sh i h Bank Negara
B kN
Supervisory Board, Malaysia
Malaysia
Islamic
Islamic
Banking Act
(IBA)1983
“Islamic bank” means any company which
carries on Islamic banking business and
holds a valid license; and all the offices
and branches of such a bank shall be
deemed to be a bank”
deemed to be a bank
“Islamic banking business” means banking
business who aims and operations do not
involve any element which is not allowed by
involve any element which is not allowed by
the Religion of Islam”
“Element which is not allowed by the Religion of Islam”
(IBA 1983)
(IBA 1983)
5 Shariah Principles
5 Shariah
Prohibition
on the
Avoidance of Prohibition
1 Prohibition Application production
Gharar in
in of Gambling
of Gambling
of Riba of Al‐Bay and servicing
Contracts (maisir)
of prohibited
commodities
Islamic Banking Act 1983
Islamic Banking Act 1983
2. Financial requirement and
4. Restriction on Business
duties of Islamic banks
1. Licensing of
Islamic banks
l b k
JV
Stocks
Venture capital Private Equity
Sukuks Capital
Property
MORE OUTPUT IN THE BANKING BOOK
Anglo‐Saxon Islamic Banking
Wall between commercial and investment banking
W ll b i l di b ki
US : Glass ‐ Steagall Act 1938 Malaysia: BAFIA 1992
Financing Deposit
Mortgage Saving
Hire‐Purchase PSIA
Personal
Securities
Islamic
Banking
Venture Private
Leasing Brokerage Property Unit Trust
Capital Equity
Conventional to Islamic
Conventional to Islamic
IBA 1983: No Wall between Commercial and
Islamic Banking and BAFIA 1989 Investment banking
A t
Asset Li bilit
Liability A t
Asset Li biliti
Liabilities
Mortgage Saving Financing Wadiah
Hire‐Purchase PSIA Mortgage Dhamanah
HP Savings
Personal Personal
Sukuks
Operation PSIA
al Leasing
JV
Stocks
Sukuks
Universal Banking: Economies of Scale and Scope
g p
Less Cost
More Outputs Higher Profits
per Unit
IBA 1983
Buy and sell assets and
Buy and Sell common
properties ‐ BBA, Buy assets and leasing of Fee‐Based Financial Private Equity
stocks ie Joint ventures – Fund Management
Murabahah, Salam, assets – Ijarah Services
Musyarakah,mudarabah
Istisna’
Islamic Banking Act 1983 on Shariah
advisory body
“that there is in the article of association of the bank concerned, provision for the
establishment of a Syariah advisory body to advise the bank in the operation of its
banking business in order to ensure that they do not involve any element which is not
approved by the Religion of Islam”
Islam
Role of Shariah Supervisory Board
Role of Shariah Supervisory Board
To study fatwas
Supervise
previously issued
activities of
by SSB of
member banks to
member banks
ensure they are in
and how these
conformity with
fatwas conform to
Sh i h rulings
Shariah li
Shariah rulings
To issue fatwas
(religious legal Settlement of
opinions) on
litigation against
financial products
and banking Islamic bank?
operations
Role of Shariah Supervisory Board
Role of Shariah Supervisory Board
Determination of profit-
profit
A
Accounting
ti policy
li
sharing ratio between
adopted by banks
banks and clients
Others Duties
• Interpretations and enforcement of the application of the Islamic laws,
principles and traditions on all of the business operations of Islamic banks.
i i l d di i ll f h b i i fI l i b k
• To decide on the Shariah aspect of a new type of transaction envisaged and
also to explain the opinion given in light of Islamic principles
• To submit annually a written report to the shareholders to the effect that they
To submit annually, a written report to the shareholders to the effect that they
have discharged their obligations.
• To ensure that zakat payment is correctly calculated and distributed.
Banking
Practisioners BNM Shariah Muftis
Advisory S e i
Supervisory B d
Board Sh i h
Shariah FATWA
BNM officials Scholars
Bank Negara
g
Malaysia – Islamic
Banking Department Usul-Fiqh
Qawaid
Fiqhiyyah
Proposals
Fiqh
Muamalat
ISLAMIC BANKING DIVISION
- Commercial bank
Finance company
Merchant bank
Tax Law
Contract
Tax Neutrality
Documentation
Tax on leasing,
murabahah
murabahah, Litigation
assets
Products and Services
Products and Services
Islamic Banking
Simple Bank Organization
Simple Bank Organization
Board of
Di t
Directors
Shariah Advisory
Committee
CEO
Risk
Corporate Retail Investment ICBU
Management
The Conventional Banking Business
The Conventional Banking Business
Banking Firm
Banking Firm
Asset Liability
$160b $160b
$20b
Capital $20b
Non‐Banking
Non Banking Firm
Firm
Asset Liability
$20b C i l $20b
Capital $20b
Bank as Financial Intermediary
Bank as Financial Intermediary
Banking is a business based It can borrow 8 times its
on Leveraging
g g Capital
p
1. CAR 8%
1a. Bank Capital $20b
2 Borrowing
2. Borrowing $160m@5%
3. Lending $160@10%
4.Revenue $160m x 0.1 = $16b
5. Cost of deposits $160m x 0.05 = $8b
6. Overhead
6. Overhead $3b
7. Provisions $1b
8. Profit $16b – ($8b + 3B + $1b) = $4b
9. ROE $4b/$20b = 20%
10. ROD 5%
Islamic Banking
Islamic Banking
ISLAMIC BANKING
OPERATIONS
Qirad/Musharaka
(partnership)
Istisna’ Kafalah
Murabaha Ijara
(sale (guarantee)
(deferred (leasing)
sale)) by order)
Al Bay
Al‐Bay’
Spot Deferred (Muajjal)
C
Cost-Price
Pi + M k
Mark-up = Selling Price
‘IWAD
Ghurmi
Kasb Daman
(eg.ownership
risk) (Value-added) (Liability)
Al Bay’
Al‐Bay
‘IWAD
LIABILITY
(Daman)
Risk
(Ghurmi)
Profit
Work & Effort Responsibility
p y
(Kasb) (Daman)
Murabaha Financing :
Determination of Islamic Bank’ss
Determination of Islamic Bank
Profit Rate
Time Value of Money Reconsidered
Murabaha Financing
Murabaha Financing
Murabaha
Selling Price
Selling Price
Profit Margin
g
Cost Price Profit rate x
$
$Facility x tenor
y
Murabaha Financing
Murabaha Financing
Profit Rate
Cost of
Cost of Risk‐
Risk
Overhead
h d
Deposit Premium
Interest‐bearing
Interest bearing Loan
Loan
Interest
Rate
Cost of
Cost of Risk‐
Risk
Overhead
h d
Deposit Premium
Cost of Deposit
Risk Free rate
True Time Value Risk Premium
of Money
Time Value of Money
Time Value of Money
Islamic Perspective
TIME VALUE OF MONEY
Time Preference indicates the extent of a family’s preference
for current consumption over future consumption
1. Positive Time Preference
1 Positive Time Preference
Money today is worth more than money tomorrow
2. Negative Time Preference
Money today is worth less than money tomorrow
3. Neutral Time Preference
Money today is equivalent to money tomorrow
Money today is equivalent to money tomorrow
Positive
$
$1now >
time
time
preference $1future
Neutral
N t l
$1now =
time
preference $1 future
Negative
$1now <
time
time
preference $
$1future
Time Value of
Ti V l f
Money
Positive Time
Neutral Time Negative Time
Preference
Preference Preference
(PTVM)
Capitalism:
Islamic PTVM
PTVM leads to
PTVM leads to
l d
leads to hibah
hb h
interest
Time Value of Money
Time Value of Money
• Principle = Present value = $1000
p $
• Interest = 10% per year = $100
• y
Tenure = 1 year
• Future value = Present value + interest
• $1000 = $1000 + $100
• FVt = PV0 (1 + i)t
• i>0 ; FV > PV i.e.Positive time preference
• i=0 ; FV = PV i.e. Neutral time preference
• i<0; FV < PV i.e. Negative time preference
Time Value of Money
Time Value of Money
• Positive Time Preference
Positive Time Preference
• Dollar now worth more than dollar tomorrow.
• Why? Future is uncertain
Why? Future is uncertain.
• Lenders stand to lose if loan is paid without
any fixed surplus
any fixed surplus
• Surplus paid due to delaying payments i.e. the
time factor rationalizes interest payments
time factor rationalizes interest payments.
• No other factor explains interest charges other
than time taken to pay up
than time taken to pay up.
Increments in Islamic Loans
Increments in Islamic Loans
• Islamic
Islamic loan
loan – the debtor sets the increment
the debtor sets the increment
• The increment in lawful halal = hibah
the best among you is he/she who pays a handsome
• “the best among you is he/she who pays a handsome
debt” (Hadith Sahih)
• “the
the best among you is he/she who upon settling
best among you is he/she who upon settling
his/her debt, pays more (Hadith Sahih)
• The increment is set or declared on maturityy
• The increment is not contractual or fixed upfront
• The increment is voluntary
The increment is voluntary
Islamic time value of money
Islamic time value of money
• Delay in payment can allow seller to increase price
• But increase in price must be accompanied with ‘iwad i.e. (an
equivalent countervalue)
• Seller must own asset for making the sale
g
• Buyer owns the asset after sale eventhough payment is made
by installment
• Seller holds no right to put the asset under charge.
g p g
• Under charge = buyer places the purchased asset as collateral
but enjoying the usurfruct at the same time
• Buyer can place a colleteral (rahn) over the credit payment
Buyer can place a colleteral (rahn) over the credit payment
• Seller can sell the asset to a third party even before
completing payment.
• Seller must provide warranties on the asset sold
Seller must provide warranties on the asset sold
Simple interest‐bearing loan
i>0
Loan = $10,000
$ ,
Debt = $11,000
Debt > Loan
Total payment to Maybank = P + iP
Total payment to Maybank P + iP
0 Year 1
T l repayment to Maybank
Total M b k=P Principal
i i l + iinterest = P + iP = P (1 +II )
Simple Loan i>0
Simple Loan i>0
Total payment to Maybank = P + iP
0 Year 1
T l repayment to Maybank
Total M b k=P Principal
i i l + iinterest = P + iP = P (1 +II )
Discount Bond
Discount Bond
Year 1
0
Borrower receives
i $9091
$ Borrower repays
From discount bond $10,000
Islamic Loan
i 0
i=0
Loan = $10,000 ; Debt = $10,000
L
Loan = Debt
D b
Total payment to Maybank = P + 0P
Total payment to Maybank P + 0P
0 Year 1
T l repayment to Maybank
Total M b k=P Principal
i i l + 0 = P + 0P = P (1 +0
0)
Increments in Conventional Loans
Increments in Conventional Loans
• Conventional
Conventional loan
loan – the creditor sets the
the creditor sets the
increment
• The increment in unlawful haram = riba
The increment in unlawful haram = riba
• The increment is set upfront
• The increment is determined in the letter of
loan offer
• The increment is contractual i.e. legal action
on borrower if he fails to pay up.
p y p
Risk and Riba
Risk and Riba
• Bank
Bank is compensated for the risks it
is compensated for the risks it
undertakes
• Risk is the volatility of net cash flows of the
Risk is the volatility of net cash flows of the
firm
• Bank profitability depends on the
B k fi bili d d h
management of risks
• Riba is profit acquired without holding risks in
sourcing capital.
• Riba is the compensation for waiting and not
compensation for risking own capital.
The Prophet Muhammad (saw) enjoins debtor to pay more
Th P h M h d( ) j i d b
but on voluntary basis because he (saw) foresees the
problem/uncertainties falling upon the creditor who has to
bear:
• Risk of default
Ri k f d f lt
• Risk of inflation
• Opportunity cost of the loan
Since a creditor faces the above uncertainties, given an
option to spend the money today or in the future, he
p p y y
will choose the former. In this way, he holds positive
time preference (PTP) outlook.
Why pay more on Qard Hasan?
Wh Q dH ?
To say “thank you” –
y y expressing
p g
one’s GRATITUDE
• Opportunity Cost: The creditor foregoes
opportunity of earning income from the
money given away as loan
• Inflation risk: The creditor may lose out when
y
the payments holds lower purchasing power
due to inflation
Islamic recognizes that $1 today
$
is worth more than $1
is worth more than $1
tomorrow
• B
But compensation for abstinence is not
t ti f b ti i t
contractual ie not set when the loan contract is
made
• Compensation is voluntary
• Compensation known only when the debt
Compensation known only when the debt
matures
Qard Hasan
Qard Hasan
Why Pay
Why Pay
More?
Gratitude
Inflation
Opportunity
cost
Asset Liability
Loans Deposits
The Banking Business
SL r
r Sd
rL1
10%
rd1
5%
DL Dd
L1 Loan D1 Deposit
$20m $20m
Average Balance Sheet: Islamic Banking
g g
Asset Liability
Cash Wadiah Dhamanah Current
Account
BBA Home Financing Wadiah Dhamanah Savings
Account
AITAB Car Financing Restricted Mudarabah
Account
Bay al‐Inah Personal Financing
B l I hP l Fi i U
Unrestricted Mudarabah
t i t dM d b h
Enterprise Financing Account
Government Islamic Securities Commodity Murabahah
Negotiable Islamic Certificate
Negotiable Islamic Certificate
of Deposits
Sukuk
Fixed Assets Shareholders’ Capital
Income Statement
‘R
‘Reward comes with Risk”
d i h Ri k”
Islamic Banking
Profit and Loss
Revenues $500m
Cost of Funds $200m
Gross Profit $300m
Overheads $80m
Provisions for NPF $10m
Profit Equalization Reserve $5m
Profit Before Tax and Zakat $200m
Tax and Zakat $
$60m
Net Profit $140m
BALANCE SHEET
BALANCE SHEET
ASSETS
• Cash and short‐term funds
• Deposits and placements with banks other financial institutions
• Dealing securities
• Investment securities
• Financing , advances and other loans
• Other assets
• Bills receivable
• Statutory deposits with Bank Negara Malaysia
• Investment in subsidiary companies
• Investment in associated company
• Property , plant and equipment
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ FUNDS
• Deposits from customers
• Deposits and placement of banks (PSIA,commodity murabaha,NICD)
• And other financial institutions
• Bills payable
• Other payables
• Subordinated financingg
• Zakat and taxation
• Deferred tax liabilities
TOTAL LIABILITIES
• Share capital
• Reserves
• SHAREHOLDERS’ FUNDS
SHAREHOLDERS FUNDS
TOTAL LIABILITIES AND SHAREHOLDERS’ FUNDS
• COMMITMENTS AND SHAREHOLDERS’ FUND
• Capital Adequacy
• Core capital ratio before proposed dividends
• Risk‐weighted capital ratio before proposed dividends
• C
Core capital ratio after proposed dividends
it l ti ft d di id d
• Risk‐weighted capital ratio after proposed dividends
Islamic Bank as a Financial Intermediary
1. CAR 8%
1a Bank Capital
1a. Bank Capital $20b
2. Investment Deposit $160m@ex post
(Partnership)
Transaction Deposit
p
3. Financing (Trade) $160@10%
4 Revenue
4.Revenue $160m x 0 1 = $16b
$160m x 0.1 = $16b
5. Cost of deposits $160m x 0.05 = $8b
6. Overhead $3b
7. Provisions $1b
8. Profit $16b – ($8b + 3B + $1b) = $4b
9. ROE $4b/$20b = 20%
10. ROD 5%
Asset Liability
Asset‐based financing Transaction Deposit
Murabahah/BBA
AITAB
Ijarah
Istisna
Salam
Tawaruq
Bay inah
Partnership/Contract Financing Investment Deposit
Musharakah Restricted PSIA
Mudarabah Unrestricted PSIA
Fee‐based financing Commodity Murabaha
Wakalah
Investment
Sukuks
Fixed Assets
Tier 1 Capital Common Stocks
Tier 2
Capital Preference Shares
Reserves
Murabaha: 1st November 2008: Bank Buys and
H ld A
Holds Asset
Asset Liability
Current Asset
Current Asset
Fixed Asset
Murabaha asset
ISLAMIC BANKING
I
Income‐Statement
S
• Income derived from investments of depositors fund
• Allowance for losses on financing
• Profit equalization reserve
• TOTAL DISTRIBUTABLE INCOME
• Loss/income attributable to shareholder
/
• Income derived from investment of shareholders’ fund
• TOTAL NET (LOSS)/INCOME
• P
Personal expenses
l
• Other overhead expenses
• (LOSS)/PROFIT BEFORE ZAKAT AND TAX EXPENSE
• Zakat
• Tax expense
• NET(LOSS)/PROFIT FOR FINANCIAL YEAR
Per
rcentage
C
as
A h
dv an
an d
ce ca
s s
to eq
0
10
20
30
40
50
60
ot ui
he va
r le
fin n
an
ci
al
M in
ur st
ab itu
ah tio
a/
A
l-B
ai
'B
ith
am
an
A
In
a
S
al
am
/Is
tis
na
M Ija
us ra
ar
ab
a/
M
uq
ar
ad
a
In
ve
st
m
en
t M
in us
se ha
cu ra
rit ka
ie
s/
co
m
pa
ni
e
Consolidated Balance Sheets of Islamic Banks in GCC and Malaysia
Regional Balance Sheet Comparison
O
th
er
s
GCC
y
Malaysia
International Outlook of Balance Sheet Items
C
Consolidated
lid t d Balance
B l Sheet
Sh t Items
It off Islamic
I l i Banks
B k in
i GCC and
d Malaysia
M l i combined
bi d
9%
Cash and cas
17% equivalent
3% Advances to other
financial institutions
Murabaha/ Al-
Bai'Bithaman Ajil
Ina
Salam/Istisna
Ijara
Musaraba/Muqarada
12%
Musharaka
Investment in
securities/companies
Others
1%
1%
6%
47%
4%
0%
International Outlook for Sources of funds
Shareholders equity
11%
Current Accounts
28%
Investment/Savings accounts
48%
To Be Continued
To Be Continued..
Thank You