islamic finance

Islamic banks: 265% growth in net income in 2020

January 24, 2022

(TAP) - The net income of the three Islamic banks operating in Tunisia recorded an exceptional growth of 265% to 62 million dinars (MD) in 2020, against 17 MD in 2019, according to the annual report on banking supervision for the year 2020 published by the Central Bank of Tunisia (BCT) Friday.

This growth is the result of the combined effect of certain elements, namely: the doubling of the net result of a bank in connection with the increase in credits generating an increase in its profit margin and its NBI and the drop for another bank of the cost of the risk in connection in particular with the exceptional measures relating to the postponement of the deadlines.

Similarly, the NBI (net banking income) of Islamic banks saw a significant improvement of 39.1% in 2020, against 18.5%, one year earlier, which remains dominated by the strong contribution of the profit margin, i.e. 71%.

The operating ratio of Islamic banks also showed an improvement of 12.9 percentage points compared to 2019, to reach 56%; which level remains high given that the three banks are in an expansion phase.

According to the BCT, the activity of Islamic banks in Tunisia has developed strongly. Indeed, the share of assets they hold has jumped from 5.1% in 2017 to 6.4% in 2020. These banks account for 7.4% of the total deposits and 6.2% of the total credits of the banking sector at the end of 2020.

As for the operating jobs of these banking institutions, they amount to 6607 MD, recording an increase of 1106 MD or 20.1% compared to the year 2019.

The credit portfolio of Islamic banks reached 5750 MD composed mainly of Murabaha (72%) and Ijara (15.5%) operations.

The resources of Islamic banks rose in 2020 at the same rate as the previous year, i.e. 16.4%. The deposits of banks engaged in Islamic operations amounted to 6116 MD and are made up of 36.4% by sight accounts, 41.4% by savings accounts and 15.9% by participatory deposits.

The medium and long term resources of Islamic banks leapt slightly in 2020, against a drop over the last 2 years, to constitute only 1.6% of the total operating resources of Islamic banks against 5.3% in 2017.

The outstanding classified receivables of Islamic banks rose by 38 MD (or 9.9%), compared to 2019, to reach 430 MD.

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