continued... - Islamic Finance News

Islamic Finance news Guide 2008
Page 102
Accelerating Islamic Banking Growth in Indonesia (continued...)
with growth of 40.44% y-o-y, and for a while, the fi nancing
expansion of BUS recorded a lower rate of 24.5%, although
the banks have striven to do their best as refl ected by the
FDR from 93.6% in 2006 to 97.6%. Attempts by the Islamic
banking industry to optimally distribute the fund to various
production factors at a time when national banking was facing
diffi culties in distributing funds should be noted in relation to
the functioning of banks as intermediary institutions. Besides,
the expansion raised the fi nancing share of Islamic banking
from 2.6% in 2006 to 2.8%.
Figure 2: Structure of unrestricted investment
12 Month
6 Month
3 Month
1 Month
0.0%
20.3% 18.8%
11.6% 8.8%
18.6% 9.5%
49.5% 62.9%
20.0% 40.0% 60.0% 80.0% 100.0% 120.0%
2006
2007
Based on type of contracts, the fi nancing group based on
Qardh and Musharakah fi nancing increased along with a
high phase of growth each at 115.6% and 88.7% (see Table
3) while Ijarah fi nancing experienced negative growth (-
38.3%). Meanwhile, Murabahah fi nancing growth decreased
from 33.1% to 31.1%, even though it still dominated the
fi nancing portfolio, but its share dropped from 61.7% to
59.2%. Among the factors expected to support fi nancing
growth using Qardh is the bank’s fl exibility to determine the
use of the funds. This fl exibility is indeed supposed to be the
factor for Islamic banks to maintain competitiveness of its
long-term fi nancing products.
Favorable public perception of the investment climate and
in line with the boost in various production and investment
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indicators led to some movement in the fi nancing portfolio of
Islamic banking. On the one hand, the investment fi nancing
growth experienced rapid growth of 63%. On the other, the
consumptive fi nancing growth that has short-term and low
risk decreased signifi cantly to 28.2% y-o-y.
Table 3: Development of fi nancing product
Financing
products
Nominal (billion) Growth (%) Share (%)
2006 2007 2006 2007 2006 2007
Musharakah 2,334,751 4,406,360 23.0 88.7 11.4 15.8
Mudarabah 4,062,200 5,578,146 30.0 37.3 19.9 20.0
Murabahah 12,624,241 16,552,534 33.1 31.1 61.7 59.2
Istisna 336,970 350,995 19.6 4.2 1.6 1.3
Qardh 250,446 539,945 100.6 115.6 1.2 1.9
Ijarah 836,299 516,230 164.7 -38.3 4.1 1.8
Figure 4: NPF per-sector
SRV
TRNS
SOC
TRD
AGR
30.00%
20.00%
10.00%
0.00%
CONS
MIN
Nasional Shariah
ELEC
MAN
One of the aspects assumed promoting the fi nancing
reallocation is the different fi nancing risk in each sector of
the economy. Some sectors in which the production cost
signifi cantly increased due to the rise of oil and gas prices,
such as industry and transportation sectors, showed higher
continued...
Table 4 Development of BPRS business activities
ITEMS 2003 2004 2005 2006 Nov-07 G2007
Total Asset BPRS 292,959 471,454 604,971 906,325 1,186,540 31%
Share (%) 2.32 2.82 2.88 3.78 4.13
Financing 192,969 328,102 435,912 636,287 888,074 40%
Number of account 47,627 74,698 90,181 21%
Third Party Fund 184,925 267,062 353,565 530,150 702,717 33%
Number of account 21,070 314,584 343,234 9%
LDR BPRS 104.35% 122.86% 123.29% 120.02% 126.38%
LDR total BPR 89.32% 94.80% 96.12% 107.87%
NPF BPRS (Gross) 10.64% 8.29% 8.38%