The assets of sharia banks rose 18.49 percent year-on-year to Rp305.5 trillion by July, 2016 on growing third party funds.
Third party funds held by sharia banks rose 12.54 percent to Rp243 trillion in the same period, Chairman of the Board of Commissioners of the Financial Service Authority (OJK) Muliaman Hadad said in a news release received here on Sunday.
“The rise in third party fund resulted in an increase of 7.47 percent in sharia financing to Rp220.1 trillion from Rp204.8 trillion,” Muliaman Hadad said at a seminar on sharia financing in Washington, the United States, organized by the World Bank and the Islamic Financial Services Board.
The rise in sharia financing contributed to increase sharia share of the banking market to 4.81 percent in July, 2016 from 4.6 percent in July 2015. The market share rose to 5.13 percent if conversion of the Aseh Development Bank to Sharia bank was taken into account.
Muliaman said sharia finance could be an instrument to achieve Sustainable Development Goals (SDGs) as called for by the United Nations.
“The typical principles of sharia finance which give emphasis on equitable income and is oriented to environmental social activities, make development of sharia financial system very relevant with the SDGS goals,” he said.
Sharia finance covers not only poverty aspect but also health care, education, gender equal treatment, infrastructure development, economic development, anticipation of climate change, etc, he said.
He said sharia banking industry has grown in Indonesia as indicated by the decline in Non-Performing Financing (NPF) ratio to 4.81 percent by July 2016.
Return on Assets (ROA) rose to 1.06 percent by July, 2016 from 0.91 percent by July 2015. As for the ratio of operating cost to operating income has improved to 92.78 percent from 94.19 percent.
In addition, there was an increase in capital adequacy of sharia banks as reflected in the Capital Adequacy Ratio (CAR) to 14.86 percent in July 2016 from 14.47 percent last year.
The assets of sharia non bank finance industry rose 23.18 percent to Rp80.1 trillion by July 2016.
Global sharia bonds contributed 23.3 percent or US$10.15 billion to the total value of international sovereign bonds.
Indonesia is the first country to issue sharia retail bonds.
Muliaman said sharia capital market could also play a significant role in financing the governments infrastructure projects.
Separately a member of the OJK board of commissioner Firdaus Djaelani said in Semarang, the country had sharia banks, 22 conventional banks having sharia units and 165 sharia people financing banks.
Firdaus said based on data in September, 2016, there were 36 investment managers issuing sharia mutual fund (Reksadana), 12 securities companies issuing sharia on line trading system, 326 issuers and public companies with sharia shares and 51 series of corporate sharia bonds and 53 series of state sharia bonds have been issued.
Assets in sharia products in the stock exchange were valued at Rp3,272.84 trillion consisting of market capitalization of sharia shares, sharia mutual funds and corporate sharia bonds.