Strongest Banks (2024)

In this year’s The Asian Banker Strongest Islamic Banks By Balance Sheet evaluation, Al Rajhi Bank remained on top of the ranking of the strongest Islamic banks based on a detailed and transparent scorecard that evaluates Islamic banks on six areas of balance sheet financial performance, namely the ability to scale, balance sheet growth, risk profile, profitability, asset quality and liquidity.

Saudi Arabian and Qatari Islamic banks attained the highest average strength score of 3.91 and 3.62 out of 5 respectively. Kuwaiti and Turkish banks achieved higher average strength score than that recorded by all the 100 Islamic banks, at 3.27 out of 5. The average return on asset (ROA) of Saudi Arabian and Qatari Islamic banks reached 1.91% and 1.52% respectively, compared with the global average of 1.05%. Saudi Arabian Islamic banks remained well capitalised, maintaining a 19.5% average capital adequacy ratio (CAR), while the average gross non-performing loan (NPL) ratio and loan loss reserves (LLRs) to gross NPLs ratio stood at 1.3% and 251% respectively.

The top 10 Strongest Islamic Banks comprise three Saudi Arabian banks, three Qatari banks, two Turkish banks and one each from Kuwait and Pakistan. Al Rajhi Bank performed strongly in most indicators and registered a 22% growth in assets. Qatar Islamic Bank placed second, with a 1.8% ROA and a 20.1% cost to income ratio. It maintained a CAR of 19.4% and its asset quality also remained relatively sound. However, its liquid assets to total deposits and borrowings ratio was at a low level of 12.7%. Dubai Islamic Bank, the second largest Islamic bank in the world, ranked 11th in the ranking of the Strongest Islamic Banks.

Meezan Bank, Bank Islam Malaysia (BIMB) and Maybank Islamic are the top three strongest Islamic banks in Asia. The three banks maintained strong levels of capitalisation as evidenced by the CAR of above 18%. Meezan Bank excelled in profitability and liquidity, while BIMB and Maybank Islamic showed better performance in asset quality. The ROA of Meezan Bank improved from 1.6% in 2019 to 1.8% in 2020, and its liquid assets to total deposits and borrowings ratio was higher at 67% in 2020. Maybank Islamic saw its ROA weaken to 0.6% from 1.08%, and BIMB’s ROA was also reduced from 0.97% to 0.82%. However, the gross NPL ratio of Meezan Bank deteriorated to 2.8% in 2020 from 1.8% in the year earlier. Both BIMB and Maybank Islamic witnessed improvement in asset quality. The gross NPL ratio of BIMB was down from 0.86% to 0.67%, while the gross NPL ratio of Maybank Islamic improved from 1.62% to 1.19%.

For a full explanation of the evaluation criteria please click here.

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