Risk Management in
Islamic Financial Instruments
88
Liquidity Ratios
An Interbank Ratio of greater than 100 indicates the bank is net lender, rather than a net
borrower and resembles higher liquidity. Both the Islamic banks (175.29%) and conventional
banks (185.63%) maintain higher interbank ratios, which means that both types of banks are
lenders to the interbank market. A higher ratio for Net Loans / Cust & ST Funding maintained
by the Islamic banks (61.75%) represents lower liquidity, compared to conventional banks
(53.73%). (See Chart 4.38)
Chart 4.35 : Asset Quality Ratios for Kingdom of Saudi Arabia (K.S.A.)
Source: BankScope Database 2013
Chart 4.36: Capital Adequacy Ratio for Kingdom of Saudi Arabia (K.S.A.)
Source: BankScope Database 2013
4,67
12,66
130,55
3,45 2,73
16,51
120,84
4,80
0
20
40
60
80
100
120
140
Loan Loss Res / Gross
Loans
%
2011
Loan Loss Prov / Net Int
Rev
%
2011
Loan Loss Res / Impaired
Loans
%
2011
NCO / Net Inc Bef Ln Lss
Prov
%
2011
KSA Conventional KSA Islamic
16,24 18,10
26,11
16,12 18,54 20,62
52,54
71,54
0
10
20
30
40
50
60
70
80
Tier 1 Ratio
%
2011
Total Capital Ratio
%
2011
Equity / Net Loans
%
2011
Equity / Liabilities
%
2011
KSA Conventional KSA Islamic