Risk Management in
Islamic Financial Instruments
91
ROEs (1.30% and 8.08%), compared to Islamic banks (0.52% and 3.19%, respectively).
Conventional banks have also higher dividend payouts.
Liquidity Ratios
Interbank ratios for both the conventional banks (344.15%) and Islamic banks (150.37%) in
the U.A.E. are greater than 100%, which means that both types of banks are net lenders and
maintain higher levels of liquidity. However, Higher ratios of Net Loans / Cust & ST Funding
and Net Loans / Tot Dep & Bor for Islamic banks (59.58% and 83.84%), compared to
conventional bank (57.14% and 77.5%, respectively) suggest that the Islamic banks have
relatively lower liquidity. (See Chart 4.42)
Chart 4.39: Asset Quality Ratios for United Arab Emirates (UAE) Banks
Source: BankScope Database 2013
4,52
27,99
73,86
11,61
5,01
38,84
70,23
-2,71
-10
0
10
20
30
40
50
60
70
80
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
U.A.E. Conventional U.A.E. Islamic