...Key Message on 2017: Unlike conventional banks, financing growth was strong, but was supported by even higher deposit growth (more than 2x conventional banks). Strong financing growth was due to broader adoption and innovative structuring of sharia-compliant products, but also to young and fast growing franchises in some Islamic banks. The Islamic financing base reached 30% of sector financing at end-2017. Solid deposit growth led to improved funding and liquidity. Islamic deposits were 27% of sector deposits at end-2017. Asset Quality: Asset-quality metrics deteriorated in 2017 due to a slowing operating environment. Nevertheless, the financing impairment charges-to-average gross financing ratio reduced and is more in line with the conventional banks as provisioning levels have been built and impaired SME financing is now significantly provisioned. Financing-loss allowances are adequate as a proportion of impaired financing (almost 100%) and reasonable as a percentage of gross financing...
