Hajjah Salma
5.3 Loans and Advances
0
500
1000
1500
2000
2500
3000
1998 1999 2000 2001 2002
Conventional Bank
Islamic Banks
The diagram above provides evidence of a marked shift in affording of
loans and advances to the public. The market share for loans extended by
Islamic banking in 1998 is 23 per cent, but within two years, it increased to 49
per cent. However, in the next following years, the growth has remained
stagnant at the same level. A further analysis of the breakdown of lending
(see Diagram 9), indicates that although the high growth in the loans and
advances took place it is more in the direction of consumption rather than
production. Lending to manufacturing sector for the total five years averages
at a low BND6.7 million as opposed to BND99 million by the conventional
banks.
0.00
%
5.00
%
10.00
%
15.00
%
20.00
%
25.00
%
30.00
%
35.00
%
40.00
%
Personal loans
Transportation
Construction
General Commerce
Mortgage
Others
2002
2001
2000
1999
1998
Source: Financial Institutions Division, Ministry of Finance.
Diagram 8: Loans and Advances by Conventional and Islamic
Banks for 5 years, 1998 to 2002 (BND Million)
Diagram 9: Breakdown of the market share of Islamic Banks
to main lending sectors.