Monzer Kahfhas been done through an analysis of their closing accounts and annual
reports for the years 1999 to 2001.^2 This section also makes an attempt to
present important evidence that would help us deducing the main factors in
the success or failures of these Islamic banks. Specifically, this has been done
through assessing assets growth, growth of invested assets, the growth of
cash and deposits in other banks, the growth of customers’ deposits in
Islamic banks, changes in earnings, expenses, and net profits, and the
commitment to the Shari[ah and charitable and social contributions.
Section 4 will focus on the success factors of Islamic banks which could
be derived from the above analysis. This section is divided into a number of
subsections devoted for the study of bank’s efficiency, factors that Increase
customers’ trust in the bank, efficiency of departments of investment
management, financial engineering and marketing management, protecting
shareholders’ and depositors’ capital, the extension of humanitarian and
social services and some other factors.
2. Success Criteria of Islamic Banks
2.1 Long Term Considerations
2.1.1 Increasing Deposits
In order to realize the greatest possible profit, there is a need to
distinguish between the long-term and the short-term objectives. A bank,
whether Islamic or conventional, is concerned with making profit in the long-
term without sacrificing its short-term perspectives. Long-term profit is
influenced by the growth of deposits and other such resource that give the
bank the opportunities to generate earning assets. Thus, it is necessary to
consider the rate of growth of the various forms of deposits.
An Islamic bank normally has three types of deposits that determine its
capacity to raise the rates of shareholders’ return. These are: current account
deposits, unrestricted investment deposits in savings and mudarabah accounts,
and lastly, off-balance sheet deposits in investment funds in special or
restricted investment accounts. It is erroneous to think of these deposits as
being independent of each other. Numerous researches have proven the
existence of usually positive links between them. This has also been
confirmed by the reports of the Islamic banks that are considered in this
study. Therefore, the banks, in marketing and offering any type of deposit to
the clients should also consider its cross effects on other types of deposits
offered by it.