Islamic banks in Kuwait achieved a return on equity (ROE) of up to 11 per cent, compared with nine per cent for their peers in the Gulf Cooperation Council (GCC), says a senior official.
Talking to Kuwait-based Al Rai, Sayd Farook, vice-chairman and chief executive officer at Middle East Global Advisors, attributes this to what he calls the high influence of Islamic banks in Kuwait, pointing out that the total cost-to-income ratio in Kuwait is higher than traditional banks.
Farook adds that although they were able to achieve higher ROE for shareholders, there is still much room for growth and efficiency.
He says that Islamic banks are less profitable than traditional banks in the GCC, so they will have to continue to increase operational efficiency and investment in technology to bring the cost base to a level footing with conventional banks.
The World Islamic Banking Competitiveness Report revealed a few days ago that the total profits of Islamic banks in the Gulf states exceeded $12 billion for the first time during the year 2014, and expected continued growth of this sector in the coming period.
($1 = AED3.67, at the time of publishing)