Good year for interest free banks

Good year for interest free banks

ISTANBUL - Anatolia News Agency
Good year for interest free banks

The headquarter of a Albaraka bank. Hürriyet photo

The amount of deposits at Turkey’s participation banks rose 22 percent last year over 2011 to 48 billion Turkish Liras, according to data from Turkey’s banking regulation board.

The deposit banks had raised their deposits just 10 percent the previous year.

The banks, which operate in line with Islamic principles by not using interest, increased their profitability by 14 percent as well, raising their profits to 916 million liras from 803 million liras a year earlier.

“Participation banks’ outlook last year was positive, but we expect growth in 2013 to be even greater for the banking sector in general and for participation banks in particular,” said Osman Akyüz, general-secretary of the Union of Participation Banks.

“We [the banking sector] expect more growth in 2013 than 2012, but can we attain the same performance in profitability? We’ll wait and see about that,” he said.

Maintaining profitability along with growth is a must, he said. “That’s because if you can’t provide profitability, growth cannot be sustainable either.”

The lenders showed a greater performance than the overall banking sector’s performance last year while increasing their share in the sector. The ratio of the amount of funds collected by participation banks versus the overall sector rose from 5.6 percent to 6.1 percent, while the share endowment funds and credits rose from 5.8 to 6 percent. The total size of the assets’ share jumped from 4.6 percent to 5.1 percent, according to the data.