Jakarta, The Indonesia Herald - The Financial Services Authority (OJK) continues to support the development of the national sharia banking industry in order to realise a resilient and strong financial sector stability to realise sustainable national economic growth.
National Islamic banking recorded a positive performance at the end of 2024. Total assets were recorded at IDR 980.30 trillion, or grew by 9.88 percent yoy in December 2024 with a recorded market share increase to 7.72 percent (December 2023: 7.44 percent).
In terms of intermediation, the total financing channeled was recorded at IDR 643.55 trillion, or grew 9.92 percent yoy in line with the growth of the national banking industry. Meanwhile, Third Party Funds (DPK) that were successfully collected amounted to IDR 753.60 trillion, or grew around 10 percent yoy, far above the growth of the national banking industry which was in the range of 4-5 percent.
The financing distributed was mainly for the housing sector (mortgages) with a proportion of around 23 percent. Meanwhile, the distribution of MSME financing reached around 16-17 percent of the total financing.
The capital level of Islamic banks remains strong, supported by adequate liquidity. The Capital Adequacy Ratio (CAR) was recorded at 25.4 percent and was above the stipulated level. The Liquid Assets/Non-Core Deposit (LA/NCD) and Liquid Assets/Third Party Funds (LA/TPF) ratios were 154.52 percent and 32.09 percent, respectively, and were still above the respective thresholds of 50 percent and 10 percent.
The quality of financing is maintained with a gross NPF ratio of 2.12 percent and a net NPF of 0.79 percent. Profitability continues to grow, with a return on assets (ROA) of 2.04 percent. This shows that the acceleration of the sharia banking business remains strong amid domestic and global economic dynamics.
The Financial Services Authority (OJK) continues to support the acceleration of the national Islamic banking industry through the implementation of the Roadmap for the Development and Strengthening of Islamic Banking (RP3SI) 2023-2027. As a form of implementation of the roadmap, OJK held an annual Islamic banking meeting in 2024 and on that occasion launched various guidelines to strengthen the uniqueness of Islamic products, namely the Mudarabah Financing Product Guidelines, the Shariah Restricted Investment Account (SRIA) Implementation Guidelines with Mudharabah Muqayyadah Akad, and the Cash Waqf Linked Deposit (CWLD) Implementation Guidelines.
In 2025, there are five policy directions that the OJK will push to improve the economic of scale as well as the uniqueness of the Islamic banking industry business model to be able to compete at the national and global levels.
First, the consolidation of Islamic Banks and the strengthening of Sharia Business Units (UUS) is carried out by supporting the spin-off process through coordination with stakeholders in the licensing process and facilitating the spin-off Sharia Business Units (BUS) to synergise with the Parent Bank. The OJK also encourages shareholders to support consolidation in order to produce BUSs with large capacities.
Second, Finalisation of the formation of the Sharia Finance Development Committee (KPKS) as a form of OJK commitment in strengthening sharia governance in the national sharia finance industry.
Third, Continue to prepare sharia banking product guidelines to become a common guide in the implementation of products so as to provide a common perspective in their implementation. In addition, the development of shari'ah-based products will also continue in line with the sharia finance strengthening points in the 2025 Indonesian Sharia Banking Industry Roadmap. The guidelines that will be published include the Salam, Istishna' and Multijasa Financing Guidelines.
Fourth, Strengthening the role of Islamic banking in the Islamic economic ecosystem by expanding access to Islamic banking services in the Islamic economic ecosystem continues to be carried out, including through synergies with other Islamic Financial Services Institutions, the Government (Ministries/Institutions), and the halal industry.
Fifth, Increasing the role of Islamic banking in the MSME sector by increasing access to and assistance from Islamic banking in the unbankable MSME sector through Islamic social financial instruments.
These five directions are expected to be a game changer for the development of the national Islamic banking industry and increase the industry's contribution to creating quality, inclusive, and sustainable national economic growth.
The Chief Executive of the Banking Supervisor, Dian Ediana Rae, said that amid the still quite strong global and domestic economic challenges, the OJK sees that opportunities for Islamic banking in particular and Islamic finance in general are still wide open, taking advantage of niche markets and continuing to promote alternative financial products that have Islamic uniqueness in addition to general banking products that are competitive with conventional banking. Systematic and coordinated efforts among all stakeholders need to be continuously improved to achieve a significant level of Islamic banking market share through organic and inorganic efforts.