IslamicFinance.de

According to Moody’s Investors Service, concentration on retail financing and other structural features will help Islamic banks safeguard against a deterioration in asset quality and profitability. Islamic banks have sufficient loss buffers against financial stress, with their funding and liquidity remaining stable. The seven largest Islamic banks in Malaysia, five of which are subsidiaries of domestic banking groups with conventional operations, have a heavy concentration on retail financing, which is less vulnerable to an economic downturn. In addition, Malaysian banks generally have prudent underwriting practices for retail financing, which adds to their asset quality.