Two Qatari banks lead GCC cost-to-income ratio rankings

Manama, Oct. 27 (BNA): The WIBC Leaderboard on Tuesday announced the global rankings of Islamic banks in terms of Cost-to-Income ratio, one of the financial performance sub-indicators of the Leaderboard. No less than three Qatar-based banks have appeared in the top 5 Islamic banks in the GCC based on the Cost-to-Income ratio rankings. As per the rankings, Masraf Al Rayan and Qatar International Islamic Bank, both based in Qatar are positioned at the top of Islamic financial institutions in the GCC with a ratio of 20.6% and 24.4% respectively. The WIBC Leaderboard is an innovative performance assessment framework designed by, Middle East Global Advisors, the conveners of the much-acclaimed World Islamic Banking Conference (WIBC), as part of its efforts to improve the quality and performance of the Islamic banking industry. The Cost-to-Income ratio is a key financial measure used to gauge the efficiency of a bank. It is calculated based on non-interest operating cost divided by the sum of net interest income and non-interest operating income. The ratio gives a clear view of how efficiently a bank is operating at and what portion of costs can be covered by income. Speaking about the importance of this indicator, Dr. Sayed Farooq, Vice Chairman and CEO of Middle East Global Advisors, said: "By virtue of its business model, Islamic banks are able to keep their costs low as they do not participate in volatile market based activities. However, this decreases Islamic banks’ income generating avenues. In light of such issues, Cost-to-Income ratio helps banks in keeping track of their financial performance by readjusting costs and focus on revenue generating streams in case they fall below the industry benchmark." Cost-to-Income ratio is an important indicator for bank managers regarding the financial strength of their banks. It has never been more important than now for banks to achieve operational excellence given the range of headwinds they face, ranging from the challenge of regulatory requirements to the imperative of managing volatility in global financial markets. WIBC 2015 will take place on December 1-3 in Manama, Kingdom of Bahrain. For more information: www.wibc2015.com.