Banking - OJK : Performance of sharia financial services sector grows positively

Banking - OJK : Performance of sharia financial services sector grows positively The Financial Services Authority (OJK) reported continued positive growth in the Sharia Financial Services Sector (SFSS) through August 2024. OJK Deputy Chairman Mirza Adityaswara noted this growth is reflected in Sharia banking financing, which grew by 11.6% ytd, Sharia insurance contributions (up 2.9% ytd), and Sharia financing receivables (up 21.2% ytd). The Indonesian Sharia Stock Index (ISSI) also rose 8.53% ytd. To strengthen the SFSS, the OJK finalized draft regulations and published the Sharia Securities List. These initiatives aim to develop the Sharia capital market ecosystem, particularly by strengthening regulatory compliance with Sharia principles through Sharia stock selection. The OJK is also monitoring the insurance industry's readiness for Sharia unit spin-offs by the end of 2026, as mandated by Article 9 of OJK Regulation 11 of 2023. Forty-one insurance/reinsurance companies have submitted separation work plans. As of September, 29 Sharia Business Units (SBUs) planned spin-offs, while 12 were transferring their portfolios. (Source : Kontan) Comment : The continued positive performance of the Sharia financial sector, particularly Sharia banking, is encouraging. Bank Syariah Indonesia (BRIS), one of the sector's key players, reported inline earnings results for the first eight months of 2024, and continued solid growth is expected, in our view. The OJK's plan for SBU spin-offs aligns with our previous assessments (see our previous report). Our positive outlook for the banking sector is maintained.