Thus, from December 2013, when the deterioration in bank balance sheets was at its worst, to June 2018 the volume of non-performing loans in transactions with the resident private sector has declined by 60%. And the amount of foreclosures has done so by 40% since its 2012 peak. The consolidated return on equity, which in 2012 stood at around -25%, has gradually picked up to levels of 7% on data as at June 2018, and the overall capital ratio has risen from 11.4% in 2012 to 15.1%. Despite this notable improvement in its financial position, the Spanish banking industry continues to face significant challenges. These are largely shared by other banking systems in the euro area, and include i) the reduction in assets impaired by the crisis, ii) the recovery in profitability, such that Spanish banks may draw closer to the solvency levels of other euro area banks, iii) adaptation to the new regulatory framework and, iv) the configuration of a new competitive setting characterised by the emergence of new technologies and competitors. I shall now focus on describing each of these challenges, beginning with that of the reduction in assets impaired by the crisis. As stated, the volume of non-performing loans has diminished significantly from its 2013 peak. This reduction has been assisted by the economic recovery, insofar as it has favourably impacted debtors’ ability to pay, and also by the disposal of impaired portfolios.

The ability of Islamic banks to structure Investment Account in accordance with the risk profile and characteristics of the underlying assets offers an attractive opportunity for customers to diversify their investment portfolio across various halal sub-sectors. Second is the wide network of Malaysian financial institutions in facilitating halal exports to tap into regional markets. Increasing interest from ASEAN countries which makes up 42% of the global Muslim population as well as demand from non-Muslim dominated Asian countries such 1/3  BIS central bankers' speeches  as Japan, Korea and Vietnam provide a huge halal consumption base for domestic halal businesses to tap on. Currently, three Malaysian financial institutions have leveraged their extensive global network and strategic partnerships to assist halal exporters in gaining access to new markets. Moving forward, Malaysian financial institutions should take advantage of the strong government-to-government (G2G) ties and multilateral strategic cooperation in the halal sector between countries to offer Islamic trade finance to halal industry players. The third factor is the ability of Islamic financial institutions to facilitate businesses to transition towards more sustainable practices. The underlying concept of Maqasid Shariah which propagates for the attainment of benefits as well as preventing harm, resonates well with sustainability principles that call for a balanced, sustainable and inclusive economic growth. Adopting sustainability practices is imperative to ensure the longevity of businesses. Failure to take this into account may result in substantial financial loss to the halal industry given that our trade partners have started imposing expectations on sustainability as preconditions to transact.