SBAC Bank Islamic Banking distributes profit to Mudaraba depositors using the Weighted Average Method i.e. profit is shared based on amount and tenure. Different weightages are assigned for different types and tenures of deposits. These weightages are determined based on the nature of the account and its duration. As a result of applying these weightages, different profit rates are generated for different deposit categories and tenures, and these rates are paid to the Mudaraba depositors.
The profit distribution framework consists of a two-tier income distribution mechanism.
Tier One involves the appropriation of the Bank’s management fee from the funded income according to a predetermined ratio (for example, 35%) of the distributable funded income.
The remaining distributable funded income is then allocated for distribution among the Mudaraba depositors.