Banking

Islamic banking industry’s profit post 48 pc growth

Karachi, April 9, 2019: Profit before tax of Islamic banking industry posted a healthy growth of some 48 percent during the last calendar year (CY18).

According to Islamic Banking Bulletin, issued by the State Bank of Pakistan (SBP), profit before tax of the Islamic banking industry was recorded at Rs. 34 billion during CY18 compared to Rs. 23 billion in previous year (CY17), depicting an increase of Rs 11 billion.

Profitability ratios like return on assets and return on equity (before tax) were recorded at 1.4 percent and 22.3 percent, respectively by end December, 2018. During the period under review, operating expense to gross income ratio witnessed further improvement and was recorded at 62.9 percent.

Assets of Islamic banking industry increased by 17 percent to reach Rs. 2.658 trillion in the last year compared to Rs 2.272 trillion in CY17. Similarly, deposits of Islamic banking industry witnessed a yearly growth of 17 percent to stood at Rs 2.203 trillion by end December, 2018.

With current growth, market share of Islamic banking assets and deposits in the overall banking industry was recorded at 13.5 percent and 15.5 percent, respectively by end December, 2018.

The growth in assets was mainly contributed by financing (net). The share of net financing and investments in total assets (net) of Islamic banking industry stood at 56.8 percent and 19.4 percent, respectively by end December, 2018.

Asset quality indicators of Islamic banking industry including non-performing finances (NPFs) to financing (gross) and net NPFs to net financing were registered at 2.4 percent and 0.4 percent, respectively by end December, 2018 as against industry ratio of 8 percent and 1.4 percent respectively.

Both these ratios showed further improvement compared to previous quarter, mainly due to significant rise in financing portfolio of Islamic banking industry during the period under review.

The network of Islamic banking industry consisted of 22 Islamic banking institutions; 5 full-fledged Islamic banks (IBs) and 17 conventional banks having standalone Islamic banking branches (IBBs) by end December, 2018. During the period under review, Zarai Taraqiati Bank Limited started its Islamic banking operations.

Branch network of Islamic banking industry was recorded at 2,851 (spread across 113 districts) by end December, 2018. During CY18, 270 branches were added to branch network of Islamic banking industry. The number of Islamic banking windows operated by conventional banks having standalone Islamic banking branches stood at 1,288.

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