KARACHI: Islamic banking registered a slight growth in the 3rd quarter of this calendar year, but its non-performing financing (NPF) rose substantially to Rs19.7 billion as of September 30, 2013.

“Both assets and deposits registered growth as asset base of the industry reached to Rs926bn while deposits to Rs775bn by end September 2013,” said the latest Islamic Banking Bulletin.

In terms of market share in overall banking industry, share of assets and deposits of Islamic banks increased to 9.5pc and 10.1pc respectively in the quarter.

Assets of the Islamic banking industry grew by 2.5pc to reach Rs926bn by end September 2013 from Rs903bn in the previous quarter.

According to the report, profitability of the Islamic banking industry rose to Rs6.8bn by end September 2013 from Rs4.3bn by end June CY13, though still lower compared to Rs7.7bn profit in September 2012.

The NPF of Islamic banking industry again increased during the July-Sept 2013 quarter and reached Rs19.7bn indicating quarterly (QoQ) growth of 1.6pc.

“The rising trend of NPF was mainly contributed by the category of “Loss” that reached Rs16.5bn during the quarter under review; more than 83pc of overall NPF,” said the report.

The rising trend in NPF resulted in increased provisions which reached to 69.4pc in the quarter under review compared to 66.1pc in the previous quarter, said the report.

Financing by Islamic banking industry witnessed a growth of 1.8pc at Rs266bn by end September 2013.

This quarterly growth is however lower compared to 10.4pc growth in the previous quarter ending June 2013.

The bulletin said the investments of Islamic banking industry increased by 1.5pc to Rs445bn which was lower when compared to previous quarter (2pc) as well as same quarter last year (8.2pc).

The growth in investments has slowed down since March 2013 mainly due to non-issuance of any new GoP Ijara Sukuk that has generally been the key investment option for Islamic banking industry.