KARACHI: Profits of the Islamic banking industry surged by 27.7 per cent to Rs23 billion in 3QCY18, from Rs Rs18bn in same quarter last year, reported State Bank of Pakistan’s Islamic Banking Bulletin issued this month.

According to the bulletin, liquid assets to total assets and liquid assets to total deposits ratios of the industry stood at 22.8pc and 27.9pc, respectively. Meanwhile, asset quality indicators like non-performing finances (NPFs) to financing (gross) and net NPFs to net-financing were recorded at 2.7pc and 0.5pc, respectively — better than the overall banking averages. Similarly, return on asset and return on equity (before tax) were recorded at 1.3pc and 20.2pc, respectively.

However, the figures could have been better had there been Shariah-compliant investment avenues for the industry, which has ample liquidity. The SBP on Friday offered Government Ijara Sukuk worth Rs129.3bn and accepted Rs103.5bn.

Investments (net) of Islamic banking, however, decreased to Rs535bn, from Rs555bn in the previous quarter amid a decline of Rs24bn in investments of Islamic banking branches of conventional banks. On the other hand, those of full-fledged Islamic banks edged up by Rs4bn to Rs248bn.

Review of sector-wise financing shows production and transmission of energy as the leading sector with a share of 18pc in overall Islamic banking financing. Corporate sector also remained an attractive destination for the industry, followed by commodity financing.

The share of small and medium enterprises and agriculture in overall financing of Islamic banking industry, on the other hand, was recorded at mere 3pc and 0.3pc, respectively.

Published in Dawn, December 16th, 2018