KARACHI: The Islamic banking industry (IBI) has achieved the highest year-on-year growth in assets and deposits since 2015 increasing the market share in the overall banking industry to 17pc and 18.7pc, respectively.

The State Bank of Pakistan (SBP) in its latest bulletin for April-June quarter reported that assets and deposits of IBI grew 32 per cent and 29.7pc, respectively.

The assets expanded by Rs408 billion to Rs4,797bn and deposits grew by Rs365bn to Rs3,822bn by June 30, 2021.

The main reason behind this expansion was a quarterly rise of Rs165bn in financing during the period. Similarly, the investment also exhibited a surge of Rs17.6bn to Rs1,363bn. The share of financing and investments in total assets of IBI was recorded at 44.2pc and 28.4pc, respectively.

Review of sector wise financing shows that major portion of financing was extended to textile (13.9pc) and production and transmission of energy (13.6pc) sectors. (Table 3)The report, however, stated that the profit-before-tax dropped by 13pc to Rs42.6bn by June 30 compared to Rs49bn in the same quarter last year. Before tax earnings ratios like return on assets (ROA) and return on equity (ROE) were recorded at 1.9pc and 31.1pc, respectively. (see Table 9)

Client wise financing remained concentrated in the corporate sector, having a share of 68.8pcin overall financing of IBI, followed by commodity financing and consumer financing with a share of 15.2pc and 10.6pc, respectively.

The share of SMEs and agriculture financing in overall financing of IBI was recorded at 2.6 per cent and 1.2pc, respectively.

Deposits of IBI increased by Rs365bn during the quarter under review and were recorded at Rs3,822bn by end June, 2021 compared to Rs3,457bn in the previous quarter. Market share of IBI’s deposits in overall banking deposits was registered at 18.7pc. A total of 22 Islamic banking institutions including five full-fledged Islamic banks and 17 conventional banks having standalone Islamic banking branches are in operations. With addition of 79 more branches during the quarter the network expanded to 3,583 branches (spread across 124 districts of the country). Figure-1

Published in Dawn, September 12th, 2021

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