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KARACHI: The assets of the Islamic banking industry (IBI) increased 41.3 percent to Rs6.902 trillion in the third quarter of 2022 from Rs4.884 trillion a year ago, the central bank said on Wednesday.
The market share of IBI’s assets in the overall banking industry rose to 20 percent in July-September 2022 from 19.5 percent in the previous quarter and 17 percent a year earlier, said the State Bank of Pakistan’s Islamic Banking Bulletin.
Expansion in assets was mainly backed by net investments, which sharply rose 105.8 percent year-on-year to Rs2.821 trillion in July-September. Banks’ investments continued to rise due to various Sukuk issuances by the government amounting to Rs120 billion during the period under review.
Market share of financing of IBI in advances of the overall banking industry reached 27 percent, while the share of investment reached 15.7 percent by the end of September 2022, according to the SBP’s bulletin.
The Islamic banking sector deposits stood at Rs5.021 trillion in the third quarter of this year, compared with Rs3.822 trillion in the same period last year. The deposits saw YoY growth of 31.4 percent. The market share of Islamic banks’ deposits rose to 21.1 percent from 18.6 percent a year ago.
The conversion of Faysal Bank Limited to a Shariah-compliant lender and the expansion of Islamic deposits at some conventional banks are attributed by analysts to the considerable increase in deposits.
The profit before tax of IBI rose to Rs124.5 billion by the end of September 2022 from Rs66.4 billion a year ago. The profitability ratios like return on assets (ROA) and return on equity (ROE) (before tax) stood at 2.6 percent and 46.4 percent, respectively. The operating expense to gross income ratio of IBI was reduced by 2.4 percent and stood at 44 percent. “Mode-wise break-up of financing divulges that the share of Diminishing Musharaka (35.2 percent) continued highest in the overall financing of IBI, followed by Musharaka (22.9 percent) and Murabaha (15.7 percent) by the end of September 2022,” the SBP said.
In terms of the sector-wise break-up of financing, textile (16.4 percent), agribusiness (13.6 percent), and production and transmission of energy (10.9 percent) remained the three dominant sectors in terms of their share in the overall financing of the Islamic banking industry, it added. The IBI network is made up of 22 Islamic banking institutions, including five fully-fledged Islamic banks and 17 conventional banks with Islamic banking branches. Between July and September 2022, 105 branches were added to IBI’s branch network. With this addition, IBI’s branch network reached 4,191 across 129 districts of the country, according to the SBP’s bulletin.
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