Assets of Islamic banks rise to Rs4.79 trillion: SBP

Shahnawaz AkhterWeb Editor

11th Sep, 2021. 02:09 pm
State Bank of Pakistan

KARACHI: The assets of the Islamic banking industry (IBI) have expanded Rs408 billion during the quarter (April to June) and stood at Rs4.797 trillion by the end of June, 2021, a report issued by the State Bank of Pakistan (SBP) said.

The deposits of the Islamic banking industry also witnessed a quarterly growth of Rs365 billion and were recorded at Rs3.822 trillion.

The year-on-year (YoY) growth of assets and deposits was recorded at 32 per cent and 29.7 per cent, respectively, by the end of June 30, 2021.

This has been the highest YoY growth in assets and deposits since June 2015, the SBP said.

The market share of the Islamic banking assets and deposits in the overall banking industry stood at 17 per cent and 18.7 per cent, respectively.

On the profitability side, the profit-before-tax of the Islamic banking industry was registered at Rs42.6 billion by the end of June 2021.

The Islamic banking industry network consisted of 22 Islamic banking institutions, including five full-fledged Islamic banks and 17 conventional banks having standalone Islamic banking branches by the end of June 2021.

During the quarter (April–June), 79 branches were added in the network of the Islamic banking industry. As a result, the branch network of IBI increased to 3,583 branches (spread across 124 districts of the country) by the end of June 2021.

The branch’s network of IBI is mainly concentrated in Punjab; followed by Sindh and Khyber-Pakhtunkhwa.

The number of Islamic banking windows (dedicated counters at conventional branches) operated by IBBs stood at 1,562 by the end of June 2021.

The State Bank of Pakistan said the assets of IBI reported a healthy growth of Rs408 billion during the quarter April to June 2021 and increased to Rs4.797 trillion by the period under review from Rs4.389 trillion in the previous quarter.

The main reason behind this expansion was financing (net) of IBI, which observed a quarterly rise of Rs165 billion during the period under review.

Similarly, investment (net) of IBI, exhibited a surge of Rs17.6 billion. The market share of IBI’s assets in the overall banking industry’s assets was recorded at 17 per cent by the end of June 2021.

The share of net financing and investments in total assets (net) of IBI was recorded at 44.2 per cent and 28.4 per cent, respectively, by the end of June 2021.

Analysis of assets by breakup among IBs and IBBs divulges that IBs recorded a quarterly growth of Rs156 billion to reach Rs2.700 trillion by the end of June 2021. The assets of IBBs reflected a growth of Rs252 billion and stood at Rs2.097 trillion by the end of June 2021.

The share of IBs and IBBs in the overall assets of IBI was 56.3 per cent and 43.7 per cent, respectively.

The net investments of IBI registered a growth of Rs17.6 billion during the period under review and were recorded at Rs1.363 trillion by the end of June 2021, the central bank said.

During the period under review, the government of Pakistan issued one domestic Ijarah Sukuk, amounting to Rs28.9 billion (special reopening of GIS VRR-22).

The financing and related assets (net) of IBI crossed the Rs2 trillion-mark and augmented by Rs165 billion to reach Rs2.118 trillion by the end of June 2021.

The breakup of financing among IBs and IBBs shows that the financing and related assets (net) of IBs depicted a quarterly rise of Rs55 billion and were recorded at Rs1.119 trillion.

Likewise, the financing and related assets (net) of IBBs increased Rs110 billion to reach Rs999 billion during the period under review.

Similarly, the key assets quality indicators, including non-performing finances (NPFs) to financing (gross) and net NPFs to net financing were registered at 3.3 per cent and 0.5 per cent, respectively, during the period under review. These ratios were significantly better than those of the overall banking industry averages, the SBP said.

It also showed that the deposits of IBI increased Rs365 billion during the quarter under review and were recorded at Rs3.822 trillion by the end of June 2021, compared with Rs3.457 trillion in the previous quarter.

The market share of IBI’s deposits in the overall banking deposits was registered at 18.7 per cent by the end of June 2021, while the share of IBs and IBBs in the overall deposits of IBI was 57.6 per cent and 42.4 per cent, respectively, by the end of June 2021.

The breakup of deposits depicts growth in all categories of deposits during the period under review. The current deposits observed a growth of Rs170 billion; followed by the savings deposits, which increased Rs106 billion. Similarly, the fixed deposits recorded a rise of Rs8 billion during the period under review.

The liquid assets to total assets and liquid assets to total deposit ratios were registered at 27.5 per cent and 34.5 per cent, respectively, during the period under review.

The financing to deposits ratio (FDR) of IBIs was recorded at 55.4 per cent by the end of June 2021.

The profit-before-tax of IBI was recorded at Rs42.6 billion by the end of June 2021, compared with Rs49 billion in the same quarter last year.

The earnings ratio like “Return on Assets (ROA)” and “Return on Equity (ROE)” (before tax) were recorded at 1.9 per cent and 31.1 per cent, respectively, by the end of June 2021, the State Bank of Pakistan said.

The operating expense to gross income of IBI was slightly increased and recorded at 52.3 per cent during the period under review, compared with 51.5 per cent in the previous quarter.

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