AGL 5.60 Decreased By ▼ -0.18 (-3.11%)
ANL 8.90 Increased By ▲ 0.02 (0.23%)
AVN 76.85 Decreased By ▼ -2.07 (-2.62%)
BOP 5.26 Decreased By ▼ -0.02 (-0.38%)
CNERGY 4.63 Decreased By ▼ -0.07 (-1.49%)
EFERT 81.27 Decreased By ▼ -0.33 (-0.4%)
EPCL 50.08 Decreased By ▼ -0.83 (-1.63%)
FCCL 13.16 Decreased By ▼ -0.22 (-1.64%)
FFL 5.69 Decreased By ▼ -0.03 (-0.52%)
FLYNG 7.07 Decreased By ▼ -0.08 (-1.12%)
FNEL 4.79 Decreased By ▼ -0.03 (-0.62%)
GGGL 8.80 Decreased By ▼ -0.10 (-1.12%)
GGL 14.55 Decreased By ▼ -1.33 (-8.38%)
HUMNL 5.69 Decreased By ▼ -0.08 (-1.39%)
KEL 2.63 Decreased By ▼ -0.03 (-1.13%)
LOTCHEM 28.60 Decreased By ▼ -0.45 (-1.55%)
MLCF 24.49 Decreased By ▼ -0.61 (-2.43%)
OGDC 72.43 Decreased By ▼ -0.02 (-0.03%)
PAEL 15.36 Increased By ▲ 0.01 (0.07%)
PIBTL 5.00 Decreased By ▼ -0.05 (-0.99%)
PRL 16.10 Decreased By ▼ -0.19 (-1.17%)
SILK 1.08 Decreased By ▼ -0.01 (-0.92%)
TELE 9.14 Decreased By ▼ -0.23 (-2.45%)
TPL 7.23 Decreased By ▼ -0.10 (-1.36%)
TPLP 18.61 Decreased By ▼ -0.34 (-1.79%)
TREET 21.68 Decreased By ▼ -0.32 (-1.45%)
TRG 136.71 Decreased By ▼ -4.44 (-3.15%)
UNITY 16.88 Decreased By ▼ -0.14 (-0.82%)
WAVES 9.86 Decreased By ▼ -0.04 (-0.4%)
WTL 1.41 No Change ▼ 0.00 (0%)
BR100 4,225 Decreased By -29.6 (-0.7%)
BR30 15,518 Decreased By -214.7 (-1.36%)
KSE100 42,150 Decreased By -243.4 (-0.57%)
KSE30 15,588 Decreased By -75.7 (-0.48%)
Business & Finance

Moody’s says Robust growth in Pakistan’s Islamic banking a credit positive

  • “The growth is credit positive for Pakistani banks because it attracts customers from the previously unbanked population, which creates new business opportunities and boosts banks' financial performance,” said Moody’s.
Published March 29, 2021
Follow us

International credit rating agency Moody’s has termed the impressive growth in Pakistan's Islamic banking assets as credit positive for banks.

On Wednesday, the State Bank of Pakistan (SBP), released its quarterly Islamic Banking Bulletin for December 2020, which showed that Shariah-compliant banking assets grew 30 percent in 2020.

“The growth is credit positive for Pakistani banks because it attracts customers from the previously unbanked population, which creates new business opportunities and boosts banks' financial performance,” said Moody’s in a statement.

Pakistan’s Islamic banking assets grew to Rs 4.3 trillion as of year-end 2020, comprising 17pc of total banking system assets. Meanwhile, Islamic deposits have had witnessed a 22pc annual compound growth rate since June 2013.

Furthermore, Islamic financing also grew faster than conventional loans and were Rs 1.9 trillion, or 23pc of Pakistani banks' total loans at year-end 2020. The profitability of Islamic operations has also been stronger, with return on assets for Islamic banking institutions was 2.4pc at year-end 2020, versus the system average ROAA of 1.8pc, and Islamic nonperforming financing (NPF) was 3.2pc, lower than the system weighted average of 9.2pc at year-end 2020.

Moody’s was of the view that the Islamic banking growth will benefit Pakistan's banking sector “because attracting previously unbanked customers facilitates deposit and loan growth while reducing funding costs because of the banks' access to a large pool of non-remunerated deposits.”

Moody’s expect Shariah-compliant banking to continue growing in Pakistan by targeting customers who prefer Islamic products or are voluntarily excluded or underserved because of their religious belief.

“We believe that all rated banks will benefit from the increase in Islamic banking penetration, especially Habib Bank Ltd. (HBL, B3 stable, caa11), which, at year-end 2020, had a 7.5% market share of Pakistan's Islamic banking assets and MCB Bank Limited (B3 stable, b3) which had a 3.3% market share, the largest shares among their rated peers,” stated Moody’s.

Comments

Comments are closed.

Zarzan khan Mar 29, 2021 02:03pm
That why moodys should upgrade Pakistan credit rating one notch up.
thumb_up Recommended (0)

Moody’s says Robust growth in Pakistan’s Islamic banking a credit positive

‘Won’t take IMF’s dictation’: Dar

FY22 trade with US soars 38.3pc to $10.5bn YoY, NA told

US unveils high-tech B-21 stealth bomber

PM seeks reform plan: Power sector PDM govt’s Achilles heel

Taxation-related issues of IT sector: FBR nominates IR Commissioners as focal persons

Maj-Gen Sharif made ISPR DG

SBP repays $1bn bond before due date

PM urges Chinese co to invest in renewable energy sector

Import of urea: PPRA refuses to give fresh exemption

ECC decides to import urea; Rs8bn okayed for MPs’ schemes