KARACHI: First half of 2021 proved to be a prolific financial cycle for BankIslami as the Bank crossed Rs 300 billion benchmark for its deposit book. This landmark was achieved as a result of constant efforts made by the Bank to strengthen its distribution structure and ‘feet on street’ field force which proved to be pivotal in enhancing its deposit base, particularly the low cost CASA deposits.
When compared with balances at Jun’20, the Bank’s overall Deposit grew by 26 percent at Jun’21 (growth of 7 percent from Dec’20) while CASA deposits witnessed an increase of 34 percent at Jun’21 (increase of 16 percent from Dec’20). Out of this increase, the growth in Current Deposits was recorded at 39 percent (increase of 18 percent from Dec’20). The continuation of CASA growth trend will play an essential role in enhancing Bank’s net income margin (NIM) going forward.
On the credit side, the Bank disbursed funds to corporate entities and retail segment while investment book was increased through investments in GoP Sukuks to improve overall credit risk profile of the Bank. BankIslami having the largest portfolio in Housing Finance has successfully achieved SBP’s mandatory targets for Housing and Construction and the Government Markup Subsidiary Scheme (MPMG). The Bank provides facilities including housing construction, purchasing and renovation to both Resident & Non-Resident Pakistani.
While the Bank witnessed growth in its earning assets and low-cost CASA deposits, net spreads of the Bank reduced by 25.4 percent mainly attributable to outweighing impact of downward repricing on assets vis-à-vis repricing of expense bearing liabilities. However, BankIslami’s non-funded income rose by 13 percent based on growth sustained via service-based fee income earned through its Digital Delivery Channel, Trade Business, Consumer Finance and Wealth Management desk.
Cumulative operating and other expenses of the Bank were up by 5 percent mainly due to inflationary impact linked with staff and non-staff costs and rise in variable cost directly attributable to business growth. Owing to contraction in net spreads, the operating profit of the Bank decreased to Rs 1,592 million in HY’21. This decline was offset by net reversals of provisioning during the period. Resultantly, BankIslami posted Profit After Tax (PAT) of Rs 1,162 million for the half year ended June 30, 2021, an 8 percent increase from last year’s PAT.—PR
Copyright Business Recorder, 2021
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