KARACHI: Assets of the Islamic Banking Industry (IBI) recorded highest-ever growth of Rs 1.3 trillion reaching Rs 5.5 trillion in the last calendar year (CY21).
According to Islamic Banking Bulletin for the quarter ending December 2021, issued by State Bank of Pakistan (SBP) on Friday, assets of IBI grew by 30.6 percent in CY21, while deposits increased by 24.2 percent during the same period. As a result of this strong growth, the market share of Islamic banking assets and deposits in the overall banking industry increased to 18.6 percent and 19.4 percent, respectively, by end Dec 2021.
The Islamic Banking Industry (IBI) has reached new peaks during CY21 as its assets surpassed the 5 trillion mark to reach Rs 5.577 trillion with the highest ever increase of Rs 1.308 trillion, whereas deposits reached at Rs 4.211 trillion with an increase of Rs 822 billion.
The increase in assets of IBI was driven by both financing to the private and public sector and investments in Shariah compliant securities. Financing by the IBI recorded a rise of Rs 716 billion (38.1 percent) during CY21, which is also the highest ever increase during a year. Further, investments of IBI witnessed a growth of Rs 591 billion (46.9 percent) during CY21 on the back of domestic sovereign Sukuk issued by the Government of Pakistan. On funding side, current deposits and saving deposits of IBI witnessed significant increase of Rs 441 billion and Rs 277 billion respectively during CY21. The growth in deposits is also owed to the fact that, during CY21, the availability of Islamic banking services increased in the country with the addition of 500 new Islamic banking branches. The total numbers of branches now stand at 3,956 across 125 districts, which is around 25 percent of the total number of commercial banks’ branches in the country.
It would be pertinent to mention here that the IBI has been playing a significant role in the implementation of various measures taken in the wake of Covid19 pandemic and several other key initiatives to promote financing for low cost housing and SMEs and digitization. During the Covid19 pandemic, SBP introduced Temporary Economic Refinance Facility (TERF)- a concessionary refinance facility aimed at promoting investment both new and expansion and/or Balancing, Modernization and Replacement (BMR) that has been highly appreciated by the business community.
Copyright Business Recorder, 2022