End-December 2019: Islamic banking market share jumps to 15 percent

14 Mar, 2020

According to Islamic Banking Bulletin issued by the State Bank of Pakistan (SBP) assets of IBI increased by 23.5 percent during last calendar year (CY19). Assets of Islamic banking stood at Rs 3.284 trillion by Dec 31, 2019 compared to Rs 2.658 trillion by Dec 31, 2018, showing an increase of Rs 626 billion. Similarly, deposits of Islamic banking industry experienced a yearly growth of 20.4 percent or Rs 449 billion and were recorded at Rs 2.652 trillion by end December 2019. The market share of Islamic banking assets and deposits in the overall banking industry was recorded at 14.9 percent and 16.6 percent, respectively by end December 2019 up from 13.5 percent and 16.6 percent respectively in December 2018.

Profit before tax of Islamic banking industry was recorded at Rs 66 billion by end December 2019 against Rs 34 billion in December 2018. Profitability ratios like return on assets (RoA) and return on equity (RoE) before tax were recorded at 2.2 percent and 34.4 percent, respectively by end December 2019. During the period under review, operating expense to gross income ratio was recorded at 51.5 percent, which remained lower than that of overall banking industry ratio.

The network of Islamic banking industry consisted of 22 Islamic banking institutions; five full-fledged Islamic banks and 17 conventional banks. The standalone Islamic banking branch network surged by 375 branches reaching 3,226 branches spreading across 120 districts by end December 2019. The number of Islamic banking windows operated by conventional banks having IBBs stood at 1,373 by the end of CY19.

Investments (net) of Islamic banking industry witnessed an increase of Rs 2 billion and were recorded at around Rs. 597 billion by end December 2019 compared to Rs. 535 billion in December 2018. Asset quality indicators of Islamic banking industry including non-performing finances (NPFs) to financing (gross) and net NPFs to net financing increased and were recorded at 4.3 percent and 2 percent, respectively by end December, 2019 owing to increase in NPFs.

The ratios of Capital to total assets and capital minus net non-performing assets to total assets of Islamic banking industry were recorded at 6.8 percent and 5.7 percent, respectively by end December 2019. In addition, Liquid assets to total assets and liquid assets to total deposits of Islamic banking industry increased as compared to previous quarter and stood at 20.8 percent and 25.8 percent, respectively by end December 2019.

Copyright Business Recorder, 2020

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