RIZWAN BHATTI

KARACHI: Assets of Islamic banking industry (IBI) continued to grow and reached Rs 1.625 trillion at the end of the first quarter of the current calendar year.

According to State Bank of Pakistan (SBP), the market share of IBI’s assets in overall banking industry remained at 11.4 percent as assets of both IBI as well as the entire banking industry grew almost at the same pace during the review quarter. Assets of overall banking industry recorded growth of around 1 percent during the quarter - January to March 2016.

Analysis of assets composition of the IBI shows that investments grew by 35.9 percent or Rs 155 billion to reach Rs 586.9 billion by end March 2016 compared to Rs 431.9 billion by end December 2015. This increase in investment was mainly contributed by investment in the federal government securities as it recorded growth of 35.8 percent. The Government of Pakistan (GoP) issued Ijara Sukuk of Rs. 80.4 billion during the review quarter of which Investments to Deposits ratio (IDR) of IBI reached at 43.9 percent by end March 2016 compared to 31.4 percent by end December 2015

In addition, Financing (net) witnessed an increase of Rs 3 billion (0.5 percent) during the review quarter and reached Rs 648.3 billion by end March 2016 compared to Rs 645.3 billion by end December 2015. The share of net financing and investments in total assets (net) of IBI stood at 39.9 percent and 36.1 percent respectively at the end of the quarter under review.

IBI registered profit after tax (PAT) of Rs 2.9 billion by end March 2016. During the review quarter, IBs and IBBs earned PAT of Rs. 1.7 billion and Rs. 1.2 billion respectively. Return on Equity (ROE) and Return on Assets (ROA) of IBI recorded at 10.8 percent and 0.7 percent respectively during the review quarter. In line with general trend, Operating Expense to Gross Income of IBI remained higher than that of overall banking industry mainly due to expansionary phase of the industry.

Deposits of IBI were recorded at Rs 1.336 trillion and share in overall banking industry’s deposit was 12.9 percent by end March 2016. The breakup of deposits shows that share of customers’ deposits and financial institutions deposit in overall deposits of IBI was 93.8 percent and 6.2 percent respectively during the review quarter. The share of IBs and IBBs in overall deposits of IBI stood at 62.5 percent and 37.5 percent respectively by end March 2016.

Branch network of IBI was surged to 2,082 branches (including sub-branches) by end March 2016. Province/Region wise breakup of branches reveals that IBI’s branch network concentrated in two provinces i.e. Punjab and Sindh as both these provinces collectively account for nearly 79 percent branches of overall IBI’s branch network.

In terms of cities, 56 percent branch network of IBI is centered in five cities (Karachi, Lahore, Rawalpindi, Islamabad and Faisalabad). The number of Islamic banking windows operated by conventional banks having Islamic banking branches stood at 1,064 by end March 2016 compared to 1,050 by end December 2015.