KARACHI: The Islamic banking industry’s assets increased by Rs836 billion in April–June 2022, the largest growth in asset size in a single quarter ever. This increase is mostly attributable to increasing net investments and financing.
The assets crossed the six-trillion mark to reach Rs6.781 trillion by the end of June, compared with Rs5.945 trillion in the previous quarter, the Islamic banking bulletin released by the State Bank of Pakistan (SBP) said on Monday.
The Islamic banking industry’s (IBI’s) assets have seen a strong growing trend over the years. The market share of IBI’s assets in overall banking assets stood at 19.5 percent by the end of June 2022.
“This rising path also sustained during the period under review and assets of IBI reflected double-digit growth of 14.1 percent,” the SBP said. Islamic banks’ assets stood at Rs4.797 trillion in April-June 2021.
The growth in assets was mainly due to net investments, which increased by Rs470 billion or 21.4 percent quarter-on-quarter to Rs2.672 trillion in April-June. “The main reason behind this increase was the deployment of funds by IBI in the government of Pakistan domestic Ijarah Sukuk (GIS),” the SBP’s report said. Seven GIS totalling Rs504 billion were issued by the government in the second quarter of this year.
At the end of June, Islamic banks’ (IBs’) investment rose by 29.3 percent to Rs1.608 trillion. The investments of Islamic banking branches (IBBs) increased by Rs106 billion (11.1 percent) to Rs1.064 trillion.
Besides, the net financing of the Shariah-compliant lenders was Rs2.961 trillion in April-June 2022, 10 percent up from the previous quarter. The share of investments (net) and financing (net) in total assets of IBI registered at 44 percent and 39 percent, respectively by the end of June 2022.
According to the SBP, the market share of IBI’s assets in total banking assets was 19.5 percent by the end of June 2022. In terms of mode-wise financing, Diminishing Musharaka’s part of IBI’s overall financing remained dominating (33.9 percent), followed by Musharaka’s (22.9 percent) and Murabaha’s (15.6 percent). The review of the sector-wise break-up of financing shows that textile (15.7 percent), agribusiness (13.5 percent), and production and transmission of energy (11.5 percent) were the three major sectors in terms of their share in the overall financing of IBI.
Review of client wise financing portfolio depicts that the share of the corporate sector (68 percent) was the highest in the overall financing of IBI followed by commodity financing (16.8 percent) and consumer finance (10.9 percent). On the other hand, the share of SMEs and agriculture financing remained low compared to the overall banking industry’s share in financing for these sectors.
The deposit base of IBI has been consistently rising at a significant pace over the years. During the period under review, deposits of IBI reported a double-digit growth of 14.4 percent. The deposits of IBI saw a quarterly rise of Rs610 billion and registered at Rs4.856 trillion in April-June 2022. The market share of IBI’s deposits in overall banking industry deposits increased to 20.5 percent from 20 percent in January-March 2022.