Mon December 11, 2017
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

Business

EZ
Erum Zaidi
December 7, 2017

Share

Advertisement

Islamic banks post 44.26pc rise in Q3 gross earnings

Islamic banks post 44.26pc rise in Q3 gross earnings

KARACHI: The Islamic banking industry posted a 44.26 percent increase in third quarter gross profit, the central bank’s data showed on Wednesday, mostly on the back of higher financing to various sectors of the economy.

The total of 21 Islamic banking institutions of those five full-fledged Shariah-compliant lenders and 16 conventional banks having Islamic banking branches, made Rs17.6 billion in profit before tax in the three months till September 30, 2017. This compares with a profit of Rs12.2 billion in the previous quarter.

Experts said Islamic banking sector’s earnings were lifted by a 5.9 percent quarter-on-quarter increase in income from financing. That helped offset a 2.3 percent decrease in investments. “Islamic banks are doing considerably better than conventional banks in terms of advances.

They have strong loan books and they are well-placed to tap rising demand for Islamic finance by consumers and businesses,” said an Islamic banking executive. “Their [Islamic banking industry’s] assets are growing at moderate pace. However, dearth of Shariah-compliant investment opportunities, limited availability of Islamic money markets and instruments and Shariah-compliant alternate of standing facilities are most of the pronounced challenges being faced by the Islamic banks today.”

The sector’s deposit growth remained stagnant in July-September 2017 quarter, the banker said, as Islamic banks were reluctant to mobilise deposits aggressively due to lack of solutions for the deployment of excess liquidity held with these banks.

The Islamic banking bulletin for July-September 2017 published by the State Bank of Pakistan (SBP) on the same day said the profitability indicators of the Islamic banking industry including return on assets and return on equity (before tax) were recorded at 1.2 percent and 18.1 percent, respectively.

Like previous quarters, operating expense to gross income ratio of Islamic banking industry remained higher than that of overall banking industry’s average, it said. The assets of Islamic banking industry rose to Rs2.083 trillion in the third quarter, compared with Rs2.035 trillion in the previous quarter.

“This increase in assets was mainly on account of financing,” the SBP said. Market share of Islamic banking industry’s assets in overall banking industry’s assets increased to 11.9 percent by end September, 2017 from 11.6 percent in the previous quarter.

The share of net financing and investments in total assets (net) of Islamic banking industry stood at 49.7 percent and 25.2 percent, respectively, by end September, 2017, according to the SBP.

Bifurcation of assets among full-fledged Islamic banks and Islamic banking branches of conventional banks reveals that assets of full-fledged Islamic banks witnessed quarterly growth of Rs23 billion during the review quarter to reach Rs1.233 trillion, compared with Rs1.210 trillion a quarter earlier.

The share of full-fledged Islamic banks and Islamic banking branches of conventional banks in overall assets of Islamic banking industry was 59.2 percent and 40.8 percent, respectively.

Investments (net) of Islamic banking industry fell to Rs525 billion. Breakup of investments among full-fledged Islamic banks and Islamic banking branches of conventional banks shows that investments of full-fledged Islamic banks declined to Rs220 billion in July-September from Rs226 billion in April-June, the SBP said.

Similarly, investments (net) of Islamic banking branches of conventional banks decreased to Rs305 billion by end September, 2017, compared to Rs311 billion in the previous quarter. Financing and related assets financing of Islamic banking industry increased by Rs58 billion and reached at Rs1.035 trillion, compared with Rs977 billion in the previous quarter.

The share of Diminishing Musharaka remained higher in overall financing of Islamic banking industry followed by Musharaka and Murabaha. The share of Musharaka increased to 21 percent by September-end, 2017 compared to 17.9 percent in the previous quarter.

In terms of sector wise financing, production and transmission of energy and textile sectors remained two main leading sectors and their share in overall financing of Islamic banking industry stood at 12.9 percent and 11.5 percent, respectively.

Advertisement

Comments

Advertisement

In This Story

Topstory

Opinion

Newspost

Editorial

National

World

Sports

Business

Karachi

Lahore

Islamabad

Peshawar

Advertisement