Islamic banking profit soars 48pc

KARACHI: Profits of the Islamic banking industry increased by 48 per cent during the quarter Oct-Dec 2018, a report issued by the State Bank said on Monday.

“Profit before tax of Islamic banking industry was recorded at Rs34 billion by end December, 2018 compared to Rs23bn in the same quarter last year,” according to SBP’s Islamic Banking Bulletin. The report added that profitability ratios like return on assets and return on equity were recorded at 1.4pc and 22.3pc, respectively by end Dec 2018.

During the period operating expense to gross income ratio witnessed improvement and was recorded at 62.9pc, compared to 65.1pc in the previous quarter.

The report said the assets of Islamic banking industry registered a quarterly growth of 8.1pc during the quarter and were recorded at Rs2,658bn, compared to Rs2,458bn in the previous quarter.

“This growth in assets was mainly contributed by financing that recorded quarterly growth of 10.7pc (Rs146bn),” said the report. Investments of Islamic banking industry declined by 3.7pc (Rs20bn) during the period under review, it added.

Market share of Islamic banking industry’s assets in overall banking industry’s assets was recorded at 13.5pc by end Dec 2018, compared to 13.6pc in the previous quarter, the report added.

Deposits of Islamic banking industry depicted a quarterly growth of 9.9pc (Rs198bn) during the period under review to reach at Rs2,203bn, compared to Rs2,005bn in the previous quarter.

“As a result of this growth, market share of Islamic banking industry’s deposits in overall banking industry’s deposits increased to 15.5pc by end Dec 2018, compared to 14.7pc in the previous quarter,” said the report.

Breakup of deposits among full-fledged Islamic banks and Islamic banking branches of conventional banks showed that the deposits of former grew by 7.9pc (Rs98bn) while the latter were registered at Rs1,340bn by end Dec 2018.

“The share of full-fledged Islamic banks and Islamic banking branches of conventional banks in overall deposits of Islamic banking industry stood at 61pc and 39pc, respectively by end Dec 2018,” said the report.

Islamic financing kept its focus on two major sectors of textile and production and transmission of energy. Textile got 13pc of overall financing while energy got 17.7pc.

Review of client-wise financing reveals that corporate sector accounted for 74.3pc share in overall financing of Islamic banking industry, followed by commodity financing with a share of 10.5pc. The share of small and medium enterprises and agriculture financing in overall financing of Islamic banking industry was recorded at 3.7pc and 0.3pc respectively.

“Financing and related assets (net) of Islamic banking industry continued their growing trend and reflected a quarterly growth of 10.7pc (Rs146bn) to reach Rs1511bn by end Dec 2018 compared to Rs1,365bn in the previous quarter,” said the Bulletin.