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Islamic Banking profit earning up by 40 pc: SBP

Investments decline by 0.9 pc, assets shoot up by 2.8pc, deposits grow by 1.7pc

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By M J Hayat

LAHORE: The Islamic Banking profit earning has increased by 40 percent as profit before tax of Islamic banking recorded at Rs. 7 billion by end March 2018 compared to Rs. 5 billion in the same quarter last year while assets of Islamic banking industry increased by 2.8 percent (Rs.
62 billion) during the quarter January to March, 2018 and stood at Rs 2,334 billion by end March 31, 2018, a recent report of State bank of Pakistan (SBP) disclosed on Monday.
Profitability ratios like return onassets and return on equity (before tax) stood at 1.1 percent and 18.4 percent, respectively by end March, 2018. Operating expense to gross income ratio continued the declining trend; however, this ratio is still higher than that of overall banking industry’s average, the report said.
Deposits of Islamic banking industry showed a quarterly growth of 1.7 percent (Rs. 31 billion) during the period under review to reach Rs. 1,916 billion. Market share of Islamic banking assets and deposits in the overall banking industry was recorded at 13.5 percent and 14.6 percent, respectively by end March, 2018. Profit (before tax) of Islamic banking industry was registered at Rs. 7 billion by end March 2018 compared to Rs. 5 billion in the same quarter last year, it added.
Assets of Islamic banking industry increased by 2.8 percent (Rs. 62 billion) during the quarter January to March, 2018 and were recorded at Rs. 2,334 billion, compared to Rs. 2,272 billion in the previous quarter, the report said.
Analysis of assets composition shows that financing (net) recorded growth of 6.4 percent (Rs. 77 billion) during the period under review. The report said, adding that market share of Islamic banking industry’s assets in overall banking industry’s assets increased by 1.1 percent during the period under review and was recorded at 13.5
percent by end March, 2018 compared to 12.4 percent in the previous quarter, it added.
Investments (net) of Islamic banking recorded a decline of 0.9 percent (Rs. 5 billion) during the period under review and stood at Rs. 529 billion by end March, 2018. The review of last three quarters shows that investments (net) of Islamic banking industry have not shown any significant change and almost remained at same level, the report stated.
Financing and Related Assets Financing and related assets (net) of Islamic banking industry continued its growing trend and registered a quarterly growth of 6.4 percent (Rs. 77 billion) during the review quarter to reach Rs. 1,284 billion by end March, 2018 compared to Rs. 1,207 billion in the previous quarter, the report highlighted. Breakup of financing and related assets (net) among full-fledged Islamic banks and Islamic banking branches of conventional banks shows that financing and related assets (net) of full-fledged Islamic banks witnessed a growth of 2.1 percent (Rs. 16 billion) during the review quarter and were recorded at Rs. 778 billion by end March, 2018, it asserted.
On the other hand, financing and related assets (net) of Islamic banking branches of conventional banks showed a quarterly growth of 13.7 percent (Rs. 61 billion) and were recorded at Rs. 506 billion by end March, 2018, the report said, adding that mode wise breakup of financing (gross) shows that the share of Diminishing Musharaka remained higher in overall financing of Islamic banking industry followed by Musharaka and Murabaha.
Asset Quality Asset quality indicators of Islamic banking industry including non-performing finances (NPFs) to financing (gross) and net NPFs to net-financing were recorded at 2.8 percent and 0.5 percent respectively by end March, 2018, the report concluded.

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