Pakistan’s Islamic banking industry posted a profit of Rs 9.4 billion ($94 million) in July-September 2014, a substantial rise compared to Rs 5.6 billion during the same quarter of 2013, reported The Gulf Today newspaper.
The newspaper, quoting State Bank of Pakistan (SBP) bulletin for July-September quarter, said that Islamic banking share in the overall banking has been increasing, but growth is significantly slow.
Assets of the Islamic banking industry grew by 1.3 per cent to Rs 1,102 billion during the quarter compared to Rs 1,089 billion in the previous quarter. Similarly, its deposits rose to Rs 934 billion during the quarter, the newspaper said.
The newspaper further said, “The market share of Islamic banking assets and deposits in overall banking industry increased from 9.8 per cent and 10.6 per cent by end-June 2014 to 9.9 per cent and 10.7 per cent respectively by end-September 2014.”
Among asset quality indicators, non-performing financing (NPF) of Islamic banking industry increased during the quarter resulting in an increase in provisions against financing, it added.
As for earnings and profitability indicators, both return on assets (ROA) and return on equity (ROE) also rose during the three-month period. The industry has been investing heavily in government papers like conventional banks, according to the SBP report.
It added that the net investments of the Islamic banking industry declined to Rs 354 billion by end-September 2014 from Rs 358 billion by end-June 2014, reflecting an on-quarter fall of 1 per cent.
“The decline in investments was mainly due to non-issuance of any new sukuk during the quarter that has generally been the key investment option for Islamic banking industry,” said the report.
This is also reflected in decline of 1.2 per cent in the federal government securities during July-September, though they still remain the highest contributor in investments, it added.
In terms of share, nearly 60 per cent of investments made by the industry are contributed by Islamic banks and 40 per cent by the Islamic banking departments of conventional banks.
Gross financing of the industry grew by 2.8 per cent to Rs 348.5 billion by end-September from Rs 339 billion by end-June. The industry’s NPF rose for the first time since September 2013 to reach Rs 18.4 billion by end-September 2014, said the report, adding that all categories of non-performing financing except `loss’ witnessed decline. Deposits reached Rs 934 billion by the end of the quarter, posting a quarterly growth of 0.2 per cent.
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