Islamic Banks achieves 94% expansion plan: SBP


Karachi: Islamic banking Industry completed 94 percent of its approved expansion plan by having a network of 886 branches by end of 2011, State Bank of Pakistan (SBP) reported.

The quarterly “Islamic Banking Bulletin” said that Islamic Banks assets and liabilities both constitute 7.8 percent of the overall banking industry by 2011-end.

The asset base of the industry reached to Rs. 641 billion indicating 13 percent quarterly growth by close of Dec 2011.

The growth in assets is mainly contributed by financing and investment that together grew by15 percent during the quarter under study, registering YoY growth of 40 percent. On the other hand, the deposits reached to Rs. 521 billion depicting a quarterly growth of 12.5 percent and YoY growth of 34 percent by end of Dec 2011.

The expansion of the industry is complemented with rising trend of profitability that has reached Rs. 10.6 billion by end Dec 2011. Besides, the operating performance indicators also showed encouraging picture for the last quarter of 2011.

The Non-Performing Financing (NPFs) declined while Return on Assets (ROA) and Return on Equity (ROE) both remained higher than that of overall banking industry average.

IBIs achieved ROA of 2 percent which is twice as large as of the overall banking industry average. ROE at 17 percent in the quarter ending Dec 2011 is also 2 percentage points higher than the industry average of 15 percent.

The full-fledged Islamic banks (IBs) constitute 66 percent while Conventional banks having Islamic windows (IBDs) occupy 34 percent share of overall network of the industry.

However, no change in terms of regional allocation of branches was observed; 78 percent concentration of branches remains in Punjab and Sindh while among cities 65 percent of the network is concentrated in 7 big cities (Karachi, Lahore, Faisalabad,  Peshawar, Islamabad, Quetta and Rawalpindi).