Islamic banks post Rs8 billion profit in third quarter

KARACHI: The Islamic banking industry has posted Rs8 billion profit for the quarter ended September 2011, showing growth of over 58 percent when compared with the last quarter ended June 2011, said State Bank of Pakistan (SBP).

In the Islamic Banking Bulletin for July-September released on Monday, the central bank, however, said that the growth in profit during the quarter is relatively lower than the growth rate of the last quarter, which was 100 percent.

The SBP attributed the higher growth for quarter ended September 2011 to the base effect. The central bank also said that quarterly growth of profit of conventional banks having Islamic banking branches is significantly higher than the growth rate of full fledged Islamic banks.

“The share of full fledged banks in overall profit of Islamic Banking Institutions (IBI) though declined marginally over this quarter still constitutes major share of 55 percent of overall profit of the industry,” the SBP said.

IBI continued its positive trend of earning as indicated by the rising trend in return on assets (ROA) and return on equity (ROE), both these ratios though did not show any significant change over the quarter under review for the overall banking industry.
The central bank also said that IBI’s ‘Net Markup/Profit income to Gross income’ indicated a decline while ‘Non-Mark-up/Profit income to Gross income’ showed an upward trend which is in contrast to overall banking industry norms.

By quarter end September 2011, the total assets of IBI stood at Rs568 billion, constituting 7.3 percent share of overall banking industry, the bulletin said. The deposits of the industry reached Rs463 billion during the quarter under review and its share increased to 8 percent of the overall banking industry from 7.6 percent in the last quarter (April-June 2011); the YoY growth of the deposits was almost 37 percent.

However, investments growth decelerated while financing witnessed retrenchment compared to the previous quarter. The SBP said that deceleration in growth of investment was due to non-issuance of any new Sukuk during the quarter while the retrenchment in financing is due to business cycle of most corporate clients as well as overall economic conditions of the country.

The industry witnessed rising non-performing financing (NPF) during the period under discussion reaching Rs15.7 billion from Rs14.8 billion during the last quarter , even so the IBI continued to achieve higher profit and increase in earnings, the central bank said.

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