According to the statistics released by the State Bank of Pakistan (SBP) during October-December 2023, Islamic Banking Institutions included 22 banks, comprising 6 full-fledged Islamic banks and 16 conventional banks having standalone Islamic banking branches. Islamic Banking branch network has shown a quarterly growth of 6.2 per cent with the addition of 289 branches. With the inclusion of these branches, IBI branch network proliferated to 4,955. State Bank of Pakistan (SBP) showed that the Islamic banking industry has marked its presence in 131 districts across Pakistan. In addition to that Islamic banking windows (IBWs) reached 1,922 by the close of December 2023 mentioning a quarterly growth of 4.8 per cent.
| Islamic Industry Progress In Pakistan (Amount in Rs Billion) | |||||||||
| Particulars | Period | Yearly Growth (YoY) | Share in Overall Banking Industry (%) | ||||||
| Dec-22 | Sep-23 | Dec-23 | Dec-22 | Sep-23 | Dec-23 | Dec-22 | Sep-23 | Dec-23 | |
| Assets | 7,229 | 8,417 | 8,994 | 29.6 | 21.9 | 24.4 | 20.2 | 19.6 | 19.4 |
| Deposits | 5,161 | 6,160 | 6,749 | 22.6 | 22.7 | 30.8 | 22.0 | 22.5 | 23.2 |
| Investments (net) | 3,051 | 3,928 | 4,235 | 64.8 | 39.2 | 38.8 | 16.6 | 16.9 | 16.3 |
| Financing (net) | 3,113 | 3,026 | 3,335 | 19.9 | 1.4 | 7.1 | 26.3 | 26.1 | 27.4 |
| Number of Islamic Banking Institutions | 22 | 22 | 22 | _ | _ | _ | _ | _ | _ |
| Number of Branches | 4,396 | 4,666 | 4,955 | 11.1 | 11.3 | 12.7 | _ | _ | _ |
| Number of Islamic Banking Windows | 1,516 | 1,834 | 1,922 | 5.1 | 29.0 | 26.8 | _ | _ | _ |
| *number includes sub-branches | |||||||||
Assets of IBI during the period under review, grew by Rs577 billion and were recorded at Rs8,994 billion in comparison to Rs8,417 billion in the previous quarter.
This growth in assets was chiefly driven by Financing (net), which observed a quarterly hike of Rs309 billion (10.2 per cent) and grew to Rs3,335 billion. Investments (net) were recorded at Rs4,235 billon in the same quarter, registering a rise of Rs 307 billion. The market share of IBI’s assets in the overall banking industry’s assets was registered at 19.4 per cent.
The breakdown of Islamic banking assets reveals that the share of financing (net) reached at 37.1 per cent, whereas investments (net) was registered at 47.1 per cent. Assets of IBs grew by Rs299 billion and stood Rs5,985 billion. Similarly, the assets of IBBs grew by Rs278 billion and stood at Rs3,008 billion.
By the close of December 2023, the share of IBs and IBBs in the overall IBI asset reached at 66.5 per cent and 33.5 per cent, respectively.
The asset quality ratios of IBIs During the quarter under review, remained stable. Gross Non-Performing Financing (NPF) to Financing (gross) reached at 3.8 per cent, whereas Net NPFs to Net Financing was registered at 0.3 per cent. Deposits of IBIs carried on the momentum gained in the previous quarter with a rise of Rs589 billion, reaching Rs6,749 billion. The market share of deposits in the overall banking industry grew to 23.2 per cent as against 22.5 per cent in the previous quarter.
Analysis of the deposits side shows that current deposits and saving deposits are the major constituents, having a sum of Rs2,528 billion and Rs2,372 billion, respectively.
Saving deposits grew by Rs205 billion during the quarter under review, whereas current deposits and fixed deposits displayed an increase of Rs211 billion and Rs102 billion each.
On the other hand, Investments (net) of IBI displayed a robust growth of Rs307 billion during the quarter under review. This rise in investments (net) was chiefly because of the funds invested by IBIs in multiple domestic Ijarah Sukuk (GIS) issued through the Government of Pakistan. The breakdown of investments (net) portfolio shows that the main growth was generated through IBBs, which grew by Rs179 billion and reached at Rs1,382 billion.
Similarly, the investment (net) portfolio of IBs by the close of December 2023, grew by Rs128 billion. In terms of share, IBs and IBBs investments (net) as percentage of total investments (net) reached 67.4 per cent and 32.6 per cent respectively. SBP in the report also showed that financing and related assets reached Rs3,335 billion, explaining a rise of 10.2 per cent as against to 9.0 per cent decline in the previous quarter. The dissection of financing highlights that a major share of financing is contributed by IBs which reached at Rs2,188 billion, whereas IBBs contributed Rs1,147 billion towards the total amount. On an overall basis, financing observed a rise of Rs309 billion. In terms of mode-wise financing, Diminishing Musharakah had a leading share with 32.1 per cent of the total financing, followed by Musharakah with 25.3 per cent and Murabaha financing with 13.1 per cent share. Sector Wise Financing of IBI depicted a trend similar to the previous quarter, with the textile sector holding a major share of 16.3 per cent, followed by agribusiness with a share of 10.7 per cent.