Islamic Banking Industry during the quarter ending September 30th has increased by Rs. 48 billion. The industry has reached to an amount of Rs. 2,083 billion compared to Rs. 2,035 billion in the previous quarter. Islamic Banking deposits during the quarter grew little as the total deposits registered a meagre increase of Rs. 9 billion from previous quarter.
The Islamic Banking industry in Pakistan now holds 11.9 percent and 13.7 percent market share in overall assets and deposits of the banking industry. Islamic Banking is currently progressing at a Return on Equity (ROE) of 18.1 percent during the quarter.
State Bank of Pakistan has released the Monthly Statistical Bulletin on the progress and development of Islamic Finance in Pakistan.
The Islamic Banking has become increasingly popular in Pakistan as more and more customers move towards interest free mode of Banking. The local commercial banks have adopted to the changing demands of its customers and increased their network of Islamic Banking branches.
There are now a total of 2,368 branches Islamic Banking branches in Pakistan with 47% (1,117 branches) of the total branches located in Punjab. Sindh has also been increasing its number of branches in the recent years with a total share of 29.75% (704 branches). However, the most remarkable of the all is the Federal Capital (Islamabad) with a total 120 branches nearly half of the total of 272 in KPK.
| Total Branches in Pakisan | ||
|---|---|---|
| Province/Region | Total Number | Share (%) |
| Punjba | 1,117 | 47.25 |
| Sindh | 704 | 29.7% |
| KPK | 272 | 11.5% |
| Baluchistan | 99 | 4.2% |
| Gilgit Baltistan | 10 | 0.4% |
| FATA | 9 | 0.4% |
| Federal Capital | 120 | 5.1% |
| AJK | 37 | 1.5% |
| Total | 2,368 | 100 |
Despite penetration from the banks into the local markets, the Islamic banking continues to remain concentrated in the major cities of Pakistan: Karachi, Lahore, Rawalpindi and Islamabad.
Islamic Banking Assets for the period increased by around 48 billion, totaling at Rs. 2,083 billion compared against the Rs. 2,053 billion in previous quarter. The major chunk of the net assets continues to remain within financing and investments in total assets at 49.7 percent and 25.2 percent of the entire Asset and Liability Structure.
| Financing Mix | |||
|---|---|---|---|
| Sep – 16 | Jun – 17 | Sep – 17 | |
| Murabaha | 16.9% | 17% | 14.1% |
| Ijarah | 7.8% | 6.8% | 8.3% |
| Musharaka | 12.0% | 17.9% | 21.0% |
| Diminishing Musharaka | 38.5% | 29.6% | 29.1% |
| Salam | 3.3% | 5.2% | 3.8% |
| Istisna | 7.0% | 7.2% | 6.2% |
| Others | 14.5% | 16.3% | 17.5% |
| Total | 100% | 100% | 100% |
Mode wise breakup of financing (gross) shows that share of Islamic Banking continues to remain concentrated in the Diminishing Musharaka 29.7% followed by Mushraka 17.9% and Murabaha 17.0%. The major sectors receiving theses financing include, Production & Transmission Energy 12.9%, Individuals 12.0%, Textile 11.5% and Agribusiness 10.3%.
On the profitability front, the industry continues to grow. The banking sector registered an increase of Rs. 5.4 billion during the period with total Profit before tax clocking in at Rs. 17.6 billion against 12.2 billion in the previous quarter.
Graph: Return on Equity of Islamic Banking Industry
