The Non-Performing Finance of Islamic Banking Industry (IBI) has registered a healthy growth of over 16 percent and crossed Rs 15 billion mark end of third quarter of calendar year 2011. According to State Bank of Pakistan, Asset quality of the industry deteriorated marginally as on year on year basis non-performing financing (NPF) increasing from Rs 13.51 billion in September 2010 to Rs 15.78 billion in September 2011, depicting a surge of Rs 2.27 billion.
The YoY growth rate of 16.8 percent in NPF is lower than that of last quarter, however, the quarterly growth rate is higher than that of the previous quarter indicated by the rising trend of NPFs to Financing as well as the net infection ratio. However, both mentioned ratios are still below than the overall industry average hinting at the cautious approach of Islamic banks.
Quarterly basis, NPFs has posted an increase of 6.1 percent from Rs 14.87 billion in June 2011 to Rs 15.785 billion in September 2011. The industry witnessed Rs 0.8 billion increase in the category of Substandard while Rs 0.2 billion in category of Doubtful. However, this quarterly rise in NPFs is in line with the quarterly growth of NPLs of the overall banking industry. End of third quarter, the provisioning of NPFs has mounted to Rs 9.847 billion from Rs 8.92 billion in June 2011, showing an increase of 10 percent. In addition, the recovery of IBIs against NPFs has improved and witnessed a raise of 27.4 percent. With current surge it mounted to Rs 810 million in September 2011.
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