IBI deposits down Rs 8 billion in Q3CY19

Deposits of Islamic Banking Industry (IBI) recorded a decline of Rs 8 billion during the third quarter (Jul-Sep) of this calendar year (CY19).

According to Islamic Banking Bulletin issued by the State Bank of Pakistan (SBP), assets of Islamic banking industry rose by Rs 3 billion during the quarter July to September, 2019 and reached Rs 2.995 trillion compared to Rs 2.992 trillion in the previous quarter. The market share of Islamic banking assets in the overall banking industry was recorded at 13.8 percent by the end of September, 2019.

However, deposits of IBI witnessed a downward trend and declined by Rs 8 billion to Rs 2.407 trillion by the end of September 2019 down from Rs 2.415 trillion in June 2019.

Breakup of deposits reveals that deposits of full-fledged Islamic Banks (IBs) declined by Rs 4 billion during the period under review and were recorded at Rs 1.451 trillion by end September 2019.

Similarly, deposits of Islamic banking branches (IBBs) declined by Rs 3 billion to Rs 956 billion by end September 2019. The category wise breakup of deposits reveals that fixed deposits increased by 11.3 percent to Rs 55 billion while current (non-remunerative), saving and current (remunerative) deposits declined by 5.7 percent, 2.9 percent and 22.2 percent, respectively by end September 2019.

However, despite some decline, market share of Islamic banking industry's deposits in overall banking industry's deposits increased to 16.1 percent by end September, 2019 compared to 15.9 percent in the previous quarter.

The network of Islamic banking industry consisted of 22 Islamic banking institutions; 5 full-fledged Islamic banks and 17 conventional banks having standalone Islamic banking branches with 2,979 branches spread across 115 districts by end September 2019.

Bifurcation of assets among IBs and IBBs reveals that assets of full-fledged Islamic banks were recorded at Rs 1.766 trillion while assets of IBBs increased by around Rs 15 billion to Rs 1.229 trillion by end September, 2019.

Investments (net) of Islamic banking industry were recorded at Rs 595 billion by end September, 2019 compared to Rs 606 billion in the previous quarter. During the period under review, investments (net) of IBs declined by around Rs 13 billion while that of IBBs increased by Rs 2 billion. Lack of Shariah compliant investment avenues can be one of the major reasons for decline in investments of the Islamic banking industry during the period under review.

Profit before tax of Islamic banking industry was recorded at Rs 46 billion by end September, 2019. Profitability ratios like return on assets (ROA) and return on equity (ROE) before tax were recorded at 2.1 percent and 33.2 percent, respectively by end September, 2019.

During the period under review, operating expense to gross income ratio was recorded at 52.5 percent, compared to 52.6 percent in the previous quarter. It is also important noting that this ratio was lower than that of overall banking industry ratio.