Non-Performing Finances (NPFs) of the Islamic Banking Industry were recorded at 2.8 percent by end of March 2018 down from 3 percent in December 2017. According to State Bank of Pakistan (SBP), asset quality indicators of Islamic Banking Industry, including Non-Performing Finances (NPFs) to financing (gross) and net NPFs to net-financing were recorded at 2.8 percent and 0.5 percent, respectively by end-March, 2018.
NPFs to financing declined from 3 percent in December 2017 and much lower than overall industry ratio, which stood at 8.3 percent by end-March 2017. NPFs to financing (gross) ratio of Islamic Banking Industry has shown improvement over the last few quarters, mainly due to significant rise in financing portfolio of Islamic banking industry.
During the quarter Jan-March 2018, capital base of Islamic banking industry registered a quarterly growth of 3.5 percent and was recorded at Rs 146 billion by end March, 2018 compared to Rs 141 billion in the previous quarter. Capital to total assets and capital minus net non-performing assets to total assets ratios of Islamic banking industry stood at 6.2 percent and 6.1 percent, respectively.
Operating expense to gross income ratio continued the declining trend; however, this ratio is still higher than that of overall banking industry''s average. Operating expense to gross income ratio of Islamic Banking Industry stood at 67.5 percent compared to overall industry ration of 57.7 percent.