Pakistan Islamic Banking windows net assets surge by 31.77pct
By Riffat Mughal
KARACHI: Pakistan’s Islamic banking windows of
conventional banks continued to grow during the first nine months of
the calendar year 2011 (9MCY11) with improved asset base. Net assets of
the Islamic banking windows grew by 31.77 percent and stood at Rs 17.647
billion as on Sep 30, 2011 as against Rs 13.393 billion reported on Dec
31, 2010.
Islamic banking business of 11 selected banks was included in this report. The banks taken for analysis include Standard Chartered Saadiq, Bank AL Habib, Askari Bank Limited, Habib Bank Limited, Faysal Bank Limited, National Bank of Pakistan, Bank Alfalah Limited, Bank of Khyber, Habib Metropolitan Bank, Muslim Commercial Bank and United Bank Limited-Ameen.
Total assets surged by 26.85 percent during 9MCY11 and have reached to Rs 195.739 billion during the period as against Rs 154.303 billion as on Dec 31, 2010.
Banks financing and receivables climbed up by 12.89 percent to Rs 68.239 billion. In the total financing and receivables, Murabaha portfolio contributed Rs 18.369 billion with an increase of 51.09 percent. Banks’ Ijarah portfolio reduced by 25.66 percent to Rs 3.609 billion in the 9MCY11. Diminishing Musharakah portfolio grew by 37.08 percent to Rs 19.341 billion. Out of total financing and receivables, Murabaha portfolio constituted 26.92 percent, diminishing Musharaka portfolio contributed 28.34 percent and Ijarah portfolio had a share of 5.29 percent.
On the liabilities side, total deposits and other accounts increased by 22.75 percent to Rs 153.775 billion as on Sep 30, 2011 against Rs 125.270 billion on Dec 31, 2010.
Among the deposit categories, current accounts climbed by 55.83 percent to Rs 19.043 billion, saving accounts went up by 8.14 percent to Rs 18.473 billion and term deposits jumped by 30.51 percent to Rs 30.142 billion. In the total deposit mix, term deposits contributed 19.60 percent, savings account 12.01 percent and current accounts comprised 12.38 percent during the period under review.
Banks advances to deposits ratio decreased to 44.38 percent from 48.25 percent which indicates that banks are not utilizing their deposit base effectively at the moment so as to make full use of their deposit base. Given the relaxation in policy rate, financing operations may speed up as government usually does not borrow much from Islamic banks until recently and Islamic banks have enough liquidity to expand their financing operations.
Banks capital to total assets ratio surged to 9.02 percent from 8.68 percent during the period under consideration. Since the capital increased in more proportion than the total assets, therefore, leveraging of capital base did not improve in Islamic banking windows operated by conventional banks.
Pakistan Islamic banking business of conventional banks net financing and investments surged by 30.36 percent and reached Rs 157.995 billion as on Sep 30, 2011 compared with Rs 120.873 billion posted on Dec 31, 2010.
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