[dropcap]I[/dropcap]nternational experts have revealed that the worldwide Islamic funds market gaining favorable prospects as several growth drivers are expecting to bring it to the next stage of development. They also estimate that global Islamic assets under management amounted to US$70.8 billion and the number of Islamic funds reached 1,5353 mark at the close of Q1 2017. It is to mention that Malaysia accounted for 28.5 percent of the total Islamic funds, followed by Saudi Arabia and Luxembourg with 15.3 percent and 13.9 percent respectively. It is believed that greater innovation and collaboration has served to boost the Islamic capital market globally.
| IBI: FINANCING MIX (% SHARE) | |||
|---|---|---|---|
| Details | Jun-16 | Mar-17 | Jun-17 |
| Murabaha | 20.1 | 16.4 | 17.0 |
| Ijarah | 7.2 | 6.4 | 6.8 |
| Musharaka | 12.9 | 16.3 | 17.9 |
| Diminishing Musharaka | 35.8 | 32.3 | 29.6 |
| Salam | 3.3 | 5.2 | 5.2 |
| Istisna | 7.3 | 8.9 | 7.2 |
| Others | 13.4 | 14.5 | 16.3 |
| Total | 100.0 | 100.0 | 100.0 |
During April to June 2017, the State Bank of Pakistan (SBP) reported that the network of Islamic banking industry (IBI) in Pakistan consisted of 21 Islamic banking institutions; 5 full-fledged Islamic banks and 16 conventional banks having standalone Islamic banking branches. Furthermore, branch network of Islamic banking industry was registered at 2,320 branches (spread across 110 districts) by end June, 2017. Total assets of IBI recorded growth of Rs150 billion during the quarter April to June, 2017 and were registered at Rs2,035 billion as against to Rs1,885 billion in the last quarter. During the review quarter, major asset quality indicators of IBI, counting non-performing finances (NPFs) to financing (gross), net NPFs to net-financing and net nonperforming assets (NPAs) to total capital remained better than those of overall banking industry’s averages.
INVESTMENTS (NET)
Pakistani bankers have also mentioned that investments (net) of Islamic banking industry rose by 9.9 percent (Rs48 billion) during April to June, 2017 and were registered at Rs537 billion. This rise in investments can be linked with issuance of Government of Pakistan Ijara Sukuk of Rs71 billion in June, 2017. Breakup of investments (net) among full-fledged Islamic banks and Islamic banking branches of conventional banks shows that investments (net) of full-fledged Islamic banks declined to Rs226 billion by end June, 2017 from Rs232 billion in the previous quarter.
DEPOSITS
In a banking report it is clearly noted that deposits of Islamic banking industry recorded a quarterly growth of 10 percent (Rs156 billion) during the quarter April to June, 2017 and were registered at Rs1,720 billion compared to Rs1,564 billion as against to the corresponding period last year. This pace of growth in deposits of Islamic banking industry was higher than deposits’ growth (6.5 percent) of overall banking industry. As a consequence, market share of Islamic banking industry’s deposits in overall banking industry’s deposits grew to 13.7 percent by end June, 2017 as against to 13.2 percent in the last quarter.
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LIQUIDITY
During April to June, 2017, liquid assets to total assets and liquid assets to total deposits ratios were registered at 30.2 percent and 35.7 percent, respectively. Financing to deposits ratio of Islamic banking industry was registered at 56.8 percent by end June, 2017 as against to overall banking industry’s advances to deposits ratio of 48.7 percent.
CAPITAL
The State Bank of Pakistan also mentioned that the Capital base of Islamic banking industry grew by 5.6 percent (Rs7 billion) during the quarter April to June, 2017 and stand at Rs134 billion as against to Rs127 billion in the last quarter. On the other hand, Profit-after-tax of IBI grew by Rs5 billion during the quarter April to June, 2017 and was registered at Rs8.8 billion. Profitability ratios like return on asset (ROA) and return on equity (ROE) of IBI explained some improvement and were registered at 0.9 percent and 13.8 percent, respectively during the review quarter. Operating expense to gross income ratio recorded a fall of 2.9 percent during the review quarter.
| REGION WISE BRANCHES (JUNE 30, 2017) | ||
|---|---|---|
| Province/Region | Total Number | Share (%) |
| Punjab | 1,091 | 47.0 |
| Sindh | 699 | 30.1 |
| Khyber Pakhtunkhwa | 258 | 11.1 |
| Baluchistan | 99 | 4.3 |
| Gilgit Baltistan | 10 | 0.4 |
| FATA | 8 | 0.3 |
| Federal Capital | 119 | 5.1 |
| AJK | 36 | 1.6 |
| Total | 2,320 | 100 |