Islamic Banking Industry (IBI) has made a tremendous stride this year with the growth of profit-before-tax recorded over 100 percent in the first half of 2019 as against similar period last year.
According to the State Bank of Pakistan, the profit before tax of the Islamic banking industry grew significantly to Rs. 32 billion from the period of January to July 2019 as compared with Rs. 15 billion reported in the same period of 2018, showing a year-on-year growth of 113 percent.
The industry comprises of 5 full-fledged Islamic banks and 17 Islamic banking windows of conventional banks, totaling 22 different options for the public.
Some of the prominent banks which reported growth in profitability are Meezan Bank Islami and Islamic banking windows of HBL and UBL.
The profits of the Islamic banks were driven in tandem with widening spread or financing rate, which went up due to the increase of KIBOR and policy rates by the central bank.
The outstanding profitability of the Islamic banking industry showed the consistent and hyperactive penetration of the industry in the targeted sectors and areas but it also depicted the acceptance of the banking system among the public. Moreover, the financial performance of the banks in terms of strategic planning and business operations also contributed significantly to the industry’s profitability.
Besides, the issuance of the Government’s Energy Sukuk of Rs. 200 billion provided a handsome pool of investment and return of profit to the Islamic banks in the country.
The assets size of the IBI industry surged to Rs. 2.99 trillion by June 2019 from Rs. 2.41 trillion till the same period last year. The deposits of the industry also increased to Rs.2.48 trillion from Rs. 2.03 trillion.
During the period of one year (from June 2018 to 2019) the number of branches increased from 2,685 to 2,913 branches. It is evident that the Islamic banking industry is contributing impressively to the economy with the establishment of the network and generating employment to hundreds of fresh and experienced graduates.
Besides, the heavy profit revenues of the Islamic banking industry also generated handsome tax revenues for the government in the time of the economic slowdown.