In a recent directive issued by the State Bank of Pakistan (SBP), IFPD Circular No. 09 of 2024, the profit-sharing mechanism for savings deposits held by Islamic Banking Institutions (IBIS) has been revised.
This new regulation introduces significant changes to ensure a level playing field across the banking sector
According to Arif Habib Limited, the profitability of IBIs will come under pressure due to the higher cost of savings deposits, driven by the MDR requirement. This impact will primarily affect PKR savings deposits, excluding those held by financial institutions, public sector enterprises, and public limited companies.
Meezan Bank Limited (MEBL) – Downgraded to Sell
AHL has revised the CY25 earnings estimate to Rs. 34.4/share, reflecting a decline of Rs. 9.0/share from prior estimates.
The report has reduced the target price to Rs. 205.2/share, down from Rs. 289.3/share, implying a total return of -3.3 percent from the last closing price.
Outlook
The extent of profitability impact for IBIs will hinge on the incremental cost of saving deposits and their ability to offset higher deposit costs through enhanced non-funded income and capital gains. The report has set a cautious on the Islamic banks, with a preference for banks better equipped to absorb the spread pressure.
