Islamic Banking Bulletin June Islamic Bank Limited. Branch network of Islamic banking industry was...

download Islamic Banking Bulletin June Islamic Bank Limited. Branch network of Islamic banking industry was recorded

If you can't read please download the document

  • date post

    15-Mar-2020
  • Category

    Documents

  • view

    2
  • download

    0

Embed Size (px)

Transcript of Islamic Banking Bulletin June Islamic Bank Limited. Branch network of Islamic banking industry was...

  • Islamic Banking Bulletin

    June 2018

    Islamic Banking Department

    State Bank of Pakistan

  • Islamic Banking Bulletin: April-June 2018

    2

    Table of Contents

    Page No.

    Islamic Banking Industry – Progress and Market Share 3

    Country Model: Singapore

    8

    A Brief on Shariah Standard ‘Trading in Currencies’ issued by Accounting and Auditing

    Organization for Islamic Financial Institutions

    10

    Events and Developments at Islamic Banking Department

    14

    Islamic Banking News and Views

    16

    Annexure I: Islamic Banking Branch Network 23

    Annexure II: Province/Region wise Break-up of Islamic Banking Branch Network 24

    Annexure III: District-wise Break-up of Islamic Banking Branch Network 25

  • Islamic Banking Bulletin: April-June 2018

    3

    Islamic Banking Industry - Progress & Market Share

    Overview

    Total assets of Islamic banking industry grew by Rs. 148 billion during the quarter April to June, 2018

    and were recorded at Rs. 2,482 billion by end June, 2018. Similarly, deposits of Islamic banking industry

    also witnessed growth of Rs. 117 billion during the period under review and reached to Rs. 2,033 billion

    by end June, 2018. Market share of Islamic banking assets and deposits in the overall banking industry

    was recorded at 12.9 percent and 14.8 percent, respectively by end June, 2018 (see Table 1). On

    profitability side, Islamic banking industry recorded profit before tax of Rs. 15 billion by end June, 2018

    compared to Rs. 12 billion in the same quarter last year.

    Branch Network of Islamic Banking Industry

    The network of Islamic banking industry consisted of

    21 Islamic banking institutions; 5 full-fledged Islamic

    banks and 16 conventional banks having standalone

    Islamic banking branches by end June, 2018. During

    the period under review, branch network of Islamic

    banking industry increased by 96 branches. This

    addition was mainly due to demerger of 90 branches of

    MCB Bank Limited and their merger into MCB

    Islamic Bank Limited. Branch network of Islamic

    banking industry was recorded at 2,685 (spread across

    111 districts) by end June, 2018. The number of

    Islamic banking windows operated by conventional banks having standalone Islamic banking branches

    stood at 1,284 (see Annexure I for details).

    Asset and Liability Structure

    Assets: Asset base of Islamic banking industry registered a quarterly growth of 6.3 percent (Rs. 148

    billion) during the quarter April to June, 2018 and were recorded at Rs. 2,482 billion, compared to Rs.

    2,334 billion in the previous quarter. This growth in assets was contributed by net financing and

    Table 1: Industry Progress and Market Share

    Particulars Industry Progress YoY

    Growth (%)

    Share in Overall

    Banking Industry (%)

    Jun-17 Mar-18 Jun-18 Jun-18 Jun-17 Mar-18 Jun-18

    Total Assets

    (Rupees in billion) 2,035 2,334 2,482 21.9 11.6 13.5 12.9

    Deposits

    (Rupees in billion) 1,720 1,916 2,033 18.2 13.7 14.6 14.8

    Number of Islamic banking

    institutions 21 21 21 - _ _ -

    Number of Islamic banking

    branches* 2,320 2,589 2,685 15.7 _ _ -

    Source: Data submitted by banks under quarterly Reporting Chart of Account (RCOA)

    *Including sub-branches

    Table 2: Region Wise Branches

    Province/Region Total Number Share (%)

    Punjab 1,278 47.6

    Sindh 795 29.6

    Khyber Pakhtunkhwa 300 11.2

    Baluchistan 108 4.0

    Federal Capital 141 5.3

    AJK 42 1.6

    Gilgit Baltistan 12 0.4

    FATA 9 0.3

    Total 2,685 100.0

  • Islamic Banking Bulletin: April-June 2018

    4

    investments that recorded a quarterly growth of 3.1 percent (Rs. 39 billion) and 4.8 percent (Rs. 26

    billion), respectively during the period under review. Market share of Islamic banking industry’s assets in

    overall banking industry’s assets was recorded at 12.9 percent by end June, 2018. The share of net

    financing and investments in total assets (net) of Islamic banking industry stood at 53.3 percent and 22.4

    percent, respectively by end June, 2018 (see section below on Investments and Financing for details).

    Bifurcation of assets among full-fledged Islamic banks and Islamic banking branches of conventional

    banks reveals that assets of full-fledged Islamic banks witnessed a quarterly growth of 6.9 percent (Rs. 93

    billion) during the period under review to reach Rs. 1,452 billion. Assets of Islamic banking branches of

    conventional banks grew by 5.6 percent (Rs. 55 billion) and their assets base reached to Rs. 1,030 billion

    by end June, 2018. The share of full-fledged Islamic banks and Islamic banking branches of conventional

    banks in overall assets of Islamic banking industry stood at 58.5 percent and 41.5 percent, respectively by

    end June, 2018.

    Investments

    Investments (net) of Islamic banking industry reflected an increase of 4.8 percent (Rs. 26 billion) during

    the period under review and were recorded at Rs. 555 billion by end June, 2018 compared to Rs. 529

    billion in the previous quarter. 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 grew by Rs. 9 billion during the period under review and were recorded at Rs. 244 billion by end

    June, 2018. Similarly, investments (net) of Islamic banking branches of conventional banks witnessed

    growth of Rs. 17 billion and stood at Rs. 311 billion by end June, 2018.

    Financing and Related Assets Financing and related assets (net) of Islamic banking

    industry witnessed a quarterly growth of 3.1 percent (Rs.

    39 billion) during the period under review and were

    recorded at Rs. 1,323 billion by end June, 2018. Breakup

    of financing and related assets (net) among full-fledged

    Islamic banks and Islamic banking branches of

    conventional banks shows that financing and related

    assets (net) of Islamic banking branches of conventional

    banks increased by 7 percent (Rs. 35 billion) during the

    period under review and were recorded at Rs. 541 billion

    by end June, 2018. In contrast, financing and related

    assets (net) of full-fledged Islamic banks recorded a growth of 0.5 percent (Rs. 4 billion) and stood at Rs.

    782 billion by end June, 2018. In terms of financing mix, Diminishing Musharaka was the leading mode

    of financing followed by Musharaka and Murabaha (see Table 3).

    In term of sector wise financing, production & transmission of energy and textile sectors remained two

    leading sectors and their share in overall financing of Islamic banking industry was recorded at 17.1

    percent and 11.5 percent, respectively by end June, 2018 (see Table 4).

    Table 3: Financing Mix (% Share)

    Jun-17 Mar-18 Jun-18

    Murabaha 17.0 13.1 13.4

    Ijarah 6.8 6.4 6.6

    Musharaka 17.9 21.2 20.0

    Diminishing Musharaka 29.6 32.4 33.7

    Salam 5.2 2.5 2.8

    Istisna 7.2 7.7 6.4

    Others 16.3 16.7 17.1

    Total 100.0 100.0 100.0

  • Islamic Banking Bulletin: April-June 2018

    5

    Client wise financing shows that corporate sector

    accounted for 74.5 percent share in overall

    financing of Islamic banking industry, followed

    by consumer financing with a share of 10.5

    percent by end June, 2018. The share of small

    and medium enterprises (SMEs) financing and

    agriculture financing in overall financing of

    Islamic banking industry remained low (see

    Table 5).

    Asset Quality Asset quality indicators of Islamic banking

    industry including non-performing finances

    (NPFs) to financing (gross) and net NPFs to net-

    financing were recorded at 2.7 percent and 0.4

    percent, respectively by end June, 2018. It is

    pertinent to mention here that both these ratios

    were better than those of overall banking

    industry’s averages (see Table 6).

    Liabilities Deposits of Islamic banking industry showed a quarterly growth of 6.1 percent (Rs. 117 billion) during

    the period under review and were recorded at Rs. 2,033 billion by end June, 2018 compared to Rs. 1,916

    billion in the previous quarter. Market share of Islamic banking industry’s deposits in overall banking

    industry’s deposits increased to 14.8 percent by end June, 2018 compared to 14.6 percent in the previous

    quarter. The category wise breakup of deposits reveals that current (non-remunerative) and saving

    deposits increased by 6.5 percent (Rs. 43 billion) and 6.4 percent (Rs. 49 billion), respectively; while,

    Table 4: Financing Concentration (% Share)

    Jun-17 Mar-18 Jun-18 Industry

    Chemical and Pharmaceuticals 5.4 4.1 4.0 3.4

    Agribusiness 8.5 7.6 5.7 8.4

    Textile 11.8 12.2 11.5 12.5

    Cement 1.7 2.5 3.2 1.8

    Sugar 4.1 4.3 4.6 3.9

    Shoes and leather garments 0.4 0.5 0.5 0.4

    Automobile and trans