ISLAMABAD: The Islamic banking industry of Pakistan has posted 30.6 percent and 28.4 percent year-on-year growth in overall assets and deposits respectively, central bank data released on Friday showed.
Twenty-two Islamic banking institutions currently operate in Pakistan: five Islamic banks and 17 conventional banks with standalone Islamic banking branches.
The overall assets of the Islamic banking industry (IBI) increased by Rs120 billion during the quarter January to March and were recorded at Rs4.39 trillion on by the end March, the State Bank of Pakistan (SBP) said in its quarterly Islamic Banking Bulletin report.
Deposits of IBI also experienced a quarterly growth of Rs68 billion during the period under review to reach Rs3.46 trillion.
"Assets and deposits of IBI achieved year on year growth of 30.6 percent and 28.4 percent, respectively," the central bank said.
Market share of the Islamic banking industry’s assets and deposits in the overall banking industry was recorded at 17.0 percent and 18.7 percent, respectively.
Net investments of the Islamic banking industry registered an increase of Rs84 billion in the quarter that ended on March 31, reaching Rs1.35 trillion.
"This increase in investments (net) can be mainly attributed to investments made by IBI in Government of Pakistan (GoP) domestic Ijarah Sukuk," the SBP said.
In terms of sector-wise financing, the sectors of textile and production and transmission of energy were the two leading sectors in acquiring financing and their share in overall financing of the Islamic banking industry was 14.8 percent and 13.8 percent respectively by end-March 2021.
The corporate sector accounted for 69.7 percent of overall financing of the Islamic banking industry, followed by commodity financing and consumer financing with a share of 14.9 percent and 10.5 percent respectively.
The Islamic banking sector has been seeing continuous growth in Pakistan, which experts say is driven by increasing access to shariah-compliant financial instruments and faith-based demand.
Islamic banking follows religious principles such as bans on interest and pure monetary speculation, ruling out the use of interest-based financial instruments.
