Islamic banking assets witness robust surge of nearly 22% in
the third quarter
Islamic banking assets experienced a robust surge of nearly
22% in the third quarter of 2023 in Pakistan, reaching an unprecedented Rs8.417
trillion. According to the State Bank of Pakistan’s Islamic Banking Bulletin,
deposits within the Islamic banking sector surpassed Rs6.160 trillion by the
end of September, compared to Rs5.021 trillion in the corresponding period last
year.
During July-September 2023, the Islamic banking industry's
market share in assets and deposits within the overall banking sector stood at
19.6% and 22.5%, respectively. The remarkable quarterly growth in assets was
primarily propelled by an increase in net investments, rising by Rs456 billion
and reaching Rs3.928 trillion by September 2023.
Islamic
Banks’ assets predicted to reach Rs. 40 Trillion by 2027
In contrast, net financing for the Islamic banking industry
was recorded at Rs3.026 trillion. Net investments and net financing constituted
46.7% and 35.9%, respectively, of the total assets of the Islamic banking
industry.
The surge in net investments was attributed to the
industry's investments in the Government of Pakistan’s domestic Ijarah Sukuk
(GIS). Pakistan, as the world's fifth-most populous country and the
second-largest Muslim-populated nation, is witnessing an escalating demand for
Shariah-compliant banking services. A recent study by the State Bank of
Pakistan, in collaboration with the Department for International Development
(DFID), revealed that religious beliefs contribute to 23% of the demand for
Islamic banking, with a higher demand observed among households (retail)
compared to businesses.
Bank
of Punjab engages KPMG to explore feasibility of Islamic Banking transformation
Aligned with its strategic vision for 2023–2028, the SBP aims
to transition existing conventional banks into Islamic financial institutions.
This involves creating a roadmap for the conversion to Islamic banking and
coordinating with banks for the transition. The Federal Shariat Court's
landmark ruling, mandating Shariah compliance in Pakistan's banking sector by
2027, represents a significant milestone for the Islamic banking sector.
Source: Profit Pakistan