IBI assets post record growth of Rs1.3trn in CY21 – Business & Finance

KARACHI: Islamic Banking Industry (IBI) assets recorded the highest ever growth of 1.3 trillion rupees, reaching 5.5 trillion rupees in the last calendar year (CY21).

According to the Islamic Banking Bulletin for the quarter ending December 2021, released by the State Bank of Pakistan (SBP) on Friday, IBI’s assets grew by 30.6% in year 21, while that deposits increased by 24.2% over the same period. Due to this strong growth, the market share of Islamic banking assets and deposits in the entire banking sector increased to 18.6% and 19.4%, respectively, at the end of December 2021.

The Islamic Banking Industry (IBI) reached new highs during CY21 as its assets surpassed the Rs 5 trillion mark to reach Rs 5.577 trillion with the highest increase ever of Rs 1.308 trillion, while that deposits reached 4.211 trillion rupees with an increase of 822 billion rupees. .

The increase in IBI’s assets was driven by both private and public sector funding and investments in Shariah-compliant securities. IBI funding increased by Rs 716 billion (38.1%) in year 21, which is also the highest increase ever in a year. In addition, IBI’s investments witnessed a growth of Rs 591 billion (46.9%) in year 21 thanks to National Sovereign Sukuks issued by the Government of Pakistan. On the funding side, current deposits and savings deposits of IBI witnessed a significant increase of Rs 441 billion and Rs 277 billion respectively during CY21. The growth in deposits is also due to the fact that during CY21 the availability of Islamic banking services increased in the country with the addition of 500 new Islamic banking branches. The total number of branches now stands at 3,956 in 125 districts, or about 25% of the total number of commercial bank branches in the country.

It would be relevant to mention here that the IBI has played an important role in the implementation of various measures taken in the wake of the Covid19 pandemic and several other key initiatives to promote social housing and SME financing and the scanning. During the Covid19 pandemic, SBP introduced the Temporary Economic Refinancing Facility (TERF) – a concessional refinancing facility aimed at promoting new and expansion and/or Balancing, Modernization and Replacement (BMR) investments which was highly appreciated by the business world.

Copyright Business Recorder, 2022