KARACHI: Deposits of the Islamic banking industry clocked up at Rs1.27 trillion at the end of September, down 0.8% on a quarter-on-quarter basis, the State Bank of Pakistan (SBP) said on Tuesday.

In its Islamic Banking Bulletin for Jul-Sept, the SBP said deposits of the overall banking industry witnessed a sharper decline (2.6%) over the same quarter, thus increasing the market share of the Islamic banking industry’s deposits from 12.8% on June 30 to 13.1% on September 30.

The asset base of Islamic banking industry grew 1.1% during the quarter under review to reach Rs1.5 trillion. This pace of growth in Islamic banking assets was low compared to the previous two quarters of 2015, it said.

Resultantly, the market share of assets of Islamic banking industry in the overall banking industry’s assets decreased from 11.3% in June to 11.2% in September. An analysis of the asset composition of the banking industry reveals that investments constituted a major share in total assets of the banking industry as opposed to advances at the end of the third quarter of 2015.

In contrast, the share of investments and financing in total assets of the Islamic banking industry remained 26% and 35.3%, respectively, by the end of the quarter under review.

A review of the assets breakup of full-fledged Islamic banks and Islamic banking divisions of conventional banks indicates that the assets of the former witnessed growth of 2% while those of the latter declined by 0.3% over the preceding quarter.

Therefore, the share of Islamic banks (62.7%) remained higher than that of Islamic banking divisions (37.3%) in the overall assets of the Islamic banking industry.

Non-performing assets (NPA) of the Islamic banking industry slightly increased to Rs34.6 billion as opposed to Rs34.1 billion in the previous quarter. Likewise, non-performing financing (NPF) of the Islamic banking industry also witnessed growth of 1% during Jul-Sept to reach Rs31.4 billion.

The provisions-to-NPFs ratio was 90.2% as of September compared to the industry-wide average of 81.8%. However, the overall asset quality indicators of the Islamic banking industry were better than those of the overall banking industry, the SBP said.

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