Islamic Banking in Pakistan

Islamic Banking in Pakistan

Islamic banking in Pakistan has been flourishing from the couple of years. FY’07 was also witnessed significant growth in the Islamic Banking industry. The market share of Islamic banking assets in the overall banking system rose to 4.3% at the end of December 31, 2007 which was 2.9% in December 2006.

Deposit Base
The total deposits of the banking sector at the end of Dec’07 stood at Rs3.5t in which the share of Islamic Banks has grew to 4.1% (Rs147b) in Dec’07 from 2.9% (Rs83b) in Dec’06. The total deposits of the Islamic banks have grown with CAGR of 107% in last four years and stood at Rs147b at the end of Dec’07 from just Rs8b in Dec’03. The growth in Islamic banks deposits was much higher than Islamic banking divisions (IBDs) of conventional banks. Islamic Banks’ deposits grew by 93% in FY’07 as compared to 44% growth in IBDs. A member company of group

Financing
The total financing of Islamic Banking industry has reached at Rs107b at the end of December 2007 which is 62.8% higher than the corresponding figures of Rs66b recorded in December 2006. Out of total financing, Rs69b was done through Islamic banks and remaining Rs38b was covered by IBDs. Total financing of the Islamic Banking Institutions (IBIs) has covered 4.3% share of the total industry figures of Rs2.5t.

Investments
The percentage share of Islamic Banking institutions (IBIs) in total investments of the banking sector was 2.6% recorded at the end of December 2007 and the figures have now reached at Rs31b in total industry figures of Rs1.2t recorded in December 2007. As compared to December 2006, the total investments of the IBIs grew by 322.5% in FY’07. The share of IBIs in total investments was 71% as compared to 29% by IBDs.