The Government of Pakistan as also the State Bank of Pakistan (SBP) chiefly concerned with stability and efficiency of the banking system and safeguarding the interests, mainly of small depositors. With this concern in mind it has been planned to operate Islamic banking side by side with traditional banking.
In the different research reports experts mentioned that in Pakistan, historically Islamic banking emerged as a response to both economic and also religious needs. They also mentioned that efforts for economy wide elimination of Riba started during 1970s and most of the important and practical steps were taken in 1980s. The mid-80s attempt was an important step in the evolution of Islamic banking system in Pakistan.
In Pakistan, BankIslami Pakistan Limited, was the first Islamic commercial bank to obtain the Islamic banking and presently offers Shariah compliant retail banking, investment banking, consumer banking and trade finance products to their target clients. It is said that the management of the bank intends to focus on wealth management as the core area of business and planning to soon launch proprietary products, and integrated financial planning services.
SBP declared BankIslami as a Scheduled Bank with effect from March 17, 2006.
BankIslami commenced its banking operations on 7th April 2006 with its first branch in S.I.T.E, Karachi.
By the close of 2006, the bank had 10 branches, 9 in Karachi and 1 in Quetta.
BankIslami further concentrated in building a nationwide network and by the end of year 2007, its branch network rose to 36 branches in 23 cities.
In 2008, the bank opened 66 new branches nationwide which enlarged its network to 102 branches in 49 cites.
By the end of 2014, the bank has attained the target of 213 branches in 80 cities nationwide.
On May 7, 2015 SBP approved the amalgamation of KASB bank with and into BankIslami. With this amalgamation all 104 branches of KASB Bank were merged into BankIslami making it the country’s 11th largest banking network with 317 branches in 93 cities in a short span of 9 years.
|BANKISLAMI: FINANCIAL HIGHLIGHTS (Rs.Mn)|
|Total Financing and related assets-net||121,712||99,319||22.55%|
In the financial report experts mentioned that BankIslami introduced partial equity payment option for its auto financing product. This option gives customers the flexibility to make equity payment in tranches once at the time of vehicle booking and the remainder at the time of delivery. New products such as Bike financing and Business finance are predicted to be introduced in the upcoming periods by bank to augment its consumer financing portfolio in Pakistan.
Financial experts of BankIslami also mentioned in a statement that the financial results of Bank for the first quarter closed March 31, 2018 showed that the total assets of the bank increased by 9.79 percent as against to 3.50 percent in the corresponding period previous year. The rise was driven by healthy growth in the overall financing portfolio of the bank chiefly consumer financing. Auto & Housing financing portfolios, the main consumer financing products of the Bank, increased by 41.59 percent & 37.64 percent respectively growing the share of consumer financing in total financing to 17.33 percent from 12.00 percent as against with first quarter of 2017 (1Q17).
Furthermore, the financial experts of the Bank also calculated that the deposits of reached at Rs173.8 billion, resulting in Financing (Advances) to Deposit (ADR) ratio growing to 70.00 percent from 62.42 percent in 1Q17. The Current and Saving Accounts (CASA) mix also enhanced from 75.00 percent in 1Q17 to 76.63 percent. Overall, the deposit growth rate was 9.28 percent over 1Q17. They have also mentioned that this quarter the BankIslami is reporting profit before tax (PBT) for the first time after amalgamation with defunct KASB Bank. The Bank has been able to report profit after tax (PAT) of Rs39.8 million in this quarter.
On the other hand, SBP officials also mentioned in a statement that the network of Islamic banking industry in Pakistan consisted of 21 Islamic banking institutions; 5 full-fledged Islamic banks and 16 conventional banks having standalone Islamic banking branches by end December, 2017. SBP urged that during the period under review, 213 branches were added to branch network of Islamic banking industry. With this addition, the aggregate number of Islamic banking branches reached to 2,581 branches (spread across 111 districts) by close December, 2017 as against to 2,368 branches in the previous quarter. The number of Islamic banking windows operated by conventional banks having standalone Islamic banking branches was registered at 1,277 by end December, 2017 in Pakistan.