KARACHI: The profit of Islamic banking industry has shown substantial increase of 44 percent or Rs 5.4 billion, to Rs 17.6 billion, in the first quarter of current fiscal year FY 17, as compared to Rs. 12.2 billion in the previous quarter, State Bank of Pakistan said in its Islamic banking bulletin issued on Wednesday. Profitability ratios like ROA and ROE before tax of Islamic banking industry were recorded at 1.2 percent and 18.1 percent, respectively, by end of September 2017. Like previous quarters, operating expense to gross income ratio of Islamic banking industry remained higher than that of overall banking industry’s average. Deposits of Islamic banking industry increased by Rs 9 billion, to Rs 1,729 billion, by the end of September 2017. Market share of Islamic banking industry’s deposits in overall banking industry’s deposits stood at 13.7 percent. Category wise breakup of deposits showed that fixed and saving deposits witnessed growth of Rs 22 billion and Rs 2 billion respectively, while, current (non-remunerative) deposits declined by Rs 26 billion during the period under review. Liquid assets to total assets and liquid assets to total deposits ratios were registered at 28.8 percent and 34.7 percent, respectively. Both ratios witnessed slight decline during the period under review. In contrast, financing to deposits ratio (net) of Islamic banking industry increased to 59.8 percent, compared to 56.8 percent in the previous quarter. Capital base of Islamic banking industry was recorded at Rs 135 billion, compared to Rs 134 billion in the previous quarter. Net investments of Islamic banking industry decreased by Rs 12 billion or 2.3 percent during the period under review to Rs 525 billion. Breakup of investments (net) among full-fledged Islamic banks and Islamic banking branches of conventional banks showed that net investments of full-fledged Islamic banks declined to Rs 220 billion from Rs 226 billion. Similarly, net investments of Islamic banking branches of conventional banks decreased to Rs 305 billion, compared to Rs 311 billion in the previous quarter. Assets of Islamic banking industry (IBI) increased by Rs 48 billion during the quarter of July to September 2017 and were recorded at Rs 2,083 billion, compared to Rs 2,035 billion in the previous quarter. Deposits of Islamic banking industry were recorded at Rs 1,729 billion by end September 2017compared to Rs 1,720 billion in the previous quarter. Market share of Islamic banking assets and deposits in overall banking industry was recorded at 11.9 percent and 13.7 percent, respectively Branch network of Islamic banking industry consisted of 21 Islamic banking institutions; 5 full-fledged Islamic banks and 16 conventional banks having standalone Islamic banking branches, by the end of September 2017. Branch network of Islamic banking industry stood at 2,368 branches (spread across 110 districts). Province/region wise breakup of branches showed that Punjab and Sindh accounted for 47.2 percent and 29.7 percent share, respectively, in overall Islamic banking industry’s branch network. In terms of cities, 54.6 percent branch network of Islamic banking industry was based in five big cities (Karachi, Lahore, Rawalpindi, Islamabad and Faisalabad). The number of Islamic banking windows operated by conventional banks having standalone Islamic banking branches was recorded at 1,275. Review of client wise financing showed that corporate sector accounted for 71.3 percent share in overall financing of Islamic banking industry followed by commodity financing having 12.3 percent share. Like previous quarters, the share of small and medium enterprises (SMEs) financing and agriculture financing in overall financing of Islamic banking industry remained low compared to overall banking industry’s averages during the period under review. Published in Daily Times, December 7th 2017.