Muhammad Arif
Muhammad Arif: Chairman Centre of Advisory Services for Islamic Banking and Finance (CAIF), Former Head of FSCD SBP, Former Head of Research ArifHabib Investments and Member IFSB Task Force for development of Islamic Money Market, Former Member of Access to Justice Fund Supreme Court of Pakistan.

Islamic Banking in Pakistan as of June 2019

Market share of Islamic banking assets in the overall banking industry by the end of last fiscal year rose to 14.4 per cent in June 2019 compared to 12.9pc in June 2018, said the State Bank’s Islamic Banking Bulletin

The market share of Islamic banking assets in the overall banking industry’s assets reached to 14.4pc whereas the share of net financing and investments in total assets (net) of Islamic banking industry stood at 51.6pc and 20.3pc respectively, added the report.

Moreover, the Islamic banking sector’s deposits grew by 9.8pc (Rs216 billion) to Rs2.415tr by June.

The report added that the sectors’ profit before tax rose to Rs32bn compared to Rs15bn in the same quarter last year. However, the report did not mention the Islamic banking sector’s profit after tax.

The sector’s profitability ratios ­including return on assets and return on equity before tax were recorded at 2.3pc and 35.3pc respectively. During the period under review, the sector’s operating expense to gross income ratio witnessed further improvement and clocked in at 52.6pc, compared to 54.7pc in the previous quarter.

Investments (net) of Islamic banking industry clocked in at Rs606bn compared to Rs 617bn in the previous quarter. During the period, investments (net) of both Islamic banks and Islamic banking branches witnessed slight attrition of 0.8pc and 3.3pc respectively.

“This can be mainly attributed to non-issuance of sovereign sukuk during the period,” said the report.

Liquid assets to total assets and liquid assets to total deposits of Islamic banking industry increased to 23.2pc and 28.7pc respectively. On the other hand, financing to deposits ratio (net) increased to 63.9pc compared to 53.2pc for overall banking industry.

In terms of sector-wise financing, production and transmission of energy retained its leading position as its share in overall financing from the Islamic banking was recorded at 17.9pc, followed by textile and individuals both having respective shares of 11.6pc.

Review of client wise financing data revealed the corporate sector accounting for 73.5pc share in the overall financing of Islamic banking industry, followed by commodity financing with a share of 10.6pc and consumer financing 10.4pc.

The share of small and medium enterprises (SMEs) financing and agriculture financing from the Islamic banking sector was recorded at 3.7pc and 0.5pc respectively.

Islamic finance Industry in UK in 2019

With six licensed Islamic banks and over 20 international banks offering Shariah compliant financial products, the UK’s Islamic finance industry is a favorite destination for investors, particularly for its flourishing real estate sector. Apart from the banking industry, the London Stock Exchange is also one of the most active Sukuk-listing destinations, with 67 listed Sukuk and three Islamic exchange-traded funds to date. On top of this, implications from Brexit has also led the Kingdom to boost its international trade and financial relationships with existing non-EU trade partners, especially with key Islamic finance markets from the regions of the Middle East and Southeast Asia. Last year’s UK Islamic Finance Week saw many breakthrough sessions in a week-long event, including the official launch of iE5, an Islamic economy accelerator, during IFN Fintech Huddle UK. Following on from the success of 2018, IFN returns to London for the third time for various hard-hitting sessions and discussions in conjunction with leading European regulators, global standard-setters, world leaders and UK and European Islamic finance practitioners

Role of Islamic Financial Services Industry (IFSI) (Organization) in development of Islamic finance

IIFM is a standard-setting body of the Islamic Financial Services Industry (IFSI) focusing on standardization of Islamic financial contracts and product templates relating to the Capital & Money Market, Corporate Finance and Trade Finance segments of the IFSI. IIFM which is based in Manama and hosted by the Central Bank of Bahrain (CBB), was established in 2002 under the Royal Decree No.(23) Year 2002 of the Kingdom of Bahrain as a neutral and non-profit infrastructure development institution, by the collective efforts of the Islamic Development Bank, Autoriti Monetari Brunei Darussalam (formerly Ministry of Finance Brunei Darussalam), Bank Indonesia, Bank Negara Malaysia (delegated to Labuan Financial Services Authority), Central Bank of Bahrain (formerly Bahrain Monetary Agency) and the Central Bank of Sudan. Besides the founding members, IIFM is also supported by certain regulatory and government bodies such as Dubai International Financial Centre Authority, State Bank of Pakistan, The National Bank of Kazakhstan and by a number of international and regional financial institutions active in Islamic finance as well as other market players. In advancing its mission to create a robust, transparent and efficient Islamic financial market, IIFM promotes at the global level unification, best practices and Shari’ah harmonization through introducing and developing Shari‘ah compliant standard financial contracts. It also contributes in creating industry awareness by organizing specialized seminars and technical workshops in many jurisdictions as well as publishing research reports. Abu Dhabi Commercial Bank Abu Dhabi Islamic Bank Ahli United Bank Ajman Bank Al Baraka Banking Group Al Salam Bank Allen & Overy LLP Attijari Al Islami Autoriti Monetari Brunei Darussalam Bahrain Islamic Bank Bank ABC Islamic Bank Al Jazira Bank Al Khair Bank Indonesia Bank Islam Brunei Darussalam Bank Kerjasama Rakyat Malaysia Berhad Bank of London and the Middle East BNP Paribas Borsa Istanbul Boubyan Bank Central Bank of Bahrain Central Bank of Sudan CIMB Islamic Bank Berhad Citi Islamic Investment Bank Clifford Chance LLP Crédit Agricole Corporate & Investment Bank DDCAP Limited Dubai International Financial Centre Authority Eiger Trading Advisors Emirates Islamic Bank EY Bahrain First Abu Dhabi Bank Gatehouse Bank GFH Financial Group Global Banking Corporation Gulf International Bank Hong Leong Islamic Bank Berhad Ibdar Bank International Islamic Trade Finance Corporation Islamic Corporation for the Development of the Private Sector Islamic Development Bank Ithmaar Bank Jordan Islamic Bank Khaleeji Commercial Bank Khartoum Stock Exchange Kuveyt Turk Participation Bank Kuwait Finance House−Kuwait Kuwait Finance House-Bahrain Kuwait International Bank Labuan Financial Services Authority Malaysian Rating Corporation Berhad National Bank of Fujairah National Bank of Kazakhstan National Bank of Kuwait Natixis Dubai Branch Noor Bank OCBC Al-Amin Bank Berhad Securities & Commodities Authority (UAE) Standard Chartered Bank State Bank of Pakistan Sudan Financial Services Company The National Commercial Bank United Gulf Bank Ziraat


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