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KARACHI - Qatar Islamic Bank, a fully-fledged Islamic banking company providing Shaira-Complaint financial products and services to individual and corporations in Qatar, is likely to start financial operations soon in Pakistan by the end of this year by opening its first Islamic banking branch.
Meanwhile, a foreign microfinance bank is also set to open its door to Pakistan with opening first microfinance-based Islamic bank in the country. According to the sources, it has not been yet disclosed that which foreign microfinance bank would suppose to commence Islamic banking activities in Pakistan. It is important to note that foreign direct investment in Pakistan’s Islamic banking sector stood at over Rs 20 billion by end-September, 2007. It has also projected an inflow of near Rs 35 billion in the next few months, according to a private sector estimate.
After successfully penetrating in Middle East and North African financial market, now QIB is seeking to expand its presence in Pakistan to capture fastest growing corporate and consumer related banking market of the region.
Earlier, the management of QIB had made public that it was planning to open a whole-sole Islamic bank in Pakistan in the fourth quarter of this year.
The QIB was incorporated in July 1982 as a shareholding company to provide banking services based on Islamic principles.
According to the bank’s mission statement, QIB aims to accommodate the diverse financial need of its clients by providing a comprehensive range of traditional and modern banking products in accordance with sharpie principles, and to generate a satisfactory rate of return for its depositors and shareholders on a consistent basis, its company profile showed.
In Pakistan the nationwide full-fledged Islamic Scheduled Banks’ numbers of branches have increased by 117 during the seven months of the current calendar year (CY07) by making up to 10 percent market share from 3 percent in the CY06.
With the entrance of 3 more conventional banks, the total number of conventional banks offering Islamic banking services and products increased to 13 whereas the full-fledged Islamic banks have increased to 6 from 2 in CY05.
Besides expansion, key performance indicators also witnessed healthy trends during the year, auguring well for the future growth prospects.
According to the State Bank report on Islamic banking sector growth during CY06, the total assets of this segment grew by almost 67 percent to Rs119 billion thus increasing its share in the overall banking system to 2.9 percent from 2 percent in CY05.
Infection ratio (gross) stayed at 1.3 percent while ROA remained at 0.9 percent. Building a specialized human resource would help Islamic banking system foster as a successful parallel banking system.
However, in 2006, all the 39 commercial banks made Rs84 billion after-tax profit. But only five large local banks had a seventy per cent share in it, the latest data released by the State Bank revealed. The commercial banks combined had a 52 per cent share in the overall advances of the banking system that totalled Rs2.389 trillion.
In Pakistan, the Islamic banking system has witnessed a very healthy growth during the last couple of years and is steadily proving its potential to work as a compatible and parallel alternative system for providing financial services.
It is growing in terms of size and structure. Growing at a rate of 114 percent, total number of branches increased to 150 in CY06 from 70 in CY05.
The growing interest in Islamic banking in the year under review is also evident by the entry of three new conventional banks having Islamic banking branches. These include Askari Bank Limited, United Bank Limited, and National Bank of Pakistan.
Moreover ABN Amro also started operations in second quarter of the CY07, making the tally of conventional banks having Islamic Banking Branches to thirteen. It is interesting to note that the conventional banks are increasingly realizing the huge potential market backed by the untapped and steadily growing appetite for Islamic banking products; hence the drive for entering this market is based on business considerations in addition to religious considerations. Courtesy by ERUM ZAIDI “The Nation “
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