BankIslami Pakistan Limited (‘the Bank’ or ‘BankIslami’) announced its financial results for the quarter ended June 30, 2022.
For half year ended June 2022, the Bank achieved 155% increase in its operating profit before provisions and reported Rs. 4.1 billion as compared to Rs. 1.6 billion in the same period last year. This achievement is predominately attributable to increase of 56% in net spread earned on the back of rising profit yields on asset portfolio, growth in current account deposits and increase in earning asset base of the Bank. Furthermore, operating profits also got support from increase in other income which grew by 62%, mainly because of growth in fee from digital channels & trade services, FX income and sale of non-banking assets.
BankIslami’s balance sheet remained robust with its Deposit and Net Islamic Financing witnessing year on year (YoY) growth of 22% and 46% respectively; demonstrating the confidence of customers and other stakeholders in the Bank’s service levels. Owing to Bank’s focused and aggressive strategy towards acquisition of low cost deposits, Current Account (CA) deposits depicted a healthy YoY rise of 31.4% with CA mix in total deposits improving from 38% in Jun’21 to 41% in Jun’22. Funds generated through deposits were deployed towards revenue generating avenues such as financing to Corporate, Consumer, Agri & SME segments and treasury book. Consequently, in Jun’22, total assets of the Bank grew by 30% vis-à-vis Jun’21.
With the growth in overall Islamic Financing book and recoveries against delinquencies, NPF ratio of the Bank has reduced from 11.5% in Jun’21 to 8.1% in Jun’22; whereas provision coverage ratio (including general provision) also enhanced from 84.2% in Jun’21 to 91.7% in Jun’22.
Operating expenses of the Bank rose by 22.9% which was mainly attributable to abnormal rise in inflation and BankIslami’s continuous investment towards human capital and technology to foster growth in business volumes and customer base. Despite an increase in administrative expenses, efficiency ratio of the Bank for the half year ended June 2022 has improved to 57.9% from 76.1% in same period last year.
Provisioning against credit losses of the Bank for the half year ended June 30, 2022 reported at Rs. 1,356 million. Included in provisioning, the Bank has recorded general provision of Rs. 650 million which has enabled the Bank to improve its coverage ratio against existing non-performing financing portfolio, as well as withstand any risk associated with deterioration in the economic outlook. In spite of additional provisioning, the Bank generated Profit after tax (PAT) amounting to Rs. 1,436 million for the half year ended June 2022 i.e. 24% higher from PAT of Rs. 1,162 million generated during half year ended June 2021, Alhamdulillah.
Moving ahead, the Bank will continue with its strategy to enhance its overall deposit base, particularly CA, through expanding its branch network, offering competitive Shariah compliant products for both retail and corporate segments and growing its trade based clientele with specific focus towards small and medium sized enterprises. Moreover, considering the current macro-economic scenario and rising trend in policy and inflation rates, the Bank is prudently assessing its credit risk profile and will diligently expand its credit exposures based on its sound risk management framework. Additionally, to strengthen its Capital Adequacy and support prospective growth in earning assets, the Bank has also planned further issue of an Additional Tier-1 Sukuk of Rs. 1 billion.
