BankIslami Announced 262% Growth in Profit Before Tax in 1st Quarter of 2023

BankIslami Pakistan Limited (‘the Bank’ or ‘BankIslami’) announced its financial results for the quarter ended March 31, 2023, with an impressive increase of 262% in profit before tax, reaching Rs. 3.16 billion as compared to Rs. 0.87 billion for the corresponding period of the previous year.

The profit after tax closed at Rs. 1.79 billion, showing a growth of 244% as compared to Rs. 0.52 billion during the same period last year. This significant growth can be attributed to the Bank’s focus on deploying surplus liquidity in profitable Shariah compliant avenues.

Focus on Deployment of Surplus Liquidity

From the beginning of the year 2023, BankIslami has been focused on deploying its surplus liquidity in profitable Shariah compliant avenues, which has led to a 19.6% increase in its financing book during the first three months of 2023.

This has improved the Advance to Deposit ratio (gross) from 53% in Dec 2022 to 63% at the end of Mar 2023. Additionally, the Bank’s investment portfolio also grew by 11.9% during the first quarter of 2023.

Reduction in Infection Ratio

Owing to growth in the credit book and persistent recovery efforts against delinquent exposures, the infection ratio reduced from 9.0% to 8.0% during the first quarter of 2023.

With the increase in general provision, the overall coverage ratio has been maintained at a desirable level of 95.6%. With the improvement in earnings of the Bank, the cost to income ratio has improved from 49.8% for the year 2022 to 47.9% for the quarter ended Mar 2023.

Deposit Book and Capital Adequacy Ratio

The deposit book of the Bank observed a contraction by 1.2%, however, the Bank is poised to grow its deposit book during the remaining part of the year on the back of an improved CASA mix. With the rise in profitability and improved credit risk profile of the Bank, the Capital Adequacy Ratio (CAR) of the Bank recorded at 17.9%, well above the regulatory threshold of 11.50%.

Listing of Additional Tier-1 Sukuk

In order to reinforce its capital base and fortify its asset base, the Bank is in the process of listing its Additional Tier-1 Sukuk (Ehad Sukuk 2) to the tune of Rs. 1 billion, out of which Rs. 850 million worth of Pre-IPO phase has already been completed.

Future Plans

Going forward, in order to continue its growth trajectory, the Bank will focus on increasing its branch network, growing its deposit book, and improving the overall customer experience through leveraging technology and expanding its digital footprint.

BankIslami Pakistan Limited has reported impressive financial results for the quarter ended March 31, 2023, with a significant increase in profit before tax and profit after tax.

The Bank’s focus on deploying surplus liquidity in profitable Shariah compliant avenues has led to an increase in its financing book and investment portfolio, reducing the infection ratio and improving the overall coverage ratio.

With the rise in profitability and an improved credit risk profile, the Bank is poised to grow its deposit book during the remaining part of the year. By focusing on increasing its branch network, growing its deposit book, and improving the overall customer experience through leveraging technology and expanding its digital footprint, the Bank aims to continue its growth trajectory.