KARACHI: A growing client base and improving asset quality helped Islamic banks post profits before tax of 12 billion rupees ($119.1 million) in the third quarter of last year, almost double the year-earlier amount, State Bank of Pakistan data shows.
Aided by an ambitious five-year plan that regulators hope will double the industry’s share of the banking sector to 20% by 2020, Islamic finance is experiencing a revival in the country. But regulators want to tackle consumer perceptions that Islamic banks falter when it comes to social responsibility and ethical banking practices.
The SBP governor urged the country´s Islamic banks to develop ways to reward their customers in line with a surge in the sector´s profitability, or face regulatory action. The average financing-to-deposit spread – the difference between what banks charge for financing and what they pay their depositors – for all lenders, Islamic and conventional, remains high and should be “reasonably rationalised”, SBP chief Ashraf Wathra said in a speech to a gathering of industry executives on Monday.
“Banks were advised to come up with their own solutions or the SBP will apply sharia-compliant measures to address the issue,” said Wathra. He did not specify a satisfactory level, but singled out Islamic banks as the ones needing to reward customers in line with a rise in profits.
