BankIslami Posts Massive 108% Profit Growth in 2022

BankIslami Pakistan Limited (PSX: BIPL) announced its financial results for the year ended December 31, 2022, declaring a profit after tax (PAT) of Rs. 4.44 billion as compared to Rs. 2.13 billion reported last year i.e. growth of Rs. 108 percent despite a significant increase in tax rates.

Along with the result, BankIslami announced its first-ever dividend of Rs. 1 per share (10 percent) to its shareholders, subject to the approval of the shareholders in its upcoming Annual General Meeting.

Deposits surpassed the Rs. 400 billion landmark and closed at Rs. 415.91 billion, depicting a prominent rise of Rs. 71.1 billion and a growth of 20.63 percent.

Despite the increase in policy rates, around 50 percent of the increase in deposits was contributed by Current Account. This was the outcome of the Bank’s all-out efforts in introducing new and innovative products, expanding its sales team across the country, and pursuing aggressive marketing initiatives. The Bank also seized the opportunity of a rising policy rate scenario by offering attractive term deposit products which enabled healthy growth of 27.5 percent (Rs. 29.72 billion) in term deposits.

Despite the slowdown in economic activities at the country level, the Bank was able to achieve growth of 12.20 percent in its Financing book (gross). The composition of Consumer financing in the overall financing portfolio remained at 23.19 percent despite regulatory measures to curb the demand for auto financing. The financing to deposit ratio (ADR – gross) plunged to 52.98 percent as of December 31, 2022.

The infection ratio of the Bank as of December 31, 2022, increased to 9.02 percent from 8.7 percent as compared to last year due to the classification of certain corporate accounts. In view of the prevailing economic situation, the Bank has recorded an additional general provision of Rs. 2.15 billion during the year, which improved the coverage ratio against delinquent accounts to 96.14 percent as compared to 89.57 percent at the end of last year.

The Bank deployed its surplus liquidity mainly in GoP Ijarah Sukuks, which resulted in considerable growth of 43.98 percent in the investment portfolio and closed the investment book at Rs. 179.74 billion.

With the rise in profitability and an improved credit risk profile of the Bank, the Capital Adequacy Ratio (CAR) of the Bank improved to 17.92 percent, well above the regulatory threshold of 11.50 percent, while it stood at 14.15 percent at the end of last year.

Going forward, in order to continue this growth trajectory, the Bank intends to focus on increasing its branch network, improving the overall customer experience through leveraging technology, expanding its digital footprint, and developing low-cost deposit products.

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