In announcing its financial results for the year ended December 31, 2022, BankIslami Pakistan Limited (PSX: BIPL) reported a profit after tax (PAT) of Rs. 4.44 billion as opposed to Rs. 2.13 billion reported the previous year, representing growth of Rs. 108 percent despite a significant increase in tax rates.
In addition to the outcome, BankIslami also declared its first-ever dividend to shareholders, which would be Rs. 1 per share (10 percent), pending approval at its upcoming annual general meeting.
Deposits exceeded the 400 billion rupee threshold and finished at 415.91 billion rupees, representing a notable increase of 71.1 billion rupees and a growth of 20.63 percent.
Notwithstanding the rise in policy rates, the current account provided around 50% of the growth in deposits. This was the result of the Bank’s relentless efforts to launch cutting-edge products, broaden its sales force throughout the nation, and engage in aggressive marketing campaigns. The Bank also took advantage of a setting with rising policy rates by providing enticing term deposit products, which allowed term deposits to expand by a healthy 27.5 percent (or Rs. 29.72 billion).
Despite a slowdown in national economic activity, the Bank was still able to grow its Financing book by 12.20 percent (gross). Notwithstanding regulatory actions to reduce the demand for auto finance, the percentage of consumer financing in the overall financing portfolio remained at 23.19 percent. On December 31, 2022, the financing to deposit ratio (ADR – gross) had fallen to 52.98 percent.
Due to the categorisation of some corporate accounts, the Bank’s infection ratio as of December 31, 2022, climbed to 9.02 percent from 8.7 percent compared to last year. The Bank recorded an additional general provision of Rs. 2.15 billion throughout the year due to the economic climate, which helped to raise the coverage ratio for past-due accounts to 96.14 percent from 89.57 percent at the end of the previous year.
The Bank used its excess liquidity primarily to purchase GoP Ijarah Sukuks, which caused a significant increase in the investment portfolio of 43.98 percent and led to the closing of the investment book at Rs. 179.74 billion.
With increased profitability and a better credit risk profile, the Bank’s Capital Adequacy Ratio (CAR) increased from 14.15 percent at the end of the previous year to 17.92 percent, which is significantly higher than the legal threshold of 11.50 percent.
The Bank plans to concentrate on growing its branch network, enhancing the overall client experience by utilising technology, extending its digital footprint, and creating low-cost deposit products going forward in order to maintain this growth trajectory.