KARACHI, Feb 8: Qatar Islamic Bank (QIB) is looking for expansion of its operations to Pakistan by acquiring a local bank, said Gulf Times, a leading newspaper of Qatar.
The QIB, Qatar’s fourth largest bank in terms of assets, is keen to enter Pakistan’s rapidly expanding Islamic banking sector as part of its strategy to get a foothold in the emerging Asian market, said the report.
The bank has been advised to look at Tier 1 cities like Karachi, Lahore and Islamabad, targeting large to medium size corporations and the individuals having per capita household financial assets of $5,000-$12,000.
QIB has mandated Anjum Asim Shahid Rahman, a firm of chartered accountants and consultants representing global financial advisors Grant Thornton in Pakistan, which recently made a presentation to the bank’s board of directors.
The current capital requirements for Islamic banks stand at $67m, which will gradually be increased to $100m by 2009 in accordance with the State Bank of Pakistan regulations.
The bank is expected to make profits only from the third year of operations and almost quadruple it by the fifth year, it noted.
The report said Islamic banking in Pakistan has continued to show impressive growth during financial year 2005, surpassing the growth rates recorded by the conventional banks.
“Overall potential for Islamic banking is huge in Pakistan and Shariah-principled banks are expected to grow at a much faster pace than the conventional banks,” the Thornton report said.Investors from the GCC countries have been the major participants in the evolution of the banking industry in Pakistan, it said, highlighting the presence of Bank Alfalah, Faysal Bank, Pak Commercial Bank, United Bank, Meezan Bank, Crescent Commercial Bank (in which Doha Bank has stakes), Dubai Islamic Bank and Saudi Pak Commercial Bank.
According to the report prepared for QIB, Pakistan, with impressive GDP growth over the last three years backed by stable macroeconomic policies, has a population of 155m, 34pc of which is in urban areas, thus reflecting a rapidly expanding urban middle class.
Global rating agency Moody’s recently stamped stable outlook for the Pakistan’s banking system, as it reflected robust credit growth that is benefiting the banks, which are gradually showing signs of revival with stronger financial fundamentals.
Robust credit growth is helping the banks diversify their loan books, fuelled by a relatively favorable operating environment, together with spiraling consumer demand, with record levels of loan growth in 2004 followed by moderate growth in 2005 and 2006, Moody’s had said.
The Thornton report said Pakistan’s banking sector assets reported a compounded annual growth rate of 17pc during 2001-05, while the advances and deposits showed 20pc and 18pc growth respectively in the same period.
Finding 100pc growth in mortgage in Pakistan in 2006, the report said the existing housing loan portfolio, which is well diversified, is expected to double within three years.
