Lahore April 15 2023: Bank of Punjab shall engage a consultant this year for evaluation of for a full-fledged conversion from Conventional to Islamic Banking model on ruling of Federal Shariah Court.
“Islamic Banking offers lucrative returns by virtue of its Low Cost of Deposits and significant potential for enhancement of market share. In the backdrop of the ruling provided by the Federal Shariah Court, the Bank shall engage a consultant in 2023 for evaluation of the proposal for a full-fledged conversion from Conventional to Islamic Banking model. Results of the same shall be shared with the Board of Directors to seek direction in light of the results of this exercise” says Company Chief Executive Officer Zafar Masud.
He added, “Relative to its peer banks, BOP is favorably positioned to capitalize on its niche markets of Agriculture, SME, Consumer & Islamic Financing. Bank has a sizable asset portfolio in these segments which provides a solid base for an upward growth trajectory.”
“Despite the inherent challenges, SME, Agri and Consumer Financing are likely to remain the mainstay of BoP’s lending targeted towards our mass market. BoP intends to offset the higher transaction costs of lending to these segments through digital product offerings, while the downside risk of default shall be mitigated by self-liquidating transaction structuring and recourse financing with adequate margins to compensate for the inherent Probability of Default” Masud Added.
He said, “Government driven social up lift projects shall provide financing avenues with a far reaching social dividend, apart from economic returns. For this we will be constantly building our resources along with the development of a complete branchless banking solution to provide the maximum services to Government departments”
As of December 31, 2022, the Deposits of the Bank were recorded at Rs. 1,227.3 billion as against Rs. 1,003.0 billion as of December 31, 2021 showing a significant growth of 22%. During the year, Bank remained focused on procuring low cost CASA deposits with special emphasis on private sector deposits. Accordingly, the Mix of Private Deposits improved to 44% as against 40% as of December 31, 2021.
As on December 31, 2022, the Gross Advances portfolio stood at of Rs. 634.4 billion as against Rs. 534.2 billion as on December 31, 2021 registering a growth of 19%.
As on December 31, 2022, paid-up capital (net of losses) amounted to Rs. 31.69 billion and the Bank stands compliant with SBP’s minimum capital requirement of Rs. 10.0 billion. Further, the Bank’s Capital Adequacy Ratio (CAR) stood at 13.11% against the regulatory requirement of 11.50%. Had the advance subscription money against future issuance of term finance certificates eligible as additional tier I and tier II capital been accounted for as eligible capital, the CAR would have been 13.57%.