Following is the text of press release issued by
Islamic Banking Industry (IBI) in
Liquidity management remains a challenge for Islamic banks, in the absence of short term Shariah Compliant instruments and only a limited issuance of GoP Ijarah Sukuk after a gap of more than 1 year. The ratings of MBL reflect a healthy customer franchise and a solid funding base, largely comprising cost effective retail deposits.
Accordingly, deposit concentration is low while liquidity remains sound. Ratings also draw strength from the strong asset quality indicators. Although core earnings have witnessed a decline as cost to income ratio has increased, overall profitability levels have improved. Accordingly, return on equity posted by MBL was amongst the highest in the banking sector.
MBL has posted impressive growth in asset base over the last five years with total assets of the bank increasing at a CAGR of 31% over this period. Growth in asset base has been funded by deposits on the back of rapid branch expansion. Financing portfolio has also witnessed healthy growth in 2013, manifested in reputed names.
Asset quality indicators compare favourably to peers. Liquidity is strong but not easy to manage because of lack of avenues for deployment. Resultantly, exposure towards relatively low yielding assets, such as placements with financial institutions, has showed a rising trend.
As part of the bank's strategic blue print, rapid branch expansion is planned to continue with the addition of 150 additional branches over the course of the next three years. Deposit base is projected to reach
This implies that financing portfolio will be doubled over the next three years; this may be a challenging target and achievement of the same depends on economic environment. Anticipated growth in balance sheet is expected to mitigate the impact of narrowing margins on profitability.
Capitalization levels of the bank are considered adequate. As per management, internal capital generation is expected to be sufficient to achieve the planned growth in business without affecting the bank's risk profile.
During the ongoing year, MBL has entered into an agreement with the
For more information, contact:
Tel: at 021-35311861-70
Fax: +9221 35311872-3
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