Pakistan’s Islamic Banks Plan to Open 230 New Outlets in 2009: Bloomberg

By Shanthy Nambiar and Farhan Sharif

Jan. 27 (Bloomberg) -- Pakistan’s Islamic banks, which saw assets grow 20 times in the past five years, plan to expand their network of outlets this year to take advantage of rising demand for Shariah-compliant loans.

Islamic lenders may add about 230 branches in 2009, driven by the world’s second-biggest Muslim population, Pervez Said, director of Islamic banking at the State Bank of Pakistan, the central bank, said in a telephone interview today. These banks have 500 branches, after adding 210 outlets last year.

Pakistan is promoting growth in Islamic finance to expand the reach of the banking sector which has less than 25 million deposit accounts. Shariah-compliant loans are forecast to rise to 277 billion rupees ($3.5 billion) this year from 185 billion in 2008, according to central bank data.

“Islamic banking has the ability to take banking to sectors outside conventional banking because of peoples’ beliefs,” said the central bank’s Said, 52, who started the Islamic banking department in 2003.

Pakistan’s Islamic banks expanded assets by 7 percent to 251 billion rupees as of Sept. 30 last year from 235 billion rupees in 2007. Shariah-compliant lenders account for about 5 percent of total banking assets, which the central bank aims to raise to 12 percent by 2012.

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