Islamabad, Nov 27: New SBP Regulations Expected to Challenge Profit Margins of Islamic Banks. The State Bank of Pakistan (SBP) recently amended the profit-sharing structure for savings deposits held by Islamic Banking Institutions (IBIS) in IFPD Circular No. 09 of 2024.
Significant modifications are introduced by this new rule to guarantee fair competition in the banking industry. Arif Habib Limited claims that the increased cost of savings deposits brought on by the MDR requirement will put pressure on IBI profitability. Except deposits held by financial institutions, public sector businesses, and public limited corporations, this impact will mostly affect PKR savings deposits.
Meezan Bank Limited (MEBL):
Downgraded to Sell AHL has updated its CY25 profits estimate, which now stands at Rs. 34.4/share, down Rs. 9.0/share from previous projections.A total return of -3.3 percent from the previous closing price is implied by the report’s reduction of the target price from Rs. 289.3/share to Rs. 205.2/share.
Prospects
The incremental cost of saving deposits and their capacity to offset increased deposit costs through increased non-funded income and capital gains will determine how much of an impact IBIs will have on profitability. With a preference for banks better able to withstand the spread pressure, the research has placed a cautious outlook on Islamic banks.
