Karachi -Robust balance sheets, stellar capitalization as well as attractive valuation metrics indicate that the commercial banks as well Islamic Banks standout more prominently when compared to banking landscape in Asia. It is interesting to note that attractive opportunities emerging for longer-term investors in the Pakistan banks compared to their peers across the Asia Pacific region.
Financial analysts while attributing sound banking indicators to the reasonable prudential regulations in Pakistan have severally criticized the excessive deregulated financial regime under the cover of innovation of the financial system which overlooks the quality of the borrowers to get rid of the unmanageable accumulation of liquidity. Citing example of excessive liquidity they pointed out the deposit base of over $150 billion in the banks of the little Iceland having a population not more than three lakh.
The poor quality assets of the banks in the West stemmed from securitization of the mortgages to multiply the value resulted in the sub-prime havoc.Thanks god, Pakistani banks had a slight integration with the western banks which saved Pakistani banks as compared to banking regime in other countries in Asia Pacific. On Pakistan's front, the low risk to book values of Pakistani banks given their relatively high net interest margins and low cost-to-income ratios continued to attract foreign investment in the financial sector of the country.
The latest development on foreign investment inflows features Dawood Islamic Bank which has received Rs. 1 billion US$ 12.9 Million investment from Unicorn Investment Bank Limited, based in Bahrain. Unicorn already had a 22.2% equity stake in Dawood Islamic Bank prior to the current investment. With the new investment the equity of Unicorn Investment Bank, in Dawood Islamic Bank has increased to 37% percent The investment by Unicorn Investment Bank, would further boost the ability of the Dawood Islamic Bank to provide support to trade and industry through its various Riba free banking products Said Mr. Rafique Dawood, Chairman Dawood Islamic Bank.The interest of Unicorn in DIBL reflects the strength of the Islamic Banking System of Pakistan which has withstood the current turmoil in the global financial markets proving to the world that Shariah compliant financing is more transparent and trust worthy.