When one opens the business page of any newspaper and looks at the share prices of commercial banks, the most notable thing that strikes one is the fact that except for a few banks share prices of most of the banks are in the down. At the same time, those very banks are reporting huge annual profits and the rating agencies continue to give them good ratings. The State Bank, which is the regulator of banks, seems to be a sleeping and apparently has made no attempt to inquire into this discrepancy. The low share prices of those banks are causing a tremendous loss to those who invested in these financial institutions.
The primary reason for such low prices is always the credit quality of bank assets. It seems the market understands the condition of those banks better than the regulator and so has discounted their prices. Islamic banking is based on profit sharing. The Islamic banks are taking more than their pound of flesh. It is time bells started ringing in the State Bank to inquire into the state of affairs of the banks it regulates
Lahore, June 2.