KARACHI - The commercial and Islamic banks operating in Pakistan have reported an increase of Rs73 billion in their deposits in first quarter of 2009 as economic activity was growing gradually. The Islamic banks have reported an unimpressive increase of Rs 4 billion in their deposits while commercial banks showed an encouraging growth in their deposits during January to March 2009 period. Islamic banks deposits increased to Rs276 billion by March 2009, from Rs 272 billion in December last year. Total deposits of the scheduled banks have increased to Rs3.874 trillion in March 2009, from Rs 3.801 trillion in December 2008. Despite global and domestic slowdown the banking sector has indicated a significant growth in deposits that was a good omen for the growth of the financial sector in Pakistan, bankers said. Commercial banks continued to depict growth in their deposits, assets and also earned an impressive profit in 2009 although the economy of the country was still experiencing a slowdown, they added. They said the Pakistani commercial banks have shown resilience and a strong potential to growth. In 2009 the commercial banks are focusing on consolidation of their existing business because of recession but in 2010 the banks could start aggressive marketing as economy of the country is moving towards recovery and growth, a banker said. Islamic banking industry (IBI) depicted a minor growth towards outreach programme and its branch network increased to 522 by March 2009 as against 515 in December 2008. In terms of market share the total assets, financing and investment and deposits are 4.8 percent and 4.3 percent and 4.9 percent respectively in the first quarter ending March 2009. The growth of deposits and assets of the Islamic banks from January to March 2009 was lower than expectation as the aftermath of global financial crisis is affecting Pakistani financial system and slowing down the growth of Islamic banking industry due to its systemic linkages. Islamic banking industry right from its inception has expanded at a significantly greater pace than the overall banking system. However, during the current quarter, overall assets of Islamic banking, in contrast to previous Quarter on Quarter (QoQ)s healthy growth, has increase marginally by just 0.8 per cent. For the first time, Islamic Banking Industry (IBI) growth rate of total assets was even lower than conventional banking industry (at 1.6 per cent). Due to slower growth, share of IBIs Total Assets in overall banking industry decreased during the quarter to 4.8 percent from 4.9 percent in December 2008. The investment and financing mix have shown some interesting changes. Historically, investment as compare to financing being the weaker link (due to insufficient availability of Shariah compliant securities/avenues of investment) of IBIs has increased at rapid rate than financing. In fact, there was a substantial decrease in financing by Rs 7.68 billion (from Rs143.859 billion to Rs136.18 billion) and this share was taken by investment, which increased by Rs 7 billion during the quarter. Increase in investment is due to availability of GoP Ijarah Sukuk. During this quarter one issue of Rs 15.325 billion was offered, making the total GoP Ijarah Sukuk size Rs 27.848 billion.