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Pakistan’s banking sector opening up to get rewards

Published on 22nd June, Edition 25, 2015

 

Pakistan’s banking sector reforms which were started in the early 1990s have transformed the sector into a well-organized, strong and sound banking system. It is playing a significant role in economic development and setting a performance status of the state. Still it needs to play a larger role in mobilizing local’s savings, which are critical to grow its entire investment stages. State Bank of Pakistan needs to make sure the prudential regulations are in line with the need of the economy. The central bank can play a critical role in promoting venture capital also called as risk finance for greater entrepreneurialism particularly in the SME sector.

Taking the note of quarterly performance of banking in the country, the sector registered profit before tax of Rs80 billion for the quarter closed 31st March, 2015 depicting a progress of 58 per cent over the corresponding quarter of previous year 2014.

According to quarterly performance review of the banking system for the quarter closed 31st March, 2015 issues through SBP, return on assets (ROA) rose to 2.6 per cent in March 2015 from 1.9 per cent in March 2014. Solvency of the system enhanced more as CAR (capital adequacy ratio) grew to 17.4 per cent as of close March 2015 from 17.1 per cent as of close December 2014 against local benchmark of 10 per cent and global benchmark of 8.0 per cent. During the quarter, asset base of the banking system grew by 3.5 per cent (Rs422 billion) to touch Rs12.5 trillion.

This progress came on account of grow in banks’ investment in government securities, while advances viewed net retirements mainly because of seasonal adjustments and drop in commodity rates. With ongoing accumulation of great stock of liquid assets in the form of government securities, the liquidity of the system stayed at comfortable stages.

Furthermore, the asset quality slightly deteriorated; NPLs to gross loans ratio grows by 50 bps to 12.8 per cent and Net NPLs to Net Loans grew by 9 bps to 2.8 per cent during the quarter 2015. However, with rise in capital base during the period, capital impairment ratio (Net NPLs to capital) grew by 27 bps to 9.8 per cent, thus falling risk to the future earnings and equity of the banking system of the country.
On the other hand, experts have revealed that during the third quarter of FY2015, PRISM (Pakistan Realtime Inter-bank Settlement Mechanism) settled 198,250 transactions of value Rs51.5 trillion explaining a rise of 5.0 per cent and 21 per cent in volume and value respectively as against to 2nd quarter of FY2015.

 

The key share in rise of number of PRISM transactions was contributed through Inter-bank Funds Transfer, which rose by approximately 6 per cent while rise in value of PRISM transactions was contributed through securities settlement which rose by approximately 45 per cent.

During the third quarter of FY2015, the volume and value of Internet Banking transactions explained a rise of 10 per cent and 6 per cent respectively.

The volume and value of POS (Point of Sale) transactions has fallen slightly by 1.4 per cent and 3.0 per cent as against to previous quarter. The volume of Mobile Banking transactions has declined through 15 per cent while its value rose through 14 per cent as against to the last quarter of FY2015.

Similarly, ATM (Automated Teller Machine) transactions explained a progress of 2 per cent in volume and 6 per cent in value as against to previous quarter of FY2015. The volume of RTOB (Real Time Online Banking) transactions explained a progress of over 6 per cent while its value explained a slight fall of 0.8 per cent as against to 2nd quarter of FY2015. Non financial transactions, during the 3rd quarter of FY2015 explained a progress of over 4 per cent. During the 3rd quarter of present fiscal year, the network of ATMs continued to explain a progress of 3.3 per cent standing to 9,312. During this quarter, 2,341 POS machines were fitted through banks explaining a progress of 7 per cent as against to second quarter of FY2015.

The number of cards released by banks has also grown by 2 per cent standing the total of 26.5 million by the close of the quarter under review. During the quarter, recorded users of Internet, mobile and call centre banking explained a progress of 5.9 per cent touching to 19.7 million by the close of third quarter of FY2015.

TOTAL DEPOSITS OF SCHEDULED BANKS (STOCKS) Million Rupees
As on last week of
2008
2009
2010
2011
2012
2013
2014
2015
January
3,574,788
3,852,605
4,400,569
5,024,480
5,682,167
6,610,147
7,566,210
8,463,711
February
3,591,861
3,897,208
4,395,650
5,050,823
5,716,810
6,644,604
7,599,393
8,490,383
March
3,628,142
3,874,550
4,424,190
5,046,487
5,920,093
6,776,747
7,571,267
8,508,337
April
3,650,050
3,874,318
4,558,556
5,135,787
5,935,537
6,708,816
7,585,540
8,747,487
May
3,696,208
4,039,870
4,574,088
5,220,669
6,021,033
6,949,946
7,803,077
8,911,638
June
3,832,454
4,120,087
4,661,241
5,599,098
6,402,735
7,316,341
8,082,412
July
3,777,585
4,136,735
4,656,573
5,344,077
6,112,082
7,069,161
7,980,033
August
3,788,611
4,115,251
4,605,232
5,364,701
6,276,121
7,174,000
8,132,458
September
3,781,524
4,161,958
4,670,730
5,418,431
6,315,373
7,124,660
8,036,547
October
3,681,110
4,193,810
4,733,025
5,390,395
6,304,923
7,132,792
8,160,094
November
3,756,126
4,207,191
4,791,949
5,415,583
6,513,529
7,309,445
8,150,407
December
3,801,411
4,325,139
5,124,308
5,874,689
6,682,648
7,529,370
8,342,172

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