KARACHI, Feb 25 (APP): The Quarterly Performance Review (QPR)
of the banking sector for the quarter ending December 31, 2015
released by State Bank of Pakistan (SBP) on Thursday revealed that
the asset base of the banking sector has registered an increase of
4.6 per cent.
A healthy growth of 7.8 per cent in private sector advances (both
seasonal and for fixed investment) and moderate rise in banks’
investment in sovereign papers were the major contributors to this
increase in assets, said SBP report.
The reviewed quarter was also marked by a quarterly to quarterly
6.9 per cent growth (year on year 12.6 per cent) in deposit base of
the banking sector, primarily, driven by growth in current account and
fixed deposits.
The asset quality of the banking sector improved largely at the
back of improved cash recoveries.
The QPR reported that NPLs to loans ratio decreased from 12.5
per cent in September-15 to 11.4 per cent in December, 2015, while net
NPLs to net loans decreased from 2.5 per cent to 1.9 per cent. This
improvement in asset quality indicators advocates continuous decline
in risk to the future operating performance and equity of the banking
sector.
The profit after tax of the banking sector for calendar year (CY)
2015 reached to Rs 199 billion; around 22 per cent up from Rs 163
billion recorded during the calendar year 2014.
Accordingly, Return on Assets (ROA) before tax increased to 2.5
per cent in December-15 quarter from 2.2 per cent in December-14
quarter. As reported, the profitability of the banking sector was
broad based encompassing large spectrum of banks.
The rise in financing flows to private sector has improved the
utilization of idle capital as reflected through slight reduction in
Capital Adequacy Ratio (CAR) to 17.3 per cent, which is still well
above the minimum local required threshold of 10.25 per cent and
international benchmark of 8.625 per cent.
Moreover, the solvency profile of the banking system remained
strong due to healthy profitability and equity injections by few MCR
non-compliant banks.