Advances: Outstanding loans to private sector up 10.2%
Growth dwarfs in comparison to 28.2% growth in credit to government
Overall share of credit in the economy remains minuscule compared to banking deposits. PHOTO: FILE
KARACHI:
Outstanding loans to private-sector businesses increased 10.2% over the preceding 12-month period, according to the State Bank of Pakistan (SBP).
Latest statistics on credit distribution in the economy show that outstanding loans to private-sector enterprises amounted to Rs3.2 trillion at the end of February after adding Rs298.8 billion over the preceding 12 months.
In contrast, the net credit of scheduled banks to the government sector shot up 28.2% to more than Rs6 trillion over the same period.
Banks’ loans to the government already constitute nearly 50% of the total outstanding credit in the economy. The latest data shows their lending to the government - which is mainly in the form of investments in treasury bills and sovereign bonds - increased quicker than their net loans to private-sector businesses during the past 12 months.
The largest borrower within private-sector businesses is the manufacturing sector whose outstanding loans amounted to almost Rs1.9 trillion, up 9.4% from a year ago.
The largest expansion in outstanding credit among major borrowers within the manufacturing segment was recorded in non-metallic mineral products (29.6%), electrical machinery and apparatus (26%), chemicals and chemical products (22.3%), coke/refined petroleum products (16.5%), food products and beverages (5.8%) and textiles (6.6%).
Loans to electricity, gas and water supply businesses in the private sector increased 8% year on year to clock up at Rs298 billion at the end of February. The year-on-year rise in loans to the construction industry was far greater (38.5%) over the same period, although the outstanding amount was smaller in absolute terms (Rs88.1 billion).
Credit to businesses that belong to the commerce and trade sector amounted to Rs247.6 billion, up 9% from a year ago.
Loans extended under the ‘personal’ category amounted to almost Rs392 billion at the end of February after rising 9.1% over the preceding 12 months. Interestingly, banks have extended more than one quarter of total loans under the personal category to their own employees. Credit to bank employees amounted to Rs98.2 billion at the end of February, which was over 25% of total personal loans.
Consumer financing amounted to Rs293.7 billion at the end of February, which is 10.7% higher than outstanding consumer financing recorded at the end of the second month of 2015. Within the consumer financing category, the largest year-on-year expansion was recorded in car financing in absolute terms. Car financing clocked up at Rs99.8 billion at the end of February, up 35.1% from a year ago.
Home financing amounted to Rs44.8 billion at the end of the last month, up 13.9% from February 2015.
The recent uptick in outstanding loans is a positive sign, although the overall share of credit in the economy remains minuscule compared to banking deposits. The advances-to-deposits ratio stood at 46.4% at the end of December 2015, lower than 48.2% recorded at the end of 2014.
Published in The Express Tribune, March 23rd, 2016.
Outstanding loans to private-sector businesses increased 10.2% over the preceding 12-month period, according to the State Bank of Pakistan (SBP).
Latest statistics on credit distribution in the economy show that outstanding loans to private-sector enterprises amounted to Rs3.2 trillion at the end of February after adding Rs298.8 billion over the preceding 12 months.
In contrast, the net credit of scheduled banks to the government sector shot up 28.2% to more than Rs6 trillion over the same period.
Banks’ loans to the government already constitute nearly 50% of the total outstanding credit in the economy. The latest data shows their lending to the government - which is mainly in the form of investments in treasury bills and sovereign bonds - increased quicker than their net loans to private-sector businesses during the past 12 months.
The largest borrower within private-sector businesses is the manufacturing sector whose outstanding loans amounted to almost Rs1.9 trillion, up 9.4% from a year ago.
The largest expansion in outstanding credit among major borrowers within the manufacturing segment was recorded in non-metallic mineral products (29.6%), electrical machinery and apparatus (26%), chemicals and chemical products (22.3%), coke/refined petroleum products (16.5%), food products and beverages (5.8%) and textiles (6.6%).
Loans to electricity, gas and water supply businesses in the private sector increased 8% year on year to clock up at Rs298 billion at the end of February. The year-on-year rise in loans to the construction industry was far greater (38.5%) over the same period, although the outstanding amount was smaller in absolute terms (Rs88.1 billion).
Credit to businesses that belong to the commerce and trade sector amounted to Rs247.6 billion, up 9% from a year ago.
Loans extended under the ‘personal’ category amounted to almost Rs392 billion at the end of February after rising 9.1% over the preceding 12 months. Interestingly, banks have extended more than one quarter of total loans under the personal category to their own employees. Credit to bank employees amounted to Rs98.2 billion at the end of February, which was over 25% of total personal loans.
Consumer financing amounted to Rs293.7 billion at the end of February, which is 10.7% higher than outstanding consumer financing recorded at the end of the second month of 2015. Within the consumer financing category, the largest year-on-year expansion was recorded in car financing in absolute terms. Car financing clocked up at Rs99.8 billion at the end of February, up 35.1% from a year ago.
Home financing amounted to Rs44.8 billion at the end of the last month, up 13.9% from February 2015.
The recent uptick in outstanding loans is a positive sign, although the overall share of credit in the economy remains minuscule compared to banking deposits. The advances-to-deposits ratio stood at 46.4% at the end of December 2015, lower than 48.2% recorded at the end of 2014.
Published in The Express Tribune, March 23rd, 2016.