Pakistan’s financial system sound and stable, says SBP
Asset base of overall financial sector increased 15.1%, financial assets-to-GDP ratio rose to 68.4%
The banking sector observed year-on-year growth of 16.8% in 2015 to reach Rs14.1 trillion at the end of last year. PHOTO: FILE
KARACHI:
The financial system of Pakistan was in a sound and stable state at the end of 2015, a press release of the State Bank of Pakistan (SBP) said on Monday, quoting from the Financial Stability Review (FSR), which identifies key risks to the financial system.
According to the release, the asset base of the overall financial sector increased 15.1% last year. Consequently, the financial depth improved as the financial assets-to-GDP ratio increased to 68.4% for 2015 compared with 59.4% for the preceding year.
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“The domestic economic environment, in fact, counter-balanced the global economy’s repercussions as the economy has shown signs of improvement, inflation is low, foreign exchange reserves are building up, exchange rate is stable, large-scale manufacturing has picked up some pace along with continued credit to private sector and fiscal consolidation,” it said.
The performance of the banking sector improved on the back of record earnings and high capital adequacy ratio, which enhanced the overall resilience of the sector. Strong assets growth and revival of private-sector credit, along with gradual improvement in the asset quality, further strengthened the overall financial position of the banking sector.
The banking sector observed year-on-year growth of 16.8% in 2015 to reach Rs14.1 trillion at the end of last year. Advances grew at a modest pace of average 8.1% over the same period while investments - mostly in government securities - increased 30%.
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The asset expansion has mainly been financed by deposits growth of 12.6% followed by financial borrowings, it said.
The asset quality improved with a reduction in the infection ratio, which was 11.4% in 2015, and a rise in provision coverage (84.9%). “However, banks do face a challenge in reducing the high stock of non-performing loans (NPLs),” it said.
Published in The Express Tribune, June 28th, 2016.
The financial system of Pakistan was in a sound and stable state at the end of 2015, a press release of the State Bank of Pakistan (SBP) said on Monday, quoting from the Financial Stability Review (FSR), which identifies key risks to the financial system.
According to the release, the asset base of the overall financial sector increased 15.1% last year. Consequently, the financial depth improved as the financial assets-to-GDP ratio increased to 68.4% for 2015 compared with 59.4% for the preceding year.
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“The domestic economic environment, in fact, counter-balanced the global economy’s repercussions as the economy has shown signs of improvement, inflation is low, foreign exchange reserves are building up, exchange rate is stable, large-scale manufacturing has picked up some pace along with continued credit to private sector and fiscal consolidation,” it said.
The performance of the banking sector improved on the back of record earnings and high capital adequacy ratio, which enhanced the overall resilience of the sector. Strong assets growth and revival of private-sector credit, along with gradual improvement in the asset quality, further strengthened the overall financial position of the banking sector.
The banking sector observed year-on-year growth of 16.8% in 2015 to reach Rs14.1 trillion at the end of last year. Advances grew at a modest pace of average 8.1% over the same period while investments - mostly in government securities - increased 30%.
Contrary to wisdom: Why SBP’s low policy rate won’t fuel inflation
The asset expansion has mainly been financed by deposits growth of 12.6% followed by financial borrowings, it said.
The asset quality improved with a reduction in the infection ratio, which was 11.4% in 2015, and a rise in provision coverage (84.9%). “However, banks do face a challenge in reducing the high stock of non-performing loans (NPLs),” it said.
Published in The Express Tribune, June 28th, 2016.