Infrastructure projects receive enhanced bank financing
Private banks hold 62% share in total outstanding portfolio
Private banks hold 62% share in total outstanding portfolio. PHOTO: REUTERS
KARACHI:
Bank financing for large infrastructure projects is rapidly growing in Pakistan, with private banks holding a 62% share in the total outstanding portfolio, which is twice the share of public-sector banks.
According to the latest financing data issued by the State Bank of Pakistan (SBP) on Wednesday, the outstanding financing for infrastructure projects increased 20.5% on a quarterly basis to Rs444 billion at the end of March.
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In absolute terms, this shows outstanding infrastructure financing went up by Rs75.7 billion in just three months. On an annual basis, however, the surge in outstanding infrastructure financing translates into a massive 42.2%.
The SBP considers lending against 16 kinds of projects as infrastructure project finance. These projects include, roads, mass transit, railroad, telecom, power generation, power transmission, gas exploration, LPG extraction, LNG terminal, water supply/irrigation/sanitation, sewerage/solid waste management, port/channel-drudging/shipping/container terminal and refinery etc.
These loans are project-specific and thus different from working capital financing that is meant for short-term liquidity needs.
Banks disbursed Rs20.8 billion for infrastructure projects in Jan-Mar, which is up 8.3% from the comparable period of the preceding fiscal year. More than two-thirds of outstanding infrastructure financing is in the power generation sector. However, petroleum, oil and gas and road projects have recently seen a “surge” in financing, according to the SBP.
The year-on-year increase in outstanding project financing in major sectors at the end of March was: power generation (47%), telecom (15%), petroleum (46.6%), oil and gas (112%), and road/bridge/flyover (66%).
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Non-performing loans (NPLs) continued to show a declining trend and reached Rs12.3 billion as opposed to Rs16.6 billion a year earlier, the SBP reported. As a percentage of gross outstanding infrastructure financing, NPLs decreased from 3.8% to 2.7% on a quarter-on-quarter basis. The decline in annual terms was from 5.3% in Jan-Mar 2015 to 2.7% on March 31, 2016.
The institutional share in the outstanding portfolio of infrastructure financing has largely remained the same over the last quarter, with a large share resting with the private sector banks (62%) followed by public-sector banks (31%), Islamic banks (3%) DFIs (3%) and foreign banks (1%). The share of public-sector banks (has increased compared to last quarter, the SBP said.
Published in The Express Tribune, August 4th, 2016.
Bank financing for large infrastructure projects is rapidly growing in Pakistan, with private banks holding a 62% share in the total outstanding portfolio, which is twice the share of public-sector banks.
According to the latest financing data issued by the State Bank of Pakistan (SBP) on Wednesday, the outstanding financing for infrastructure projects increased 20.5% on a quarterly basis to Rs444 billion at the end of March.
ADB approves $100m loan for M-4 motorway
In absolute terms, this shows outstanding infrastructure financing went up by Rs75.7 billion in just three months. On an annual basis, however, the surge in outstanding infrastructure financing translates into a massive 42.2%.
The SBP considers lending against 16 kinds of projects as infrastructure project finance. These projects include, roads, mass transit, railroad, telecom, power generation, power transmission, gas exploration, LPG extraction, LNG terminal, water supply/irrigation/sanitation, sewerage/solid waste management, port/channel-drudging/shipping/container terminal and refinery etc.
These loans are project-specific and thus different from working capital financing that is meant for short-term liquidity needs.
Banks disbursed Rs20.8 billion for infrastructure projects in Jan-Mar, which is up 8.3% from the comparable period of the preceding fiscal year. More than two-thirds of outstanding infrastructure financing is in the power generation sector. However, petroleum, oil and gas and road projects have recently seen a “surge” in financing, according to the SBP.
The year-on-year increase in outstanding project financing in major sectors at the end of March was: power generation (47%), telecom (15%), petroleum (46.6%), oil and gas (112%), and road/bridge/flyover (66%).
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Non-performing loans (NPLs) continued to show a declining trend and reached Rs12.3 billion as opposed to Rs16.6 billion a year earlier, the SBP reported. As a percentage of gross outstanding infrastructure financing, NPLs decreased from 3.8% to 2.7% on a quarter-on-quarter basis. The decline in annual terms was from 5.3% in Jan-Mar 2015 to 2.7% on March 31, 2016.
The institutional share in the outstanding portfolio of infrastructure financing has largely remained the same over the last quarter, with a large share resting with the private sector banks (62%) followed by public-sector banks (31%), Islamic banks (3%) DFIs (3%) and foreign banks (1%). The share of public-sector banks (has increased compared to last quarter, the SBP said.
Published in The Express Tribune, August 4th, 2016.