SBP data: Housing finance up for 6 straight quarters

Amounts to Rs59.2b at end of June, up 8.6% from Jan-Mar

Our Correspondent September 22, 2015
Amounts to Rs59.2b at end of June, up 8.6% from Jan-Mar. PHOTO: FILE

KARACHI: Gross outstanding housing finance of all banks and development finance institutions (DFIs) has registered growth for the sixth straight quarter, according to the latest housing data released by the State Bank of Pakistan (SBP). 

It amounted to Rs59.2 billion at the end of June, which is up 8.6% or Rs4.7 billion on a quarter-on-quarter basis. The increase in the outstanding housing finance on a yearly basis is 12.3% or Rs6.5 billion.

“The continued growth in the housing finance portfolio is an encouraging sign,” the SBP said in its brief commentary on the latest statistics. However, the central bank also noted that the primary housing finance market in Pakistan is still at a nascent stage and should be developed by creating enabling environment and initiatives from both public and private sectors.


Currently, 27 commercial banks, one microfinance bank and House Building Finance Company (HBFC), which is the only housing bank in Pakistan, are providing people with housing finance. HBFC is the largest market player in terms of gross outstanding housing portfolio with a share of 24%.

Outstanding housing loans of HBFC totalled Rs13.3 billion at the end of June, up 7.2% from last year. The same figure for the Islamic banking industry (five Islamic banks and 14 Islamic banking divisions of conventional banks) stood at Rs21.1 billion on June 30. Compared to the preceding quarter, gross outstanding of Islamic banking industry increased 8.9% in the three months ending on June 30.

Outstanding housing loans of private banks were Rs21.5 billion and public banks were Rs5.9 billion at the end of June. This shows Islamic and private (conventional) banks remained major contributors to gross outstanding of housing finance during the 12-month period ending on June 30. The amount of housing finance provided by foreign banks and DFIs decreased slightly from Rs0.45 billion to Rs0.42 billion over the 12-month period ending on June 30.

Data shows a large portion of HBFC’s portfolio consists of small-sized loans of up to Rs1 million as opposed to other institutions whose portfolios seem tilted towards bigger loans of Rs5 million and above.

“This confirms that banks are focusing on high-end customers. There is a need to increase the primary mortgage market by extending services to low-income and salaried-class customers,” the SBP said.

Non-performing loans (NPLs) decreased ‘significantly’ from Rs14.1 billion at the end of March to Rs13.5 billion at the end of June, reflecting a decline of 4.6% in the April-June quarter.

HBFC’s NPLs showed a marked decrease of Rs0.5 billion or 10% over the preceding quarter. Also, HBFC’s percentage share of NPLs in its total outstanding housing finance has decreased significantly by 17% over the year.

At the end of the quarter on June 30, 33.7% of HBFC’s total outstanding constituted NPLs. Its percentage share in total NPLs was 33%.

The number of borrowers decreased from 74,894 to 70,498 in 12 months ending on June 30, registering a decline of 5.8%. SBP data shows there was a year-on-year decrease in the number of borrowers in each category, except Islamic banks. However, the number of active borrowers increased 3.8% over the preceding quarter.

The mortgage-to-GDP ratio was 0.49% at the end of the second quarter of 2015. It slightly moved up from 0.46% recorded at the end of the first quarter of 2015, but is still meagre, even in contrast with regional economies of similar size.

Published in The Express Tribune, September 23rd, 2015.

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