Strong deposit growth bodes well for Pak banks

Deposits at Pakistan’s commercial banks reached Rs11.2 trillion as of December 30, 2016, some 20.4 per cent year-on-year growth in deposits compared to the last three years, Khaleej Times reported. Banking and equity sector analyst Umair Naseer of Topline Securities said this was significantly higher than the historical average growth of 12 per cent in the past three years. He added that the strong deposit growth boded well for banks as it remained the key earning driver in a low interest rate environment. At this level, banks advanced Rs 5.6 trillion to the private sector in 2016, which was 17 per cent more than 2015 when only Rs 4.8 trillion was sanctioned. This is a success story for the banking sector as it took place at a time when some sectors of the economy, including the biggest one such as textiles – are still struggling to match their good performance in the past. At the same time, exports, hit by the international crash of oil and commodity prices and lower domestic output, declined from $24 billion to $19 billion in 2016.