Out­stand­ing loan ad­vances go up 9.98pc

The Pak Banker - - FRONT PAGE -

KARACHI: Out­stand­ing loan ad­vances ex­tended to pri­vate­sec­tor busi­nesses at the end of Jan­uary amounted to Rs3.15 tril­lion, up 9.98pc from a year ago. Ac­cord­ing to data re­leased by the State Bank of Pak­istan (SBP), the amount of out­stand­ing loans on the books of pri­vate-sec­tor busi­nesses at the end of Jan­uary de­clined 1pc on a month-on-month ba­sis.

SBP data re­veals the largest year-on-year (YoY) loan in­creases (in per­cent­age terms) were recorded in the cat­e­gories of ma­chin­ery im­port (79.2pc), fixed as­sets (25.3pc), se­cu­ri­ties shares and other fi­nan­cial in­stru­ments (21.7pc), ready­made gar­ments (17.1pc) and real es­tate (11.3pc). The YoY rise in per­sonal ad­vances clocked up at 9.55pc at the end of Jan­uary. They amounted to Rs390.2 bil­lion, which was 0.49pc lower than the per­sonal ad­vances out­stand­ing at the end of De­cem­ber 2015.

An in­crease in pri­vate sec­tor ad­vances gen­er­ally bodes well for the econ­omy, as greater de­mand for credit is an in­di­ca­tion of the ex­pan­sion in the na­tional out­put go­ing for­ward. Ac­cord­ing to re­search an­a­lyst, slow credit growth for the most part of 2015 should be at­trib­uted to lower work­ing cap­i­tal re­quire­ments by com­pa­nies amid fall­ing com­mod­ity prices, low ag­gre­gate de­mand and below-av­er­age per­for­mance of the tex­tile sec­tor. SBP data shows ad­vances to dif­fer­ent com­modi­ties-re­lated busi­nesses de­clined on a YoY ba­sis. Rice and paddy (-3.73pc), wheat (1.42pc), in­dige­nous raw cot­ton (-3.7pc) and ' other raw ma­te­ri­als' (-31.7pc) recorded a sig­nif­i­cant de­cline in ad­vances on an an­nual ba­sis by the end of Jan­uary. How­ever, an­a­lyst ex­pects stronger growth in credit in 2016 in view of the CPEC-re­lated projects. Projects of $28 bil­lion (out of the to­tal of $46 bil­lion) will be com­pleted by 2018 un­der the CPEC, Naseer said, trig­ger­ing higher ad­vances growth. "Our back-of-the-en­ve­lope cal­cu­la­tion sug­gests th­ese projects will gen­er­ate an ad­di­tional credit de­mand of $2 bil­lion an­nu­ally for the next three years, which is equiv­a­lent to 5% of the to­tal ad­vances of the in­dus­try," he said. Quot­ing bank­ing sec­tor sources, he said the lo­cal com­po­nent of the CPEC-re­lated fi­nanc­ing could be 10%-20% of the to­tal planned in­vest­ment dur­ing the next three years. "We now an­tic­i­pate ad­vances to grow by 10%-12% in 2016."

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