Bank­ing sec­tor records profit of 22pc in 2015

The Pak Banker - - FRONT PAGE -

KARACHI: The profit af­ter tax of the bank­ing sec­tor for 2015 reached to Rs 199 bil­lion; around 22 per­cent up from Rs 163 bil­lion recorded dur­ing 2014, State Bank of Pak­istan (SBP) stated. The prof­itabil­ity of the bank­ing sec­tor was broad based en­com­pass­ing large spec­trum of banks.

Re­turn on As­sets (ROA) be­fore tax in­creased to 2.5 per­cent in De­cem­ber-15 quar­ter from 2.2 per­cent in De­cem­ber-14 quar­ter. A healthy growth of 7.8 per­cent in pri­vate sec­tor ad­vances (both sea­sonal and for fixed in­vest­ment) and mod­er­ate rise in banks' in­vest­ment in sov­er­eign pa­pers were the ma­jor con­trib­u­tors to this in­crease in as­sets. The re­viewed quar­ter was also marked by a QoQ 6.9 per­cent growth (YoY 12.6 per­cent) in de­posit base of the bank­ing sec­tor, pri­mar­ily, driven by growth in cur­rent ac­count and fixed de­posits.

The as­set qual­ity of the bank­ing sec­tor im­proved largely at the back of im­proved cash re­cov­er­ies. The QPR re­ported that NPLs to loans ra­tio de­creased from 12.5 per­cent in Septem­ber-15 to 11.4 per­cent in De­cem­ber, 2015, while Net NPLs to Net loans de­creased from 2.5 per­cent to 1.9 per­cent. This im­prove­ment in as­set qual­ity in­di­ca­tors ad­vo­cates con­tin­u­ous de­cline in risk to the fu­ture op­er­at­ing per­for­mance and equity of the bank­ing sec­tor.

The rise in fi­nanc­ing flows to pri­vate sec­tor has im­proved the uti­liza­tion of idle cap­i­tal as re­flected through slight re­duc­tion in Cap­i­tal Ad­e­quacy Ra­tio (CAR) to 17.3 per­cent, which is still well above the min­i­mum lo­cal re­quired thresh­old of 10.25 per­cent and in­ter­na­tional bench­mark of 8.625 per­cent. More­over, the sol­vency pro­file of the bank­ing sys­tem re­mained strong due to healthy prof­itabil­ity and equity in­jec­tions by few MCR non-com­pli­ant banks.

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