The Pak Banker - - FRONT PAGE -

Pak­istan bank­ing in­dus­try de­posits con­tracted by Rs 22.5 bil­lion in Fe­bru­ary to stand at Rs 9.38 tril­lion as against of Rs9.408 tril­lion of Jan­uary due to de­mand of the money in the open mar­ket.

Ac­cord­ing to the State Bank of Pak­istan (SBP), the de­posits of all banks de­clined to Rs 9.38 tril­lion from Rs 9.408 tril­lion in Jan­uary 2016 and Rs 8.49 tril­lion reg­is­tered in Fe­bru­ary 2015. Econ­o­mists said the neg­a­tive growth in de­posits is sea­sonal be­cause of de­mand of money but the growth may re­cover in next month. In­vest­ments reg­is­tered strong growth to reach Rs 7.01 tril­lion in Fe­bru­ary 2016 from Rs6.81 tril­lion in as banks con­tin­ued to in­vest in risk-free govern­ment se­cu­ri­ties. The in­vest­ment num­ber stood at Rs 5.58 tril­lion in the month of Fe­bru­ary 2015. There are strong ex­pec­ta­tions for bullish ad­vances growth ow­ing to strong prospects from the ini­ti­a­tion of China-Pak­istan Eco­nomic Cor­ri­dor (CPEC), but the num­ber of ad­vances re­mains flat at Rs 4.83 tril­lion in Fe­bru­ary from pre­vi­ous month.

Ac­cord­ing to Min­istry of Wa­ter & Power, out of the to­tal $46bil­lion, $28 bil­lion projects are to be com­pleted by 2018, which may in­volve fi­nanc­ing of power and in­fra­struc­ture projects by Chi­nese and lo­cal banks. This cou­pled with other planned power sec­tor projects are likely to trig­ger higher ad­vance growth go­ing ahead.

Bank­ing sec­tor an­a­lysts sug­gested that th­ese projects will gen­er­ate an ad­di­tional credit de­mand of $2 bil­lion an­nu­ally dur­ing the next 3-years, which is equiv­a­lent to 5% of the to­tal ad­vances of the in­dus­try. Bankers are also of the view that lo­cal com­po­nent of the fi­nanc­ing could be 10-20% of the to­tal planned in­vest­ment dur­ing the next 3-years. It can be ex­pected that ad­vances to grow by 10-12% in 2016 and 14% on av­er­age dur­ing the next three years in 2016-18. Ini­tially there were con­cerns that whether the planned Chi­nese in­vest­ment would ma­te­ri­al­ize but the fi­nan­cial close of few projects have al­ready been achieved in­di­cat­ing strong po­ten­tial for China-Pak­istan Eco­nomic Cor­ri­dor re­lated fund­ing.

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