Banks focus on consumer finance
LAHORE: Consumer financing has seen a surge in the last two fiscal years primarily due to a big jump in auto loans and to some extent in mortgage finance. Banks had made net consumer financing of Rs31.2bn in FY14 and Rs31.3bn in FY15. This was equal to 10.5pc and 17.3pc of their net lending of Rs298bn and Rs180bn to private sector businesses (PSBs) in the last two fiscal years respectively, SBP data show. In the first seven months of this fiscal year, banks made Rs4bn worth of net housing loans against Rs14bn auto loans. The reason for this is many announcement of mega housing projects. "And, we see even greater demand for mortgage finance in near future as part of money circulating outside the banking system is being pumped into real estate development," says an executive of National Bank of Pakistan. "Besides, restoration of peace and order in Karachi is encouraging real estate developers to offer new housing schemes for different categories of middle income groups." Till the end of the last fiscal year in June 2015, net new housing loans totalled about Rs1bn. Against this, net auto loaning, which makes up the bulk of consumer finance, stood close to Rs10bn. A surge in housing loans seen during this fiscal year is strong enough to keep up growth trend in overall consumer financing even if auto loans face a weaker demand in near future.