In addition, banks’ investments in other avenues like paid-up capital, ordinary shares, TFCs, bonds etc, grew by around 5.3pc (Rs19 billion) primarily due to bullish behaviour in capital market and better corporate results, said a recent report of the State Bank.

However, equity investments remained within the exposure limits prescribed by the SBP.

Return on assets increased to 2.7pc in June 2015 from 2.1pc in the same month last year. Capital adequacy ratio remained strong at 17.2pc, well above the local requirement of 10pc and international benchmark of 8pc.

The asset quality observed some deterioration during June as non-performing loans increased by 1.6pc (year-on-year 5.8pc) to Rs630bn, the report said.

It further said that the net retirement by economic sectors like textile, food and beverages and sugar partially offset the growth in private sector lending.

The report revealed that customer deposits, representing 97pc of overall deposits, show that most of the growth came from non-remunerative current deposits (Rs467bn) followed by saving deposits (Rs107bn).

The report said that the banks have been making efforts to maximise their deposits with current account, which is a cost cutting measure.

The banks’ deposits have increased by Rs557bn to Rs9.02 trillion in the first eight months of 2015.

“Over the last few years banks are putting relatively more efforts to mobilise current deposits seemingly for managing the deposits’ cost. Visibly, share of fixed deposits reduced to 22.5pc in June 2015 from 29.2pc in June 2012,” the report added.

In contrast, share of current deposits (non-remunerative) picked up to 33pc in June 2015 from 27.5pc in June 2012.

“Entire growth in deposits came from local currency deposits, while rupee value of foreign currency (FCY) deposit stayed almost unchanged due to stability in USD/PKR exchange rate,” said the report.

Current account deposits, the second key category and the cheapest source of funding for banks, have seen substantial growth, the report said.

Liquid assets to total assets ratio pushed up from 51.9pc to 52.3pc, however, more than proportionate growth in deposits squeezed advances to deposit ratio (ADR) by 129 basis points to 45.7pc during April-June 2015.


Print Friendly, PDF & Email