Banking sector remains resilient during H1 CY19: SBP report
The review comprehensively covers the performance and soundness of the banking sector.
KARACHI (Dunya News) – Banking sector maintained its growth trajectory with asset expansion of 5.3 percent during H1 CY19 (Year-on-Year (YoY): 7.9 percent), primarily funded by deposits that witnessed the highest growth since H1CY16, according to the State Bank of Pakistan’s (SBP) Mid-Year Performance Review (MPR) of the Banking Sector report for the calendar year 2019 (CY19) issued on Monday.
The review comprehensively covers the performance and soundness of the banking sector.
The report said that despite challenging macroeconomic environment, banking sector maintained its growth trajectory during the first half of CY19 (H1CY19) largely, backed by decent growth in deposits. “The banking sector remained sound and stable during HICY19. Although some dimensions witnessed moderation, the overall risk profile of the banking sector remained satisfactory H1CY19", the report said.
“A good portion of the inflows came during the month of June 2019, among others, under the government amnesty scheme,” noted the document.
“While macro stabilisation measures have started to show favourable results, particularly on external front, the economic activity is expected to remain muted,” it continued.
“Banks need to put in place capital enhancement plans in light of the regulatory Capital Adequacy Ratio (CAR) benchmark increasing to 12.5pc by Dec 31,” said the report.
While investments observed a marginal rise, banks renewed their interest in Pakistan Investment Bonds due to favourable interest rate dynamics. “The overall risk profile of the sector remained satisfactory.”
There was some deceleration in growth in advances – a consequence of economic slowdown. Investments grew marginally and banks exhibited renewed interest in long-term government securities i.e. Pakistan Investment Bonds (PIBs).
According to the review, the performance of banking sector remained satisfactory, despite challenging macroeconomic environment. There was some deceleration in growth in advances a consequence of economic slowdown.
Investments grew marginally and banks exhibited renewed interest in long-term government securities i.e. Pakistan Investment Bonds (PIBs).
The overall risk profile of the banking sector remained robust. Though the asset quality moderated, the earnings of the banking sector improved owing to increase in Net Interest Income (NII). Resultantly, all profitability indicators showed improvement. The Capital Adequacy Ratio (CAR) at 16.1 percent was well above the local and international minimum benchmarks of 11.9 percent and 10.5 percent, respectively.
The review also includes the results of the 4th wave of SBP’s Systemic Risk Survey, which represents the views of the market participants.
The overall risk profile of the banking sector remained robust. Though the asset quality moderated, the earnings of the banking sector improved owing to increase in Net Interest Income (NII).
Resultantly, all profitability indicators showed improvement.
