Slowdown may Dampen Pakistani Banks’ Growth

KARACHI - Pakistan’s central bank has warned of bumpy ride for the banking sector due to constrained economic climate both at domestic and international levels, according to the State Bank of Pakistan’s Quarterly Performance Review of the Banking System for the quarter ended December 31, 2008 released on Saturday.

By Rehan Siddiqui

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Published: Tue 31 Mar 2009, 12:06 AM

Last updated: Thu 2 Apr 2015, 7:46 AM

“Pakistan’s banking system has been able to cope well with challenges emanated from economic slowdown, both at home and abroad, due to effective regulatory and supervisory regime. However, going forward, the impending economic slowdown may dampen the growth rate of the banking system in coming quarters”, claimed the report.

It highlighted the present tough economic environment that will also heighten the credit risk and affect the earnings due to increased loan loss charges and constrained incomes. “Though concerns about the solvency of major banks of the world are weighing on the investor confidence across the globe, the banks in Pakistan have been able to maintain their resilience”, the report said.

The report said the credit risk remained high during the quarter. Non-performing Loans increased to Rs313 billion (Rs278 billion in September-2008) giving infection ratio of 9.1 per cent and net infection ratio of 2.5 per cent.

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