September 24, 2019 (MLN): Despite slowdown in economic activity along with higher interest rates, the private sector seems to have increased its activities.
The latest SBP data on advances classified by borrowers, supports the aforesaid statement, as the data shows that in the month of August 2019, the bank advances to private sector surged by 7.8% to an accumulated amount of Rs 4.93 trillion as compared to corresponding period last year.
However, on monthly basis, it exhibited a negligible decline of 0.4% MoM.
Most of the demand in private sector credit emanated from Merchandise sector, as credit to this sector surged by 6.2% YoY or Rs 120.6 billion to Rs 2.05 trillion in August FY20. This was followed by Fixed Assets which are purchased for long-term use, as advances for these assets rose by 7.2% YoY to Rs 1 trillion from Rs 934.3 billion in August 2018.
Among Merchandise sector, Finished Goods ranked first as financing to this sector reached to Rs 982 billion during the period under review, marking a growth of 3.7% YoY.
On the contrary, the advances to government declined by 3.1% YoY from Rs 821.5 billion to Rs 796 billion. While the advances to public enterprises rushed by 6.8% YoY to Rs 1.186 trillion.
Moreover, Credit to NBFIs reached to Rs 124 billion against Rs 79 billion in the same month last year, reflecting a growth of 57% whereas, advances to Trust funds and for personal use mounted by 1% and 10.5% YoY respectively.
This depicts the total outstanding advances to Residents during the month reached to Rs 7.746 trillion, up by 7.1% YoY from Rs 7.23 trillion recorded in Aug 2018.
