August 9, 2021 (MLN): At the start of FY22, the total Deposits held by Commercial Banks have shown a growth of 17% YoY to reach Rs18.8 trillion in July’21, compared to Rs16.12tn in the same month of last year.
However, on a monthly basis, local banks’ deposits shrank by 5% from Rs19.79tn in the previous month, data issued by the State Bank of Pakistan (SBP) showed.
According to the data provided by SBP, Investments jumped to an all-time high of Rs14.10tn in Jul’21, showing a growth of 30.5% on a YoY
basis and 2.6% on a MoM basis. The higher growth in Investments can be attributed to higher Borrowings by the sector.
Consequently, banks' investment to deposit ratio (IDR) has now increased to 75% by end of July’21 compared to 67% in the same month last year and 69% in the previous month.
Similarly, demand for advances posted positive growth of 9.4% YoY in Jul'21 on the back of elevated demand for credit from the consumer financing segment. However, on a sequential basis, it went down by 1.3% MoM.
Going by the data, advances to the private sector jumped 11% YoY while retail (Personal) offtake jumped by 31% YoY.
Within the private sector, loans to construction, power, and manufacturing sectors rose by 19%, 13.6%, and 8%YoY respectively. In the consumer financing segment, loans for auto-finance, housing finance, credit cards, and personal loans increased by 45.9%, 29.9%, 27.9%, and 22.4% YoY in Jul’21 respectively.
Meanwhile, the advances to deposits ratio (ADR) has surged to 47% as of July’21 from 45% in June-2021 whereas, on yearly basis, ADR remained significantly lower than its previous year’s levels (50% Jul’20) reflecting banks’ tilt toward G-sec, a report by Aba Ali Habib Securities cited.
According to the report, the bank’s provisions increased 12% YoY to Rs631bn compared to Rs565bn last July. Sector’s provisions as a percentage of gross advances rose minutely to 7.10%, against the same period of last year’s ratio of 6.96%.
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