KARACHI: The State Bank of Pakistan lauded at the performance of the Banking System for the quarter ended on December 31, 2014, reported by External Relations Department of Pakistan.
According to the Quarterly Performance Review by SBP, the operating performance of banks shows considerable improvement as profit-before-tax has increased by 52% (Year-on-Year) to reach PKR 247 billion during last year 2014. Net Interest Margin (NIM) and Return on Assets (before tax) for the period 2014 were high than 2013. According to report, NIM for the period 2014 has increased to 4.4% from 3.9% in Calendar Year 2013 and ROA (before tax) has increased to 2.2% in CY14 from 1.6% in CY13.
The report states further that due to high profitability, capital injections by some banks, and debt equity swap of one bank has resulted in the improvement in solvency of banking sector. Capital Adequacy Ratio (CAR) stands 17.1% after 1.6% increase in the period. CAR figure is above the bench mark of minimum 10%. This will result in safe cushion for banking system in case of emergency.
Asset base of the banking sector also raised during last quarter of 2014 by 8.8% or Rs. 977 billion and final figure was Rs. 12.1 trillion at the end of December 31, 2014. According to report the reason behind this was improvement in economy activity and better energy supply to industrial sector that achieved 9.4% growth in advances during 2014, However, the speed of advances was slowed during last quarter of 2014 as compare to the corresponding period of the year 2013.
On the other side, deposits for the quarter as compare to corresponding period 2013 and over all deposits for the CY14 was higher than that deposits of CY13. During the quarter, Capital Impairment Ratio (Net NPLs to Capital) also decreased by 350bps to 10.1% indicating risk to the future earnings and equity of banking system.
Moreover, the SBP has started publishing Quarterly Performance Review of the banking sector from Dec 2014.