KARACHI : Nov 28,2022: Pakistan ‘s businesses are facing the most difficult times of its 75-year history due to highest interest rates, but the State Bank of Pakistan (SBP) in its Mid Year Performance Review (MYPR) for HICY22 issued on Monday claimed that Pakistan ‘s banking sector has shown great reliance and made growth by 16 % during the period in consideration. SBP’s review has basically justified unlawful money-making game of the banking sector in the first half the calendar year 22.
The SBP is continuously increasing interest rates for the last one year for providing a golden opportunity to the banking sector to grow without listening to wailing of the private sector
The private sector is literally reeling under high interest rate and demanding reversal of this SBP policy to stay relevant to the global markets for exports and enhance productivity at home, but SBP is simply ignoring these calls. It seems SBP has only a mission of protecting the interest of the banking sector . Its priorities neither include exports of Pakistan and nor promotion of businesses at home. The businesses can not function when interest rate stands at 16 %. The SBP is increasing interest rates to increase its income on loans taken by the government . For the last at least five years, the government is only client of the banking sector. Only a goof can understand , SBP is increasing interest rate to increase income of banking sector by hundreds of billions of rupee.
Exactly when SBP released its so cc called review Pakistan Stick Exchange crashed over soaring interest rate on Monday.
SBP had intentionally choosen Friday last week of the working session to announce last increase in interest rate.
The review said it covered the performance and soundness of the banking sector for the period January
to June 2022 (H1CY22). It also covers the performance of financial markets and Microfinance banks
(MFBs) as well as the results of Systemic Risk Survey (SRS), which represents independent respondents’
views about key risks to financial stability.
The Review reveals that sustained economic activity during H1CY22 supported the expansion of
banking sector balance sheet by 16 percent during H1CY22. Robust increase in the asset base was
mainly driven by flow of private sector advances and increase in investments particularly the government securities. Besides sizable mobilization of deposits, banks’ reliance on borrowings
increased significantly to finance the expanded balance sheet.
The pace of private sector advances growth during H1CY22 was the highest in comparable periods of
previous three years. Improved manufacturing activity, as reflected in double digit growth in Large
Scale Manufacturing (LSM) index during H1CY22, higher input prices and SBP’s refinance schemes
augmented the overall flow of advances. Individuals and sugar sector availed major chunk of financing
followed by textile sector. Besides noteworthy growth performance, banks’ asset quality indicators
further improved. Gross Non-Performing Loans (NPLs) ratio moved down to 7.5 percent by end June-
2022 from 7.9 percent at end December-2021. However, recent catastrophic flooding in many parts of
the country may impact the repayment capacity of agri-borrowers of banks’ and microfinance borrowers.
The Review highlights that baseline profitability indicators moderated — despite strong growth in
incomes — mainly due to the impact of sharp increase in tax charges. Capital Adequacy Ratio (CAR) of
the banking sector slightly edged down to 16.1 percent due to faster growth in asset base and advances.
Nonetheless, the ratio remains well above the minimum regulatory requirement (i.e. 11.5 percent) and banking sector in general has adequate capital buffers and resilience to withstand the impact of severe stress of macroeconomic conditions and shocks to key risk factors.
The Review also covered the results of 10th wave of SRS (July-2022) based on perceptions of independent market participants. The respondents perceive that the key risks for the financial system are mostly exogenous in nature i.e. global and macroeconomic risks. Majority of the respondents,
however, expressed confidence in the stability of the financial system.
Recent catastrophic flooding in many parts of the country may impact the repayment capacity of agriborrowers of banks and microfinance borrowers, and that of other borrowers as a second round effect.
As such, banks as well as MFBs need to make prudent assessment of the possible impact on lending portfolios and take necessary measures for maintaining the asset quality and resilience of financial
strength of their institutions, the Review added.
Anjum Nisar , Pakistan’s prestigious businessman and former president Federation of Chambers of Commerce and Industry (FPCCI) while commenting on SBP’s MYPR said ” SBP is just patronizing banking sector and providing it all out favour to make money at the cost of industry and businesses of the country.
“Can a country remain competitive for exports when its interest rate is 16 % and energy cost is 6 times more than other countries of the region”?, Mr Anjum Nisar questioned .
FPCCI ex- chief said SBP policy of increasing interest rates from 7 % to 16 % has literally ruined Pakistan’s businesses and Industry .
Mr Anjum Nisar added that the banks were plundering the business community through extra charging on Letter of Credits but this bloody trick of the banking sector went unnoticed as there is no accountability of this banking sector of Pakistan . He deplored that a decision of change of government has demolished Pakistan financially. He demanded accountability of the banking sector to put an end to their money -grabbing game…
