Banks make Rs7bn recovery in 6 months: NPLs at Rs162bn
By Our Staff Reporter
KARACHI, July 31: The stock of loan defaults of all banks fell from Rs133.8 billion at end-June 2002 to Rs124.2 billion at end- June 2003 showing an improvement of Rs9.6 billion or 7.2 per cent.
According to the latest SBP statistics (posted on its website) the stock of overdue loans of state-run banks saw a contraction of Rs8.8 billion or 11.5 per cent in the last fiscal year. Total overdue loans or the loans overdue by 365 days or more of these banks that stood at Rs76.6 billion at end-June 2002 came down to Rs67.8 billion at end-June 2003. The figures of overdue loans— commonly known as loan defaults—of the entire banking system as well as those of the state-run banks relate to only those overdue loans that are worth Rs1 million or above.
The figures show that the stock of overdue loans of privatized banks rather saw a 3.9 per cent increase in the last fiscal year rising from Rs33.1 billion at end-June 2002 to Rs34.4 billion at end-June 2003. Senior bankers attribute this increase to the fact that after its privatization the United Bank was taken out from the list of state-run banks and reclassified as privatized bank with two others already in this category i.e. Allied Bank and Muslim Commercial Bank. The stock of overdue loans of local private banks and foreign banks also saw a decline of 8.8 per cent and 8.4 per cent respectively during the period under review. At end-June 2002 total overdue loans of local private banks and those of foreign banks stood at Rs17.2 billion and Rs6.7 billion: At end-June 2003 the figures fell to Rs 15.7 billion and Rs6.2 billion respectively.
The stocks of overdue loans fell primarily because the banks geared up their efforts to make cash recoveries besides making room for their borrowers to reschedule and restructure overdue loans. The statistics show that during January-June 2003 alone all commercial banks made total cash recoveries of Rs7 billion. It is not known how much worth of recoveries they made during the first half of the last fiscal year—between July-December 2002.
The state-run banks made cash recoveries of Rs3.4 billion and privatized banks recovered Rs2.67 billion in cash during January -June this year. Local private banks made Rs837 million and foreign banks made Rs136 million worth of cash recoveries during this period. Senior bankers say what helped them made sizable cash recoveries was that the corporate borrowers were flooded with excess liquidity.
The Rs124.2 billion worth of overdue loans of all commercial banks at end-June 2003 was part of Rs162.4 billion worth of their total non-performing loans. Whereas overdue loans are the loans the principal or mark-up of which are overdue by 365 days or more the non-performing loans are defined as the loans overdue by 90 days or more. Out of the Rs162.4 billion non-performing loans of all commercial banks Rs89.3 billion NPLs were those of the state -run banks. The stock of NPLs of privatized banks stood at Rs46.2 billion and those of local private banks and foreign banks stood at Rs19.8 billion and Rs6.9 billion respectively.
The Rs162.4 billion worth of NPLs of all commercial banks at end-June 2003 was slightly lower than stock of NPLs at end-June 2002 i.e. Rs167.7 billion.
