KARACHI, Aug 20: At the end of last fiscal year, all banks and development finance institutions (DFIs) were carrying around Rs205.5 billion worth of bad loans, according to data released by the State Bank. The SBP data put on its website show that banks were carrying Rs201.4 billion non-performing loans (NPLs) whereas DFIs had a stock of Rs4.1 billion. NPLs which are commonly known as bad loans are the loans whose principal or markup or both remained unpaid for more than 90 days. NPLs themselves are classified into several categories the most worrisome of which is defaulted loans i.e. the loans that remain unpaid for more than a year.
Banks and DFIs are required under the rules to make different provisions against different categories of NPLs. The NPLs against which provisions are not made are classified as net NPLs.
SBP data show that whereas overall NPLs stood around Rs205.5 billion at end-June 2005, the stock of net NPLs was much smaller - Rs55.2 billion. Of this banks carried Rs53.2 billion worth of NPLs and DFIs of Rs2 billion.
RECOVERY: The State Bank data show that the banks and DFIs made cash recoveries of Rs8.554 billion during April-June 2005. Of this, banks’ recoveries stood at Rs8.435 billion and that of DFIs at Rs119 million.
During January-March 2005, banks and DFIs had made Rs6.983 billion worth of recoveries: the recoveries made by banks totalled Rs6.95 billion and whereas the DFIs had recovered only Rs33 million.
The group-wise breakup of recoveries show that state-run banks made Rs1.314 billion recoveries in the quarter ending in June 2005 and local private banks made Rs4.306 billion recoveries. Foreign banks and specialized banks reported Rs60 million and Rs2.755 billion worth of recoveries respectively.
Senior bankers say the reason why foreign banks made a very nominal amount of recovery was that these banks as a group carried the smallest chunk of overall NPLs. At end-June this year foreign banks were carrying Rs2.393 billion of bad loans. More importantly, their net NPLs was negative (minus Rs445 million) i.e. they had made more provisioning against their bad loans than required. Local private banks including all the four major privatized banks namely Habib Bank, United Bank, Muslim Commercial Bank and Allied Bank, were carrying the largest stock of Rs97.274 billion worth of NPLs at end-June 2005 followed by specialized banks (Rs61.921 billion) and state-run banks (Rs39.795 billion).
The list of specialized banks include Zarai Taraqiati Bank Ltd; Industrial Development Bank of Pakistan; Punjab Provincial Co-operative Bank and SME Bank.
The state-run banks included National Bank of Pakistan; First Women Bank Ltd.; Bank of Punjab and Bank of Khyber.
