Private sector borrowing surges to Rs412.4bn since mid-July

Published December 4, 2021
The private sector saw a net retirement of Rs43.2bn worth of credit during the same period a year ago. — Reuters/File
The private sector saw a net retirement of Rs43.2bn worth of credit during the same period a year ago. — Reuters/File

KARACHI: Borrowings from banks by private businesses jumped to Rs412.4 billion during the first four-and-a-half months (July 19 to November) of the current fiscal year, reflecting an improvement in economic activity, State Bank of Pakistan (SBP) data showed on Friday.

In contrast, the private sector saw a net retirement of Rs43.2bn worth of credit during the same period a year ago.

In its first-quarterly report for the ongoing fiscal year, the SBP reported that the credit to private businesses skyrocketed 318pc during July-September to Rs190bn compared to a net retirement of Rs87bn in the same period last year. The private sector borrowing has further increased since then.

The biggest change was aggressive lending by conventional banks, which recorded a net retirement of debt by the private sector during the same period last year. Commercial banks’ lending to the private sector reached Rs250.8bn during the four and a half months under review against a net retirement of Rs74.7bn a year ago.

Islamic banks extended loans worth Rs63.7bn to the private sector during the period compared to Rs13.6bn a year ago, whereas Islamic banking branches of conventional banks lent Rs97.8bn compared to Rs17.8bn in the year-ago period.

The SBP’s first-quarterly report also noted that the private companies’ earnings grew by 119pc year-on-year and 5pc over the previous quarter (April-June).

The profits of companies listed on the KSE-100 index grew 21pc in July-September over the same period of last year and by 66pc when compared to the same quarter of 2019. The profits of government-owned companies increased 15pc year-on-year and 33pc over the previous quarter.

Sector-wise growth included engineering (351pc), textile (163pc), automobile (131pc), cement (113pc), paper and board (87pc), oil and gas marketing (74pc), and exploration and production (29pc).

Another SBP report shows that banks’ deposits grew by 17.4pc during the last 12 months (from September 2020 to the same month this year). Bank advances rose by Rs1192bn, or 14.7pc, to Rs9.286 trillion in September compared to Rs8.094tr a year ago.

Published in Dawn, December 4th, 2021

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