KARACHI, May 3: State Bank Governor Dr Shamshad Akhtar has said that the banking industry in Pakistan has witnessed a brisk growth in assets in recent years which now stand at over $60 billion.

Delivering a speech at the Global Transaction Banking seminar here on Wednesday, Dr Akhtar said Pakistan offered a promising ground for financial experimentation and innovation. “Pakistan’s banking industry has seen a brisk growth in assets which today stand at over $60 billion. Bank’s profitability is at an all-time high and unprecedented, reaching close to Rs93 billion by 2005,” she said.

“Aside from higher efficiency, gains in the industry attributable to benefits arising from significant banking sector restructuring and reforms, and high profitability of banks has been achieved because of high interest margins,” said Dr Akhtar.

The SBP governor said that in the period ahead, the financial industry, however, had to be positioned for a more competitive environment and had to cater for more diverse and complex requirements of Pakistan’s consumers and infrastructure. Pakistan, like the rest of Asia, is growing fast and a rise in per capita income, emergence of the middle income group and relative wealth increases all together bring with them new demands for the retail banking industry.

“Beside real sector developments and requirements, the financial industry of Pakistan has to catch up fast with the global developments and achieve better financial diversification and strengthen its risk management systems,” said the SBP governor.

“In Pakistan’s context, it has to be recognized that while large banks will continue to thrive on volumes of business, which they have traditionally captured given their reach across the country, it is the foreign banks with their competitive edge in global transaction banking that can offer unique and new financial solutions,” she added.

Pakistan’s real time inter-bank settlement mechanism is at an advanced stage of installation and is expected to be lived by the 3rd quarter of 2006, Dr Akhtar said.

The coverage of online branches as a percentage of total branches (7,245 branches) has now reached 45 per cent. At this pace, the whole branches network of the banking system will be online in the very near future, which will substantially improve efficiency of the payment system.

Usage of cards at POS (Point of Sales) is expanding with the passage of time. This channel recorded remarkable growth of 62 per cent in number of transactions to 13 million transactions in FY05 from 8 million in the previous year. Value of transactions grew by 56pc to Rs42.8 billion in FY05 from Rs27.4 billion in FY04.

“The Global Transaction Banking concept, though newer to Pakistani banks, will help service the ever-growing need for Pakistan’s trade and finance and facilitate investors’ awareness about the growing Pakistani economy and markets. We see inter-exchanges like this would further strengthen the transaction banking business in Pakistan,” Dr Akhtar concluded.