KARACHI: The State Bank of Pakistan (SBP) has said that the balance sheet footing of the banking sector expanded by 11.5 per cent in H1CY24, mainly driven by investments in government securities.

In its Mid-Year Performance Review on the Banking Sector for 2024, released on Wednesday, the central bank noted that the government remained the primary borrower of banking money, which doubled the profits of the entire banking industry in CY23.

The government has planned to borrow over Rs9.3 trillion from banks in FY25, primarily to service its domestic debts. The review covers the performance and soundness of the domestic banking sector in January-June. It also briefly covers financial market performance and the Systemic Risk Survey (SRS) results.

The State Bank said the advances posted a contained growth due to the net retirements by the private sector, although long-term financing to SMEs showed some revival.

“The decline in private sector advances was significantly lower than H1CY23,” said the SBP report. On the funding side, deposits increased by 11.7pc in H1CY24, with a major impetus from saving and current deposits. The higher pace of asset growth, however, necessitated additional funding, which kept banks’ reliance on borrowing intact. The asset quality profile of the sector remained satisfactory, as gross Non-performing loans witnessed a subdued increase.

Published in Dawn, September 19th, 2024