KARACHI (January 20 2003) : Total assets of scheduled banks jumped by Rs 393 billion, or 18 percent, in 2002 as deposit base recorded substantial increase after inflow from expatriates, and investment rose sharply in the treasury bills.
The abnormal inflows into the economy after the Sept 11, 2001 events are evident from the banking sector statistics for the year ending December 2002.
The calendar year 2002 brought huge increase in the balance sheet of local scheduled banks mainly contributed by above average jump in the deposit base.
In Pakistan, there are currently 43 scheduled banks with 39 commercial and 4 specialised banks.
According to the latest numbers released by SBP, as of December 28, 2002, total assets of the scheduled banks had jumped by Rs 393 billion, or 18 percent, to reach Rs 2529 billion. This growth of Rs 393 billion in the banking sector assets is the highest ever witnessed by local banks.
The major contributor to this increase was the rising deposit base (that is demand and time liabilities) of the local banks that grew by a record Rs 253 billion, or 19 percent, in 2002 as compared with Rs 139 billion, or 11 percent, increase in 2001.
Mohammad Sohail, head of research at Invest Capital Securities, said that the huge dollar inflows and resultant dollar buying by SBP caused the deposits of banks operating in Pakistan to reach a record level of Rs 1.6 trillion on December 28, 2002.
Call and other borrowings also contributed Rs 115 billion to the liabilities and equities side of the balance sheet of these scheduled banks in 2002.
Of the Rs 393 billion increase, about Rs 248 billion was invested in T-Bills, invested in government and other securities by the banks in 2002, Sohail said.
Interestingly, the scheduled banks in last 10 years cumulatively had not invested in securities which they did in last one year alone, proving that limited options were available to them to loans and advances.
Increase in credit was a meagre Rs 29 billion in 2002.
Though this compares favourably with credit enhancement of Rs 27 billion in 2001, but is far lower than last 9 years' average credit growth of Rs 72 billion.
Due to rising money supply and dollar inflows, the balance sheet of scheduled banks is likely to increase in 2003 also.
However, it may be seen that there is some shift from investments to advances as banks have no option but to aggressively look for borrowers.
With low yields in government and other securities, banks are likely to go for more loans in the coming months.
Rising focus on consumer financing may help in achieving this in 2003.
