Pakistani banks double their profits in a year

 

Blog Post 1: "Banks in Pakistan Record Stellar Profits in H1CY23"

In a recent mid-year performance review of the banking sector in Pakistan, the State Bank of Pakistan (SBP) revealed some impressive figures. The first half of 2023 saw a remarkable surge in bank profits, more than doubling to reach Rs 284.5 billion compared to Rs 126.2 billion during the same period in the previous year. What's driving this surge? The primary factor is the increase in net interest income (NII) due to rising interest rates. NII grew by an astounding 67.3 percent in H1CY23, thanks to multiple policy rate hikes and steady growth in earning assets. However, it's important to note that interest expenses also doubled, offsetting a significant portion of the income growth.

Blog Post 2: "Pakistan's Banking Sector: Asset Growth and Shifts in Advances"

The banking sector in Pakistan has been on the move during H1CY23. The asset base of the sector expanded by 14 percent, reaching Rs 40.796 trillion. This growth was primarily fueled by investments, which accounted for over half of the asset base. On the other hand, advances saw muted growth, and the advances to deposits ratio (ADR) declined from 50.4 percent to 45 percent. Notably, there was a slowdown in domestic private sector advances, with a 7 percent contraction compared to the previous year. Various segments, including corporate and auto financing, saw retirements due to high-interest rates. This shift in the sector's dynamics is noteworthy.

Blog Post 3: "Exchange Rates and Deposits: Volatility and Recovery"

In the foreign exchange market, the SBP report highlighted a significant depreciation of the Pakistani rupee by 20.8 percent against the US dollar in H1CY23, compared to 13.8 percent in the same period the previous year. Exchange rates exhibited higher volatility during this time. However, in a contrasting trend, deposits in the banking sector saw a notable revival in mobilization activity, increasing by 14.2 percent to reach Rs 26.785 trillion during H1CY23. This resurgence in deposits marked a stark contrast to the contraction observed in the previous half-year, showcasing a positive turnaround in the banking sector's deposit base.

These three blog posts provide a concise overview of the key findings from the SBP's mid-year review of Pakistan's banking sector in H1CY23, covering profit surges, changes in asset growth, shifts in advances, exchange rate dynamics, and deposit trends.