State Bank of Pakistan: Quarterly Performance Review of the Banking Sector - Q3 2017

Transcription

1. Quarterly Performance Review of the Banking Sector (July-September, 2017) Financial Stability Assessment Division Financial Stability Department State Bank of Pakistan
2. Quarterly Performance Review of the Banking Sector , Q3CY17 | 2 QPR Team Team Leaders Mr. Muhammad Javaid Ismail javaid.ismail@sbp.org.pk Dr. Asif Ali asif.ali@sbp.org.pk Team Members Mr. Aqeel Ahmed Performance of the Banking Sector aqeel.ahmed@sbp.org.pk Mr. Hassaan Zafar Performance of the Banking Sector hassaan.zafar@sbp.org.pk Ms. Rabia Zulfiqar Soundness of the Banking Sector rabia.zulfiqar@sbp.org.pk Mr. Muhammad Sadiq Ansari Soundness of the Banking Sector sadiq.ansari@sbp.org.pk Mr. Abdul Rehman Ansari Soundness of the Banking Sector abdul.rehman@sbp.org.pk Ms. Mariam Abbas Data and Assistance mariam.abbas@sbp.org.pk
3. Quarterly Performance Review of the Banking Sector , Q3CY17 | 3 Contents Summary 04 Part A: Performance of the Banking Sector 05 Asset Growth 05 Advances 05 Investments 07 Deposits 08 Borrowings 09 Equity 09 Banking Infrastructure 09 Appendix A: Seasonality in Advances (Sector-wise) 10 Part B: Soundness of the Banking Sector 11 Interconnectedness 11 Residual Growth 11 Asset Quality 11 Liquidity 12 Earnings 13 Capital Adequacy Exposure to Public Sector 14 14 Part C: Banking Sector Outlook for Q4CY17 15 Annexures (A-E) 16-20
4. Quarterly Performance Review of the Banking Sector , Q3CY17 | 4 Summary Banking sector’s asset base has expanded marginally during Q3CY17, though, on YoY basis, the growth has been quite robust (16.0 percent). Financing has observed a minor dip over the quarter in line with the seasonal pattern of the credit cycle. Encouragingly, share of fixed investment (long-term) loans in total loans continues to rise indicating improved business confidence. Funding needs of the system are met by a nominal growth in deposits and interbank borrowings. The rising long term advances and declining share of fixed deposits is widening the assets-liabilities mismatch against which the banks need to remain vigilant. The overall risk profile of the banking sector remains within tolerable bounds in Q3CY17 characterized by high capital adequacy ratio, improving asset quality and favorable liquidity conditions. Earnings of the banking sector, however, have moderated due to low interest rates and increased administrative expenses, in addition to one-off settlement payment made by a large bank. Nevertheless, Capital Adequacy Ratio (CAR) at 15.4 percent remains well above the minimum regulatory required level of 10.65 percent. In order to deliver better performance, banks need to calibrate the changing macroeconomic environment in their business models to capitalize the emerging opportunities as arising from, generally, growth in the economy and, particularly, from the China Pakistan Economic Corridor (CPEC).
5. Quarterly Performance Review of the Banking Sector , Q3CY17 | 5 A. Performance of the Banking Sector The performance of the banking sector, both on QoQ and YoY basis, has remained quite satisfactory during Q3CY17. The assets of the banking sector have inched up by 0.3 percent during Q3CY17 as compared to a decline of 1.6 percent during Q3CY16. The increase in asset base is primarily attributed to an increase of 1.8 percent in investments (net); while advances (net) have seen a moderate decline of 0.4 percent (2.5 percent decline in Q3CY16). The reduction in advances is seasonal in nature (Appendix A). On YoY basis, however, there is a robust growth in net-advances (20.6 percent). This growth, among others things, is attributed to 51.5 percent increase in financing by Islamic banking institutions (34% share in YoY advances flow). Investments have also increased (12.8 percent) resulting in expansion of 16.0 percent in the asset base of the banking sector. On the funding side, QoQ growth of 1.1 percent in borrowings from financial institutions coupled with an increase of 0.3 percent in deposit base has enabled the banks to finance the growth in assets (Table 1). Table 1: Highlights of the Banking Industry CY15 Q3CY16 CY16 Key Variables (PKR Billion) Total Assets 14,143.2 15,133.8 15,831.1 Investments (net) 6,880.8 7,624.5 7,509.2 Advances (net) 4,815.8 5,052.1 5,498.8 Deposits 10,389.3 11,092.1 11,797.9 Borrowings from financial institutions 1,766.1 2,011.9 1,942.5 Lending to financial institutions 360.8 332.0 551.7 Equity 1,322.8 1,324.4 1,352.8 Profit Before Tax (ytd) 328.8 233.3 314.0 Profit After Tax (ytd) 199.0 138.9 189.9 Non-Performing Loans 605.4 631.3 604.7 Non-Performing Loans (net) 91.1 109.1 90.4 Q1CY17 Q2CY17 Q3CY17 16,155.5 8,003.0 5,605.1 11,809.0 2,183.4 501.1 1,404.9 75.1 49.1 603.8 88.1 17,500.5 8,448.5 6,118.8 12,573.3 2,814.8 563.4 1,359.1 150.4 89.9 614.8 100.1 17,559.7 8,600.3 6,093.7 12,609.4 2,845.4 615.0 1,344.1 195.4 111.7 611.8 89.9 11.4 1.9 7.7 84.9 2.5 17.3 46.4 Note: Statistics of profits are on year-to-date (ytd) basis. 11.3 2.2 9.1 82.7 2.1 16.8 45.5 Also, the “others” sector which constitutes various smaller sub-sectors has received advances flow of PKR 18.7 billion against a decline of PKR 58.3 billion last year. This is due not only to lower retirements in food products and beverages but also to higher financing demand by commerce & trade, transport, storage and communications, and machinery & equipment sectors.1 Table 2: Advances Flows to Private Sector (Domestic) Q3CY16 Flows 9.9 1.6 7.1 85.4 1.9 15.9 47.5 9.3 1.6 8.0 83.7 1.8 15.6 48.7 9.2 1.5 7.2 85.3 1.6 15.4 48.3 Flows Growth (3.2) (1.3) (1.3) (0.5) Agribusiness (5.5) (1.8) 9.1 2.8 Textile (17.9) (2.4) 8.4 1.0 Cement (4.6) (8.0) (0.7) (0.9) (40.2) (22.8) (31.0) (12.1) Shoes and leather garments (0.1) (0.5) (0.8) (3.0) Automobile/transportation 0.9 2.1 3.3 7.7 Financial 0.4 0.5 (7.1) (7.4) 1.7 114.7 Insurance 0.0 0.7 (0.1) 9.9 15.5 21.4 4.8 (33.8) (6.3) (6.6) (1.3) 19.8 3.5 (58.3) (4.5) 18.7 1.2 (112.2) (2.8) (5.4) (0.1) Electronics and electrical appliances (0.1) Energy Individuals Others Total (Domestic S ector) 10.1 1.6 7.3 85.0 2.1 16.2 46.6 Q3CY17 Growth Chemical and Pharmaceuticals Sugar Key FSIs (percent) NPLs to Loans (Gross) Net NPLs to Net Loans Net NPLs to Capital Provision to NPL ROA (Before Tax) CAR Advances to Deposit Ratio Gross advances (domestic) to private sector have declined by PKR 5.4 billion during Q3CY17; significantly lower than the contraction of PKR 112.2 billion in the same period last year. The sector-wise analysis reveals that the broad based advances disbursement to various sectors (agriculture, textiles, automobiles, electronics) has resisted the overall fall in financing during the reviewed quarter (Table 2). This is despite a notable decline in advances to the energy sector; attributed mainly to retirement by one of the public sector oil companies. Flows in PKR billion; growth in percent. 1 http://www.sbp.org.pk/ecodata/CreditLoans-arch.xls
6. Quarterly Performance Review of the Banking Sector , Q3CY17 | 6 The segment-wise analysis of the domestic private sector advances reveals that the decline in corporate sector advances during Q3CY17 is substantially lower than the corresponding quarter of previous year. The higher credit disbursement for trade finance and fixed investment coupled with relatively lower retirement in working capital loans explains this lower decline in advances (Table 3). Table 3: Segment-wise Domestic Advances Flows (PKR billion) Q3CY16 Public Sector Corporate S ector Private Sector Q3CY17 Total Public Sector Private Sector Total 9.1 (119.6) (110.5) 25.2 (19.9) 5.3 Fixed Investment 26.8 32.1 58.9 15.4 46.3 61.7 Working Capital (8.8) (109.5) (118.3) 21.8 (98.0) (76.2) Trade Finance (8.8) (42.2) (51.0) (12.0) 31.8 19.8 27.4 27.4 (10.8) (10.8) S MEs Fixed Investment 5.6 5.6 4.1 4.1 Working Capital 14.4 14.4 (20.1) (20.1) 5.2 Trade Finance 7.4 7.4 5.2 (3.7) (3.7) 8.8 8.8 9.7 9.7 20.1 20.1 Credit Cards 1.4 1.4 3.5 3.5 Auto Loans 7.1 7.1 9.5 9.5 2.4 (26.5) 2.4 (62.0) 5.1 (5.9) 5.1 (49.0) Agriculture Consumer Finance (35.5) S taff Loans Others Total The seasonal decline in commodity operations financing during the reviewed quarter has remained relatively low as compared to the corresponding quarter of previous year. It is, primarily, on account of lower credit retirement by the private sector during Q3CY17. Unfavorable commodity prices in the market have disincentivized stock offloading. However, as Figure 1 reveals, total credit retirement against wheat during Q3CY17 is significantly higher (PKR 51.2 billion) than in Q3CY16 (PKR 31.0 billion), mostly relating to public sector. FFigure 1 of which M ortgage Loans Commodity Financing In line with trend, Islamic Banking contributed 28 percent of the total increase in CF during Q3CY17 (24 percent YoY). Among the CF categories, 73 percent of the increase in auto financing has been disbursed by the Islamic Banks. (26.4) (43.1) 0.9 0.9 - 2.4 2.4 (0.4) (0.4) - (0.1) (0.1) (112.2) (138.6) (5.4) (23.3) (17.9) Commodity Finance Break-up - Domestic Operations (Flows) PKR billion 250 200 150 100 The SME segment, however, shows a decline of PKR 10.8 billion during Q3CY17 against disbursement of PKR 27.4 billion in Q3CY16. It is important to outline that strong advances flow to SMEs during Q3CY16 was on account of SBP’s policy measures2 that enhanced the coverage of SMEs. Consumer financing continued its steady growth with 5.0 percent increase during Q3CY17. This increase is primarily on account of auto loans followed by mortgage and credit card loans. It is essential to note that cars’ production has been quite impressive during Q3CY17.3 2 For details of the measures taken, please see QPR of Q3CY16: http://www.sbp.org.pk/publications/q_reviews/2016/Jul-Sep.pdf As per Pakistan Automotive Manufacturers Association (PAMA), cars’ production in Q3CY17 (54,873 units) is well above the average production since Q3CY13 (40,640 units). 3 50 (50) (100) Q3CY16 Q4CY16 cotton rice Q1CY17 sugar Q2CY17 wheat Q3CY17 others It deserves special emphasis that the share of fixed investment loans is steadily increasing both in corporate and SME segments (Figure 2). In SME’s case particularly, the share of fixed investment loans has risen to 25.6 percent in Q3CY17 from 14.5 percent in Q3CY14. This reflects improved investors’ confidence in the long-term outlook of the domestic economy in response to favorable macroeconomic conditions including low interest
7. Quarterly Performance Review of the Banking Sector , Q3CY17 | 7 rates. Figure 2 Growing Share of Fixed Investment across Wide Segments Percent of Total SMEs Advances 83 27 78 24 43 41 21 73 39 18 68 15 Q3CY09 Q3CY10 Q3CY11 Q3CY12 Q3CY13 Q3CY14 Q3CY15 Q3CY16 Q3CY17 Q3CY17 Q3CY16 Q3CY15 Q3CY14 9 Q3CY13 58 Q3CY12 33 Q3CY11 12 Q3CY10 63 Q3CY09 35 Table 4: Composition of Bank's Investment in Govt. Securities PKR billion Flows during : Fixed Investment Working Capital M TBs Working Capital Fixed Investment (RHS) PIBs Q3CY15 Other Govt Securities (Sukuk) 4 Total imports during Q3CY17 have stood at US$ 12.9 billion as compared to US$ 13.8 billion in previous quarter. 602.1 (651.5) (420.2) (4.9) (11.7) (227.5) 170.2 Total Investments (Net) 504.6 (196.8) 2015 O utstanding Stocks as of Se p 30: 151.7 2016 2017 M TBs 2,605.2 3,099.2 4,386.9 PIBs 3,145.4 3,244.3 3,004.7 388.0 637.5 475.0 Total Fed. Govt. Securities 6,138.7 6,981.1 7,866.6 Total Investments (Gross) 6,759.8 7,673.2 8,646.4 Less: Provision & Deficit (46.0) (48.7) (46.2) 6,713.8 7,624.5 8,600.3 Others Total Investments (Net) Consequently, the share of MTBs (in total net investments) has increased to 52.6 percent in Q3CY17 (42.0 percent in Q3CY16) while the share of PIBs in total investments has declined to 35.3 percent (42.3 percent in Q3CY16) (Figure 3). Figure 3 Banks Invesments in PIBs and Treaury Bills as Percent of Total Investment (Weekly Data) 54 52 50 46 42 38 35 34 Q1CY17 The overall net investments of the banking sector have surged by 1.8 percent during Q3CY17 against decline of 2.5 percent during Q3CY16. Banks’ 428.9 38.1 12.3 Q4CY16 The share of foreign currency loans in total loans has declined to 9.4 percent in Q3CY17 from 11.2 percent in Q3CY16. It is pertinent to mention that since Q3CY09, this ratio on average has not exceeded 11.0 percent. On QoQ basis, foreign currency loans have declined by PKR 77.5 billion in Q3CY17; higher than the decline of PKR 35.3 billion in Q3CY16. This seems to be on account of lower imports and exchange rate dynamics.4 431.1 481.5 Q3CY16 Finally, it also implies that demand for credit might rise in future with the expected increase in economic activity. Banks need to calibrate the changing macroeconomic environment in their business models in order to better capitalize the emerging opportunities. Q3CY17 Total Fed. Govt. Securities Percent Moreover, simultaneous growth of fixed investment loans in both segments mirror a broad based enhancement of productive capacity in the future. Therefore, going forward, improved supply of goods and services can be expected. Q3CY16 PIBs Q3CY17 37 Q2CY17 Percent of Total Corporate Advances investment in government securities have remained the prime driver behind investments growth. Following the recent trend, banks have continued to invest in short-term Market Treasury Bills (MTBs) and have divested from Pakistan Investment Bonds (PIBs) and Sukuks (PKR 11.7 billion) during Q3CY17 (Table 4). MTBs Following are some key reasons behind the changing composition of investments in government securities:
8. Quarterly Performance Review of the Banking Sector , Q3CY17 | 8    The offer-to-target ratio (for PIBs auctions) has declined to 0.36 in Q3CY17 from 3.32 in Q3CY16, which reflects reduced banking sector interest in long-term government securities. There is a change in government’s maturity preferences for budgetary borrowings. The target amount for PIBs auction of PKR 300 billion in Q3CY17 was significantly lower than the PIBs maturity of PKR 772.6 billion: representing abated interest of government in long-term borrowings; and Higher investments in MTBs can also be seen as a market risk management strategy by banks, owing to expectations of a possible change in direction of interest rates in the future. during Q3CY17. Within customers’ deposits, saving deposits have increased by 1.9 percent (PKR 88.9 billion) while current accounts – non remunerative deposits experienced a decrease of 8.0 percent (PKR 339.4 billion).6 The fixed deposits has expanded by PKR 59.9 billion (2.2 percent growth) during Q3CY17. The analysis of long term deposits (i.e. fixed deposits (FD)) and advances (fixed investment advances (FIA)) yield critical insight. Steadily growing FIA in relation to total advances (TA) and persistent decline in share of FD in total deposits (TD) can expose banking sector to higher assets and liabilities mismatch, going forward (Figure 4). Figure 4 Growing Gap between Long Term Advances and Deposits Banks’ investment in corporate securities (TFCs, Bonds, debentures, fully paid up shares etc.) has decreased by 2.6 percent during Q3CY17. Particularly, banks’ investment in corporate debt instruments has declined by 1.3 percent (PKR 3.2 billion) while investments in shares/listed equity has declined by 0.9 percent (PKR 2.4 billion). This may be a manifestation of the ongoing volatility in the capital market.5 Based on the above discussion, it can be inferred that the changing composition of banks’ earning assets (towards short-term investments and longterm loans) points towards repositioning by banks to remain profitable in the wake of evolving macroeconomic environment. The deposits of the banking sector have seen a marginal increase of 0.3 percent in Q3CY17 (13.7 percent on YoY). Analysis reveals that customers’ deposits (94.9 percent share in deposits) have decreased by 1.3 percent (PKR 163.1 billion) 36 34 32 30 28 26 24 22 20 Q3CY08 Q1CY09 Q3CY09 Q1CY10 Q3CY10 Q1CY11 Q3CY11 Q1CY12 Q3CY12 Q1CY13 Q3CY13 Q1CY14 Q3CY14 Q1CY15 Q3CY15 Q1CY16 Q3CY16 Q1CY17 Q3CY17 22 FIA as % of TA FD as % of TD The gap between longer term assets and liabilities (maturing after 5 years) are also growing and it has reached to PKR -1.4 trillion in Q3CY17. In this perspective, banks need to bring risk mitigation strategies (such as mobilizing long term and stable deposits) to narrow down the prevailing assetsliabilities mismatch (Figure 5.) Saving deposits and current account (non remunerative) deposits’ share in customers’ deposits stand at 37.0 percent and 31.0 percent, respectively. 6 Surplus on revaluation of listed shares held by banks has declined by PKR 8.8 billion during Q3CY17. 5 32
9. Quarterly Performance Review of the Banking Sector , Q3CY17 | 9 Figure 5 Figure 6 Growing Assets and Liabilities Mismatch over 5 Years (PKR Billion-Stock) Banks' Borrowings (percent of total liabilities), Investments and advances (percent of total assets) Q3CY17 Q4CY16 Q1CY16 Q2CY15 Q3CY14 Q4CY13 Q1CY13 Q2CY12 Q3CY11 Q4CY10 Q1CY10 Q2CY09 Q3CY08 It is pertinent to mention that Islamic banking institutions have become a key source of deposit mobilization. In Q3CY17, IBIs have generated 24.7 percent of the total quarterly deposits inflows of PKR 36.1 billion. In outstanding term, Islamic banking institutions’ share in total banking sector deposits stand at 13.7 percent. 9 8 7 6 5 4 3 2 1 Q3CY04 Q2CY05 Q1CY06 Q4CY06 Q3CY07 Q2CY08 Q1CY09 Q4CY09 Q3CY10 Q2CY11 Q1CY12 Q4CY12 Q3CY13 Q2CY14 Q1CY15 Q4CY15 Q3CY16 Q2CY17 62 57 52 47 42 37 32 27 22 17 500 200 (100) (400) (700) (1,000) (1,300) (1,600) Borrowings (RHS) Investment Advances Overall equity of the banking sector has diluted by 1.1 percent over the current quarter against a 1.3 percent expansion in Q3CY16. This seems to be a result of decline in the share capital owing to merger of two local private banks, materialized in July, 20177 and settlement payment made by a large bank. The growth in the banking sector has been Banks’ reliance on borrowings continues as depicted supported by the expanding banking sector infrastructure. The data shows that banking by an increase of 1.1 percent (PKR 30.6 billion) during Q3CY17, both from local and foreign sources. sector has added another 115 branches and 122 However, borrowings from SBP (repo) have declined ATMs during Q3CY17; while 122 additional by 12.0 percent (PKR 151.0 billion). Repo borrowings branches have been linked to the online network (Table 5). There has also been expansion in the from the interbank market have increased by 18.6 plastic cards, which is in tandem with the increase percent (PKR 95.9 billion), while the overall unsecured borrowings by banks have also increased in credit card loans. Moreover, the growing banking sector has absorbed an additional 7,088 employees by 7.7 percent (PKR 48.9 billion). during the reviewed quarter. Majority of the increase in unsecured borrowings Table 5: Banking Sector Infrastructure-Commerical Banks As of June 30, As of September have come from abroad (14.2 percent). As a result, 2017 30, 2017 Growth in (No.) (No.) Q3CY17 the foreign currency liabilities in total liabilities have inched-up to 12.3 percent in the reviewed quarter T otal Bank Branches 13,417 13,532 0.9% Online Branch Network 13,290 13,412 0.9% from 12.0 percent in Q3CY16. However, this is still AT Ms 12,578 12,846 2.1% below the average of 13.3 percent since Q3CY09. Point of Sale (POS) Machines 53,140 48,919 -7.9% Analysis of the banks’ borrowing (excluding those from SBP) pattern reveals that reliance of banks on financial institutions has been increasing (Figure 6). It is reflected by the fact that the interbank borrowing as a percentage of total liabilities has reached to 8.3 percent; highest level since Q3CY04, indicating growing interconnectedness among the financial institutions. AT M Propriety only Cards 3,779,641 3,900,244 3.2% Credit Cards 1,292,136 1,333,916 3.2% 17,604,687 18,413,689 4.6% 8,176,589 8,195,187 0.2% 193,670 200,758 3.7% Debit Card Social Welfare Cards Employees Source: SBP 7 http://www.sbp.org.pk/notifications/bprd/2017/ntf3.htm
10. Quarterly Performance Review of the Banking Sector , Q3CY17 | 10 Appendix A- Seasonality in Advances (Sector-Wise) 150 Advances Flows in PKR Billion Textile 100 50 0 -50 -100 Q1 Q2 120 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016 2017 Trend Sugar 80 20 60 15 100 Cement 1.5 1.0 0.5 80 60 40 40 10 0.0 -0.5 5 20 20 -1.0 0 0 -1.5 0 -2.0 -5 -20 -2.5 -20 -10 -40 -60 -40 Q1 40 Q2 Q3 Q4 -3.0 -15 -3.5 Q1 150 Chemicals and Pharmaceuticals Q2 Q3 Q4 Energy (Production and Transmission) 35 30 30 100 25 20 50 20 10 15 0 0 10 -50 -10 5 -100 -20 Q1 Q2 Q3 Q4 0 Q1 Q2 Q3 Q4
11. Quarterly Performance Review of the Banking Sector , Q3CY17 | 11 B. Soundness of the Banking Sector The overall risk profile of the banking sector remains within tolerable bounds in Q3CY17. This can be gauged through the Banking Sector Stability Map (BSSM) which depicts risk levels, in relation to historical performance; along seven different dimensions i.e. capital adequacy, asset quality, public sector exposure, residual growth, interconnectedness, earnings and liquidity (Figure 7). 8 Figure 7 Banking Sector Stability Map Capital Adequacy Liquidity Instability Asset Quality The significant risk dimension i.e. the asset quality has improved due to reduction in NPLs and enhanced provision coverage (Provision-to-NPLs). With cash recoveries outweighing fresh NPLs, seasonal reversals of agricultural NPLs and upgrade of some classified loans, the stock of NPLs decreased by PKR 3.0 billion to reach PKR 611.8 billion during Q3CY17(Figure 8). Aging of NPLs shows that most of the current level of the NPL corresponds to the period of build-up witnessed in CY09-CY12. Exposure to Public Sector Stability Earnings borrowings; which, though has increased reliance on non-core sources, yet it remains reasonable. Earnings have declined as growth in operational expenses has outpaced the growth in core income. Figure 8 8 Each dimension comprises of various financial soundness indicators, and then the dimensions are scaled for mapping risk ranging from zero to one. Lower risk scale value corresponds to higher stability, and vice versa. For details on BSSM please see Technical Appendix in Financial Stability Report, 2015 (http://www.sbp.org.pk/FSR/2015/pdf/TechnicalAppendix.pdf) Fresh NPLs(LHS) Change in NPLs over Qtr(LHS) Q3CY17 Q1CY17 Q3CY16 Q1CY16 Q3CY15 Q1CY15 Q3CY14 Q1CY14 Q3CY13 Q1CY13 Q3CY12 Q1CY12 The current quarter is characterized by consistent improvement in asset quality, sound liquidity position and slightly declined yet robust capital adequacy (well above the required level) and diluted exposure to public sector. Interconnectedness within the banking sector has increased due to expansion in lending/borrowing from financial institutions (excluding SBP), but these are a small portion of total liabilities of banks and their overall impact remains limited. Similarly, residual growth has also slightly increased owing to increase in assets financed by 100 80 60 40 20 (20) (40) (60) (80) Q3CY11 Sep-17 Q1CY11 Jun-17 Q3CY10 Sep-16 Q1CY10 Sep-15 Residual Growth Q3CY09 Fresh NPLs and recoveries (PKR billion) Interconnecte dness 1000 900 800 700 600 500 400 300 200 100 0 Total Recovery(LHS) NPLs(RHS) With decline in classified loans, various asset quality indicators have also improved. NPLs to Loans ratio has decreased to 9.2 percent in Q3CY17 (11.3 percent in Q3CY16), which is lowest since Q4CY08. With improvement in provisions coverage (Provisions to NPLs) ratio to 85.3 percent compared to 83.7 percent in the last quarter, netNPLs to net-loans ratio has also decreased to 1.5 percent in Q3CY17 (2.1 percent in Q3CY16). The easy monetary policy stance, as manifested in lower weighted average lending rates (WALR), has
12. Quarterly Performance Review of the Banking Sector , Q3CY17 | 12 led to improvement in the repayment capacity of the borrowers. Further, there is a downward trend in both the number of non-performing borrowers and quantum of fresh NPLs (Figure 9). assets in earning liquid assets i.e. call and repo lending (Figure 10).10 Figure 10 Growth rate of Liquid Assets (Percent) Figure 9 200% Lower interest rates impacting Classified Advances (Percent) and number of non-performing borrowers (in '000') 150% 100% Q1CY17 Cash and Due from treasury Banks Call Money Lending Federal government securities Q2CY17 Q3CY17 Balances with other banks Repurchase agreement lending Analysis shows that significant portion of banks liabilities are maturing within 3 months. However, banks hold sufficient liquid assets to meet these liabilities (Figure 11). In fact, the overall liquid assets to short-term liabilities ratio has risen to 107.2 percent from 106.0 percent in Q2CY17. Figure 11 Maturity Profile of short-term assets/liabilties(trillions) 8 6 4 2 0 Assets maturing within 3 months Assets maturing in 3 months-1 yr Q3CY17 The fund based liquidity position of the banking sector reveals availability of sufficient readyfunding buffers to meet contractual and unforeseen obligations. Almost 54.5 percent of total assets constitute liquid portfolio in Q3CY17 compared to 53.7 percent in Q2CY17. While in the last quarter the seasonal build-up of liquid assets was concentrated in the non-earning cash and balances with treasuries, increasing inter-bank activity for placement of liquidity has led to parking of liquid Q4CY16 Q2CY17 Connected lending9, another dimension of asset quality, has remained small and have been hovering around 2 percent of the advances portfolio over the last decade. While lending to related parties increased over the quarter by 18.7 percent (against an 8.7 percent increase in the similar quarter last year), given the small size of portfolio and NPLR of less than 0.01 percent, there are minimal concerns from concentration of loans to related parties. Q3CY16 Q1CY17 Q3CY17 Q1CY17 Non-Performing Borrowers(RHS) 0% Q4CY16 GNPLR 50% Q3CY16 WALR Q3CY16 0 Q1CY16 5 Q3CY15 100 Q1CY15 200 7 Q3CY14 9 Q1CY14 -100% Q3CY13 -50% 300 Q1CY13 400 11 Q3CY12 13 Q1CY12 500 Q3CY11 15 Q1CY11 600 Q3CY10 17 Q1CY10 700 Q3CY09 19 Liabilities maturing within 3 months Liabilities maturing in 3 months-1 yr The liquidity position further exhibits enhanced ability of the sector to meet any unforeseen requirements as the liquid assets to total deposits ratio has improved by 1.1 percentage point to 76.0 percent over the quarter (Figure 12). Excluding the 9 Advances to entities related to banks through ownership/ common directorship, and individuals through employment linkages. 10 This excludes investments in provincial government securities which are stagnant.
13. Quarterly Performance Review of the Banking Sector , Q3CY17 | 13 fixed deposits, the liquidity cover improves to 97.2 percent against 95.3 percent in the previous quarter. Figure 12 Liquid Assets to Deposits (percentage) 120% 100% 80% 60% 40% Q3CY17 Q2CY17 Q1CY17 Q4CY16 Q3CY16 Q2CY16 Q1CY16 Q4CY15 Q3CY15 Q2CY15 Q1CY15 Q4CY14 0% Q3CY14 20% Liquid Assets to Total Deposits Liquid Assets to Deposits( excluding customer fixed desposits) The market-based liquidity, in response to calibrated interventions by SBP, has remained satisfactory as limited upward pressure has been witnessed in the overnight repo rate. Average daily overnight repo rate at 5.79 percent has stayed much closer to SBP’s target rate of 5.75 percent than the previous quarter’s daily average of 5.82 percent and last year’s corresponding average daily rate of 5.85 percent (Figure 13). Movement of Overnight Repo Rate (Daily Data) 6.50 6.00 5.50 5.00 1-Jul-16 22-Jul-16 12-Aug-16 2-Sep-16 23-Sep-16 14-Oct-16 4-Nov-16 25-Nov-16 16-Dec-16 6-Jan-17 27-Jan-17 17-Feb-17 10-Mar-17 31-Mar-17 21-Apr-17 12-May-17 2-Jun-17 23-Jun-17 14-Jul-17 4-Aug-17 25-Aug-17 15-Sep-17 4.50 ONR Ceilng Rate Policy Rate The low interest rates are impacting the profitability through decline in yield spread and evaporating gain on sale of securities. However, Net Interest Income (NII) has started to pick-up pace (rise of 0.8 percent), led by 10.5 percent increase in interest earned on advances to customers. The share of interest earned on advances in total interest earned has increased to 42.2 percent from 39.5 percent last year. On the contrary, the share of investment (dominated by low yield government securities) in interest earnings has reduced to 54.9 percent from 57.6 percent as in Q3CY16. Thus, the growing advances (quantity impact) are offsetting the low interest (price) impact, to some extent. Analysis of the Islamic banks reveals that their bottom-line performance has remained promising during the first three quarters of CY17. The profits (before tax) have improved by 44.9 percent due to a significant 51.5 percent growth in advances (net). Overall, the downturn in earnings along with asset expansion have jointly pushed the Return on Assets (before tax) (ROA) down to 1.6 percent in Q3CY17 from 1.8 percent in Q2CY17 and 2.1 percent in Q3CY16. Likewise, Return on Equity (before tax) (ROE) has dropped to 19.1 percent in Q3CY17 from 21.9 percent in Q2CY17 and 23.8 percent in Q3CY16. Figure 13 4.00 earnings by 6.1 percent only. However, lower provisioning (on YTD basis) has helped offset some of the decline in profits. Floor Rate Year-to-date (YTD) earnings of the banking sector (i.e. profit before tax) have declined by 16.2 percent as compared to last years’ decline of 7.3 percent. Besides low interest rates and higher administrative expenses, the decline in earnings is due to settlement payment made by a large bank which, if excluded, would result in decline in Bank wise data indicates that number of loss making banks has remained unchanged at 5 during Q3CY17 as compared to Q3CY16, though the composition has changed (Figure 14). The contribution in profits was relatively more broadbased in Q3CY17 as contribution of top five banks has declined to 57.4 percent from 63.7 percent in Q3CY16.
14. Quarterly Performance Review of the Banking Sector , Q3CY17 | 14 bonds and equity instruments (low interest rate and equity price risks).12 Figure 14 Banking sector profitability (pre-tax) (PKR billion) Q3CY17 [above 10] 8 [5, 10] 5 [0, 5] 15 [less than 0] 5 Q3CY16 [above 10] 7 [5, 10] 6 [0, 5] 17 [less than 0] 5 0 5 10 15 20 25 30 No. of Banks Capital Adequacy Ratio (CAR) of the banking sector has slightly moved downward from 15.6 in the last quarter to 15.4 percent in Q3CY17, however, it is still well above the minimum regulatory required level of 10.65 percent. Generally, the third quarter is characterized by improvement in CAR due to decline in advances and hence the Total Risk Weighted Asset (TRWA). However, decline in CAR during the current quarter may be attributed to two main reasons (i) the TRWA has stayed un-changed due to rise in credit risk weighted asset and (b) eligible capital of the banking sector has slightly declined due to oneoff settlement payment made by a large bank to a foreign regulator.11 Banks’ exposure to public sector has diluted by 120 bps since the corresponding quarter last year mostly because of reduction in investments in government securities (44.8 percent of total assets). Although the BSSM considers public exposure as a concentration risk to a single entity (Government), it may be worth noting that it mainly comprises of government bonds which are considered liquid and are also credit-risk free. In the nutshell, the analysis of banking sector soundness during Q3CY17 suggests that i) NPLs exhibit seasonality and improvement in asset quality is driven by suppressed addition to the stock of NPLs; ii) even with lower profitability the solvency position of the sector is comfortable and capable of withstanding additional one-off tail events that eroded profitability; iii) liquidity is in comfortable zone; and iv) interconnectedness, though increasing, has not been alarming. The mix of risk weighted assets within TRWAs show some contrasting pattern. The Credit Risk Weighted Assets (CRWAs) – comprising 77 percent share in TRWAs - have risen by 1.2 percent. Against this the Market Risk Weighted Assets (MRWAs) – with 10 percent share in TRWAs – have declined by 6.9 percent mainly due to dip in long-term government 12 The 11 By excluding this penalty amount, the CAR of the banking sector would have increased to 15.75 percent during Q3CY17. rising portion of short-term MTBs in investment portfolio explains the low interest rate risk due to smaller maturities. The reduced portfolio of listed instruments in banking book signals lower equity price risk.
15. Quarterly Performance Review of the Banking Sector , Q3CY17 | 15 C. Banking Sector Outlook for Q4CY17 The seasonal pattern along with robust growth in Large Scale Manufacturing Index (LSM) observed during Jul-Sep 2017 suggests that advances to private sector will rise in Q4CY17. The core funding source of the banks i.e. deposits are likely to improve in the upcoming quarter for two reasons. First, banks would proactively seek to mobilize deposits in order to meet the anticipated rise in private sector advances. Second, the expected increase in advances, would further improve deposits base due to the feedback effect. The risks to the resilience of the banking sector are likely to remain muted in Q4CY16. Despite narrowing return margins and anticipated rise in risk weighted assets (due to expected uptick in advances), Capital Adequacy Ratio (CAR) is expected to remain well above the minimum regulatory requirement. The interest income from advances is likely to further rise (quantum impact of expected increase in advances) which in turn will compensate the reduced earnings from low yielding government bonds.
16. Quarterly Performance Review of the Banking Sector , Q3CY17 | 16 Annexures Annexure A Balance Sheet and Profit & Loss Statement of Banks PKR million Financial Position ASSETS Cash & Balances With Treasury Banks Balances With Other Banks Lending To Financial Institutions Investments - Net Advances - Net Operating Fixed Assets Deferred Tax Assets Other Assets TOTAL ASSETS LIABILITIES Bills Payable Borrowings From Financial Institution Deposits And Other Accounts Sub-ordinated Loans Liabilities Against Assets Subject To Finance Lease Deferred Tax Liabilities Other Liabilities TOTAL LIABILITIES NET ASSETS NET ASSETS REPRESENTED BY: Share Capital Reserves Unappropriated Profit Share Holders' Equity Surplus/Deficit On Revaluation Of Assets TOTAL PROFIT AND LOSS STATEMENT Mark-Up/ Return/Interest Earned Mark-Up/ Return/Interest Expenses Net Mark-Up / Interest Income Provisions & Bad Debts Written Off Directly/(Reversals) Net Mark-Up / Interest Income After Provision Fees, Commission & Brokerage Income Dividend Income Income From Dealing In Foreign Currencies Other Income Total Non - Markup / Interest Income Administrative Expenses Other Expenses Total Non-Markup/Interest Expenses Profit before Tax and Extra ordinary Items Extra ordinary/unusual Items - Gain/(Loss) PROFIT/ (LOSS) BEFORE TAXATION Less: Taxation PROFIT/ (LOSS) AFTER TAX CY12 CY13 CY14 CY15 Q3CY16 CY16 836,605 184,746 170,758 4,013,239 3,804,140 248,673 66,805 386,188 9,711,154 858,512 185,423 275,939 4,313,323 4,110,159 259,800 80,306 403,233 10,486,693 723,664 149,631 429,380 5,309,630 4,447,300 277,030 67,077 702,550 12,106,261 909,429 198,395 360,772 6,880,765 4,815,827 310,102 65,644 602,301 14,143,234 1,106,360 156,287 331,997 7,624,525 5,052,083 320,935 67,288 474,307 15,133,782 1,184,521 168,394 551,695 7,509,164 5,498,813 336,376 64,681 517,412 15,831,058 112,275 1,027,098 7,293,698 55,160 52 70,399 270,262 8,828,945 882,209 129,227 722,643 8,310,529 40,070 34 19,731 321,690 9,543,923 942,770 137,651 1,001,447 9,229,773 44,329 33 37,149 448,432 10,898,816 1,207,445 145,089 1,766,145 10,389,260 51,366 50 47,622 420,935 12,820,468 1,322,767 154,495 2,011,892 11,092,103 61,525 45 64,445 424,917 13,809,423 1,324,359 182,858 1,942,458 11,797,867 59,330 41 61,109 434,598 14,478,261 1,352,797 427,583 194,543 148,169 770,295 111,914 882,209 482,091 176,095 157,492 815,678 127,102 942,780 587,053 189,242 227,151 1,003,446 203,999 1,207,445 619,862 192,039 290,908 1,102,809 219,958 1,322,767 580,073 199,717 312,400 1,092,189 232,169 1,324,359 579,882 205,314 344,615 1,129,812 222,985 1,352,797 CY12 792,749 454,182 338,567 39,668 298,899 54,720 21,630 21,620 39,602 137,572 436,471 251,349 6,100 257,450 179,021 842.88 178,178 59,946 118,232 CY13 777,398 444,047 333,350 40,162 293,188 62,579 14,599 20,972 41,941 140,091 433,280 266,199 4,633 270,832 162,448 (4.64) 162,453 50,019 112,434 CY14 919,821 504,990 414,830 25,323 389,507 70,421 14,098 28,396 54,434 167,349 556,856 304,588 5,726 310,313 246,543 3.79 246,539 83,171 163,368 CY15 981,760 485,575 496,185 38,874 457,311 82,640 16,910 22,824 86,369 208,743 666,053 330,006 7,231 337,237 328,817 0.51 328,816 129,811 199,006 Q3CY16 701,993 337,693 364,300 10,128 354,172 65,349 12,061 10,172 57,253 144,835 499,007 262,074 3,661 265,735 233,272 0.30 233,272 94,358 138,913 CY16 938,026 453,232 484,793 5,305 479,489 90,266 17,187 14,015 74,260 195,728 675,217 356,183 5,003 361,186 314,031 0.27 314,030 124,117 189,914 Q3CY17 1,187,502 151,989 614,993 8,600,272 6,093,710 368,717 71,262 471,213 17,559,657 192,909 2,845,369 12,609,411 60,616 25 47,201 460,030 16,215,562 1,344,095 507,715 263,358 383,162 1,154,235 189,860 1,344,095 Q3CY17 725,651 358,317 367,334 3,012 364,322 73,985 12,041 11,830 46,012 143,868 508,190 283,614 5,460 289,074 219,115 23,717.28 195,398 83,677 111,721
17. Quarterly Performance Review of the Banking Sector , Q3CY17 | 17 Annexure B Distribution of Deposits PKR billion DEPOSITS Customers Fixed Deposits Saving Deposits Current accounts - Remunerative Current accounts - Non-remunerative Others Financial Institutions Remunerative Deposits Non-remunerative Deposits Break up of Deposits Currecy Wise Local Currency Deposits Foreign Currency Deposits CY12 7,294 6,972 2,078 2,642 343 1,868 41 321 214 107 7,294 6,310 984 CY13 8,311 7,975 2,216 3,094 381 2,241 43 336 217 119 8,311 7,129 1,182 CY14 9,230 8,886 2,268 3,467 323 2,764 64 344 201 143 9,230 7,983 1,247 CY15 10,389 9,943 2,425 3,863 331 3,254 69 446 393 53 10,389 9,042 1,347 Q3CY16 11,092 10,629 2,535 4,253 379 3,376 86 463 303 160 11,092 9,884 1,208 CY16 11,798 11,199 2,670 4,342 409 3,685 92 599 385 214 11,798 10,548 1,249 Q3CY17 12,609 11,969 2,751 4,668 505 3,899 145 641 425 215 12,609 11,202 1,407
18. Quarterly Performance Review of the Banking Sector , Q3CY17 | 18 Annexure C C1: Segment-wise Advances(Grosss) and Non Performing Loans (NPLs) CY15 Corporate Sector Fixed Investments Working Capital Trade Finance SMEs Sector Fixed Investments Working Capital Trade Finance Agriculture Sector Consumer sector i. Credit cards ii. Auto loans iii. Consumer durable iv. Mortgage loans v. Other personal loans Commodity financing Cotton Rice Suger Wheat Others Staff Loans Others Total Q3CY16 Advances NPLs 3,533,889 1,556,224 1,269,905 707,759 318,298 71,442 216,856 30,000 291,183 335,583 24,666 95,089 326 54,404 161,099 594,121 17,488 19,073 78,305 390,201 89,054 103,406 153,659 5,330,138 433,657 209,772 146,854 77,031 82,966 10,695 65,606 6,665 37,815 29,047 2,384 2,686 69 13,467 10,441 7,015 1,314 3,403 1,922 200 176 1,284 13,660 605,444 Infection Advances Ratio 12.3 3,689,535 13.5 1,801,992 11.6 1,167,987 10.9 719,555 26.1 335,266 15.0 75,761 30.3 218,091 22.2 41,414 13.0 293,197 8.7 359,903 9.7 27,067 2.8 116,824 21.0 303 24.8 61,753 6.5 153,955 1.2 635,649 7.5 9,130 17.8 10,530 2.5 46,243 0.1 504,551 0.2 65,195 1.2 102,922 8.9 157,815 11.4 5,574,287 NPLs 443,632 197,070 164,529 82,033 84,746 11,706 64,704 8,337 46,269 33,295 2,498 2,667 69 12,102 15,960 4,611 1,148 2,829 405 133 95 2,060 16,715 631,326 Amount in PKR million, ratio in percent Q3CY17 CY16 Infection Ratio 12.0 10.9 14.1 11.4 25.3 15.5 29.7 20.1 15.8 9.3 9.2 2.3 22.6 19.6 10.4 0.7 12.6 26.9 0.9 0.0 0.1 2.0 10.6 11.3 Advances 4,056,705 1,911,181 1,371,718 773,806 404,618 88,294 270,820 45,504 294,339 371,804 28,307 125,898 318 61,609 155,671 619,347 17,816 18,858 46,097 467,010 69,566 104,139 162,128 6,013,080 NPLs 431,280 193,440 155,375 82,465 82,078 11,149 62,584 8,345 38,064 30,159 2,340 2,600 67 10,894 14,258 4,571 1,140 2,761 392 135 145 1,409 17,104 604,666 Infection Ratio 10.6 10.1 11.3 10.7 20.3 12.6 23.1 18.3 12.9 8.1 8.3 2.1 21.2 17.7 9.2 0.7 6.4 14.6 0.8 0.0 0.2 1.4 10.5 10.1 Advances 4,492,789 2,139,462 1,457,303 896,025 376,898 94,706 226,706 55,485 307,459 429,298 43,574 149,893 609 75,470 159,752 722,076 63,351 14,649 11,609 561,848 70,619 112,666 174,409 6,615,596 NPLs 430,557 196,050 150,893 83,614 78,713 12,580 57,745 8,388 48,699 30,271 2,351 2,710 73 10,790 14,346 6,184 735 1,243 2,830 134 1,242 1,802 15,586 611,813 Infection Ratio 9.6 9.2 10.4 9.3 20.9 13.3 25.5 15.1 15.8 7.1 5.4 1.8 12.1 14.3 9.0 0.9 1.2 8.5 24.4 0.0 1.8 1.6 8.9 9.2 C2: Sector-wise Advances(Gross) and Non Performing Loans (NPLs) amount in PKR million, ratio in percent CY15 Agribusiness Automobile/Transportation Cement Chemical & Pharmaceuticals Electronics Financial Individuals Insurance Others Production/Transmission of Energy Shoes & Leather garments Sugar Textile Total Advances NPLs 473,845 53,312 57,623 223,608 81,159 148,136 454,622 379 2,223,916 681,463 25,388 144,716 761,973 5,330,138 40,315 12,331 7,361 13,517 10,456 9,601 45,779 1 215,255 40,698 3,811 8,549 197,771 605,444 Q3CY16 Infection Ratio Advances NPLs 8.5 23.1 12.8 6.0 12.9 6.5 10.1 0.2 9.7 6.0 15.0 5.9 26.0 11.4 571,671 82,498 60,254 244,563 70,781 168,200 522,171 3,480 2,134,828 822,337 24,369 141,288 727,848 5,574,287 51,613 12,211 6,894 14,044 12,187 10,527 57,594 1 209,368 36,594 3,728 20,029 196,537 631,326 CY16 Infection Advances Ratio 9.0 14.8 11.4 5.7 17 6 11 0 10 4 15 14 27 11 548,098.7 95,274.4 71,722.4 250,091.6 78,173 182,648 550,384 3,013 2,285,719 892,059 27,171 176,250 852,476 6,013,080 NPLs 41,706 12,604 6,789 12,780 13,326 10,544.3 58,023 1 205,981 31,094.7 3,770 15,563.3 192,483 604,666 Q3CY17 Infection Ratio Advances NPLs 7.6 13.2 9.5 5.1 17.0 5.8 10.5 0.0 9.0 3.5 13.9 8.8 22.6 10.1 607,332 99,843 85,552 271,800 91,179 206,725 609,144 4,584 2,587,821 943,568 25,782 227,259 855,008 6,615,596 51,828 12,260 6,610 13,195 13,748 10,410.3 57,010 1 205,237 34,012.0 4,277 16,305.4 186,920 611,813 Infection Ratio 8.5 12.3 7.7 4.9 15.1 5.0 9.4 0.0 7.9 3.6 16.6 7.2 21.9 9.2 C-3: Classification wise Non Performing Loans (NPLs) and Provisions (specific) PKR million OAEM Sub Standard Doubtful Loss Total CY13 NPLs Provisions 13,785 26 50,202 11,320 32,353 14,336 511,070 428,513 607,410 454,195 CY14 NPLs Provisions 15,260 57,179 14,748 36,746 16,306 495,514 433,552 604,698 464,606 * based on unaudited Quarterly Report of Condition (QRC) submitted by banks. CY15 NPLs Provisions 17,475 40,649 8,539 28,044 11,523 519,277 468,847 605,444 488,909 Q3CY16* CY16 NPLs Provisions NPLs Provisions 27,098 22,599 53,884 11,101 34,260 7,291 34,513 15,113 34,175 16,746 515,832 466,338 513,631 466,870 631,326 492,553 604,666 490,907 Q3CY17 NPLs Provisions 28,080 33,725 7,254 39,500 15,986 510,508 469,152 611,813 492,393
19. Quarterly Performance Review of the Banking Sector , Q3CY17 | 19 Annexure D Financial Soundness Indicators of the Banking Sector Indicators CAPITAL ADEQUACY Risk Weighted CAR^ Tier 1 Capital to RWA ASSET QUALITY NPLs to Total Loans Provision to NPLs Net NPLs to Net Loans Net NPLs to Capital^^ EARNINGS Return on Assets (Before Tax) Return on Assets (After Tax) ROE (Avg. Equity& Surplus) (Before Tax) ROE (Avg. Equity &Surplus) (After Tax) NII/Gross Income Cost / Income Ratio LIQUIDITY Liquid Assets/Total Assets Liquid Assets/Total Deposits Advances/Deposits percent Q2CY17 Q3CY17 CY10 CY11 CY12 CY13 CY14 CY15 Q3CY16* CY16 13.9 11.6 15.1 13.0 15.6 13.0 14.9 12.6 17.1 14.3 17.3 14.4 16.8 13.6 16.2 13.0 15.6 12.7 15.4 12.7 14.9 66.7 5.5 26.7 15.7 69.3 5.4 23.1 14.5 71.5 4.6 19.9 13.3 77.1 3.4 14.7 12.3 79.8 2.7 10.1 11.4 84.9 1.9 7.7 11.3 82.7 2.2 9.1 10.1 85.0 1.6 7.3 9.3 83.7 1.6 8.0 9.2 85.3 1.5 7.2 1.5 1.0 15.5 9.6 74.7 52.7 2.2 1.5 23.0 15.1 76.0 51.1 2.0 1.3 21.4 14.2 71.1 54.1 1.6 1.1 17.9 12.4 70.4 57.2 2.2 1.5 24.3 16.1 71.3 53.3 2.5 1.5 25.8 15.6 70.4 47.8 2.1 1.3 23.8 14.2 71.6 52.2 2.1 1.3 23.8 14.4 71.2 53.1 1.8 1.1 21.9 13.1 70.7 55.8 1.6 0.9 19.1 10.9 71.9 56.5 36.1 47.1 61.6 45.5 59.5 53.6 48.4 64.5 52.2 48.6 61.3 49.5 49.2 64.5 48.2 53.8 73.3 46.4 55.6 75.9 45.5 53.7 72.1 46.6 53.8 74.9 48.7 54.5 76.0 48.3 ^ Data for Dec-13 and onwards is based on Basel III, and data from CY08 to Sep-13 is based on Basel II with the exception of IDBL,PPCBL, and SME Bank, which is based on Basel I. ^^ Effective from June 30, 2015, Regulatory Capital, as defined under Basel requirements, has been used to calculate Net NPLs to Capital Ratio. Prior to Jun-15, Balance Sheet Capital was used for calculation of this ratio.
20. Quarterly Performance Review of the Banking Sector , Q3CY17 | 20 Annexure E Group-wise Composition of Banks CY15 Q3CY16 CY16 Q3CY17 A. Public Sector Com. Banks (5) First Women Bank Ltd. A. Public Sector Com. Banks (5) First Women Bank Ltd. A. Public Sector Com. Banks (5) First Women Bank Ltd. A. Public Sector Com. Banks (5) First Women Bank Ltd. National Bank of Pakistan National Bank of Pakistan National Bank of Pakistan National Bank of Pakistan Sindh Bank Ltd. Sindh Bank Ltd. Sindh Bank Ltd. Sindh Bank Ltd. The Bank of Khyber The Bank of Khyber The Bank of Khyber The Bank of Khyber The Bank of Punjab The Bank of Punjab The Bank of Punjab The Bank of Punjab B. Local Private Banks (22) AlBaraka Bank (Pakistan) Ltd. B. Local Private Banks (22) AlBaraka Bank (Pakistan) Ltd. B. Local Private Banks (21) AlBaraka Bank (Pakistan) Ltd. B. Local Private Banks (20) AlBaraka Bank (Pakistan) Ltd. Allied Bank Ltd. Allied Bank Ltd. Allied Bank Ltd. Allied Bank Ltd. Askari Bank Ltd. Askari Bank Ltd. Askari Bank Ltd. Askari Bank Ltd. Bank AL Habib Ltd. Bank AL Habib Ltd. Bank AL Habib Ltd. Bank AL Habib Ltd. Bank Alfalah Ltd. Bank Alfalah Ltd. Bank Alfalah Ltd. Bank Alfalah Ltd. BankIslami Pakistan Ltd. BankIslami Pakistan Ltd. BankIslami Pakistan Ltd. BankIslami Pakistan Ltd. Burj Bank Ltd. Dubai Islamic Bank Pakistan Ltd. Dubai Islamic Bank Pakistan Ltd. Dubai Islamic Bank Pakistan Ltd. Burj Bank Ltd ## Dubai Islamic Bank Pakistan Ltd. Faysal Bank Ltd. Faysal Bank Ltd. Faysal Bank Ltd. Faysal Bank Ltd. Habib Bank Ltd. Habib Bank Ltd. Habib Bank Ltd. Habib Bank Ltd. Habib Metropolitan Bank Ltd. Habib Metropolitan Bank Ltd. Habib Metropolitan Bank Ltd. Habib Metropolitan Bank Ltd. JS Bank Ltd. JS Bank Ltd. JS Bank Ltd. JS Bank Ltd. MCB Bank Ltd. MCB Bank Ltd. MCB Bank Ltd. MCB Bank Ltd. MCB Islamic Bank Ltd. MCB Islamic Bank Ltd. MCB Islamic Bank Ltd.* MCB Islamic Bank Ltd. Meezan Bank Ltd. Meezan Bank Ltd. Meezan Bank Ltd. Meezan Bank Ltd. NIB Bank Ltd. SAMBA Bank Ltd. NIB Bank Ltd. NIB Bank Ltd. SAMBA Bank Ltd. Silk Bank Ltd SAMBA Bank Ltd. SAMBA Bank Ltd. Silk Bank Ltd Soneri Bank Ltd. Silk Bank Ltd Silk Bank Ltd Soneri Bank Ltd. Standard Chartered Bank (Pakistan) Ltd. Soneri Bank Ltd. Soneri Bank Ltd. Standard Chartered Bank (Pakistan) Ltd. Summit Bank Ltd Standard Chartered Bank (Pakistan) Ltd. Standard Chartered Bank (Pakistan) Ltd. Summit Bank Ltd United Bank Ltd. Summit Bank Ltd Summit Bank Ltd United Bank Ltd. United Bank Ltd. United Bank Ltd. C. Foreign Banks (4) Bank of Tokyo - Mitsubishi UFJ, Ltd. C. Foreign Banks (4) Bank of Tokyo - Mitsubishi UFJ, Ltd. C. Foreign Banks (4) Bank of Tokyo - Mitsubishi UFJ, Ltd. C. Foreign Banks (5) Bank of Tokyo - Mitsubishi UFJ, Ltd. Citibank N.A. Citibank N.A. Citibank N.A. Citibank N.A. Deutsche Bank AG Deutsche Bank AG Deutsche Bank AG Deutsche Bank AG Industrial and Commercial Bank of China Ltd. Industrial and Commercial Bank of China Ltd. Industrial and Commercial Bank of China Ltd. Industrial and Commercial Bank of China Ltd. Bank of China Limited^ D. Specialized Banks (4) Industrial Development Bank Ltd. D. Specialized Banks (4) Industrial Development Bank Ltd. D. Specialized Banks (4) Industrial Development Bank Ltd. D. Specialized Banks (4) Industrial Development Bank Ltd. Punjab Provincial Co-operative Bank Ltd. Punjab Provincial Co-operative Bank Ltd. Punjab Provincial Co-operative Bank Ltd. Punjab Provincial Co-operative Bank Ltd. SME Bank Ltd. SME Bank Ltd. SME Bank Ltd. SME Bank Ltd. Zarai Taraqiati Bank Ltd. Zarai Taraqiati Bank Ltd. Zarai Taraqiati Bank Ltd. Zarai Taraqiati Bank Ltd. All Commercial Banks (31) Include A + B + C All Commercial Banks (31) Include A + B + C All Commercial Banks (30) Include A + B + C All Commercial Banks (30) Include A + B + C All Banks (35) Include A + B + C + D All Banks (35) Include A + B + C + D All Banks (34) Include A + B + C + D All Banks (34) Include A + B + C + D * “MCB Islamic Bank Limited” was declared as a Scheduled Bank with effect from September 14, 2015. ** Burj Bank Ltd was aquired by Al Baraka Bank on October 30, 2016. ^SBP declared "Bank of China Limited" as a scheduled Bank with effect from September 18, 2017.