Banking Industry’s Non-Performing Loans Reach an All-Time High

As the banking Industry’s lending to different sectors is increasing, its Non-Performing Loans (NPLs) also grew to Rs. 623 billion by the end of June 2018, an all-time high level, according to data updated by State Bank of Pakistan.

Non-Performing Loans (NPLs) are loans and advances whose markup/interest or principal is overdue by 90 days or more from the due date. A second example of an NPL includes payments less than 90 days late, but the lender no longer believes the debtor will make future payments.

The corporate sector remains the worst area for banks with respect to NPLs having a size of Rs. 432 billion in gross NPLs. It is followed by SME with piled up NPL value of Rs. 75 billion. The NPLs issued in the agriculture sector stand at Rs. 61 billion. NPLs under the consumer financing stand at Rs.27 billion. NPLs under the category of others reached Rs. 19 billion by the end of June 2018.


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During the past one and half years, NPLs have continued to pile up in the banking industry with increasing loans issued by the banks, however, the recovery against NPLs was quite impressive. The infectious ratio fell from double-digit of 10.1 percent to 7.9 percent.

Stable and low-interest rates were one of the reasons for the improvement in the infectious ratio of the banking industry which means the growth of NPLs slowed down against the loans issued by the banks.

According to the State Bank of Pakistan (SBP), the banking industry witnessed an increase of Rs. 18.9 billion on the account of Non-Performing Loans registered from 2016 to June 2018. During the period, various commercial banks have issued loans of Rs. 1,840 billion.

Overall, banking industry advances surged to Rs. 7.85 trillion to different sectors with a portion of Non-Performing Loans stand at Rs 623 billion.



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