Banks Assets Surge to All-time High at Rs. 30 Trillion in 2021

The banking sector exhibited a consistent performance with all major indicators touching all-time high marks including assets, deposits, financing and profits in 202, according to the Economy Survey of Pakistan FY2021-22.

The asset base of the banking sector expanded by 19.6 percent in CY21 (14.2 percent in CY20) to stand at Rs. 30 trillion. The expansion was mostly driven by growth in advances and investments.

Advances (net) increased by 22.1 percent (YoY) to stand at Rs. 10.1 trillion in CY21 as compared to the COVID induced minimal growth of 0.5 percent in CY20. The growth in advances was broad-based, however, the textile sector availed the highest financing during CY21.

Banks’ investments rose by 22.0 percent over the year to reach Rs. 14.5 trillion by the end Dec-2021. Around 95 percent of the expansion in total investments came from investments in Government securities, reflecting the increased need of the government for bank credit.

Deposits of the banking sector surged by 17.3 percent over the year to Rs. 21.7 trillion by the end of CY21 (16.1 percent increase in CY20). Current and Savings deposits together contributed to a 70.9 percent rise in total deposits in CY21.

Several factors, such as the revival of economic activities, upbeat momentum of workers’ remittances, sizeable increase in Roshan Digital Accounts (RDAs), increased use of digital payment modes and improvement in the rate of return on deposits contributed to the rise in deposits during CY21.

Asset Quality indicators of the lending portfolio improved due to contained growth in NPLs as well as better provisioning. The infection ratios, on both gross as well as a net basis, declined over the year CY21. With high provisions coverage (provisions to NPLs) of 91.2 percent, the net NPLs to net loans ratio declined to 0.7 percent by the end Dec-2021 from 1.2 percent as of the end Dec-2020.

Solvency indicators such as Capital Adequacy Ratio (CAR) moderated to 16.7 percent b the end of Dec-2021 (18.6 percent at the end Dec-2020), largely due to healthy growth in advances. However, the prevailing CAR level remains well above the local and international minimum benchmarks of 11.5 percent and 10.5 percent, respectively.

The banking sector performed reasonably well during CY21. Its profit surged to Rs. 451 billion with yearly growth of 9.7 percent or Rs. 40 billion in 2021.

To create a conducive and thriving environment for the banking industry, the SBP continued to play its role within its regulatory and supervisory ambit during FY2022, the survey said.



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