Banking sector infection ratio rises to 9.3pc

KARACHI: The infection ratio of the banking sector has increased from eight per cent in December 2018 to 9.3pc at the end of March 2021, with the textile sector appearing as the biggest defaulter till the end of the first quarter of the current fiscal year (1QFY21).

Latest data shared by the State Bank of Pakistan (SBP) shows that the advance for the textile sector till March 2021 was Rs1,383.9 billion while the default amount was Rs166.4bn. The SBP reported the infection ratio was 12pc for this sector.

Textile remained the biggest defaulter despite lower advances compared to the production and energy transmission sector.

Textiles, sugar appear as the biggest defaulters

Contrary to the textile sector, advances to production and energy sector were higher at Rs1,438.4bn but the infection ratio was 4.8pc — much lower when compared with the textiles. The default amount of the production and energy transmission sector was Rs69.6bn which is 42 per cent of the textile sector’s default.

The highest infection ratio was of electronics at 19.4pc. Non-performing loans (NPL) of this sector were Rs23.3bn against the advances of Rs119.9bn.

In terms of amount, the agribusiness sector was the second biggest defaulter in the list of the State Bank. The default amount for this sector was Rs72.9bn while the infection ratio was 12pc. The advances to this sector were Rs609bn.

Sugar, which is the most talk about sector, is also one of the biggest defaulters despite making huge profits in billions. Sugar price have seen an increase during the last three years.

In terms of percentage, the infection ratio of sugar sector was second highest with 16.3pc. The NPLs of this sector reached at Rs58.24bn against advances of Rs358.2bn.

Cement has one of the lowest infection ratio with 3.2pc (insurance 2.3pc- the lowest infected ratio), with NPLs of Rs6.146bn against the advances of Rs193bn.

The highest infection ratio was of electronic sector with 19.4pc while the amount of NPLs rose to Rs23.3bn against the advance of 119.9bn.

In terms of default amount individuals are also on higher side as the NPLs of individuals were Rs64.2bn against the advance of 860.4bn; infection ratio was 7.5pc.

The financial sector with infection ratio of 5pc, defaulted with Rs11.35bn against the advances of 228.6bn.

However, the most interesting figure was of ‘Others’ who are the biggest defaulters in the list but were undefined by the State Bank.

The NPLs of the ‘Others’ were Rs339bn against the advances of Rs3433.4bn; it makes 40pc of the total defaults and 37pc of the total advances.

Though almost all banks are in profits mainly earning through investment in the government papers, the rising trend of NPLs would force the banks to adopt more cautious approach towards advances to private sector.