The State Bank of Pakistan (SBP) has reported an 11.5 percent expansion in the balance sheet footing of the banking sector for the first half of the calendar year 2024 (H1CY24), primarily driven by increased investments in government securities. This growth is highlighted in the SBP’s Mid-Year Performance Review of the Banking Sector for 2024.
The central bank noted that the government remained the primary borrower from the banking sector, a trend that significantly boosted the profits of the entire banking industry in the calendar year 2023. For the fiscal year 2025, the government plans to borrow over Rs. 9.3 trillion from banks, mainly to service its domestic debts.
The review, which covers the performance and soundness of the domestic banking sector from January to June, also includes insights into financial market performance and the results of the Systemic Risk Survey (SRS).
While advances showed contained growth due to net retirements by the private sector, there was a noted revival in long-term financing to small and medium enterprises (SMEs). The decline in private sector advances was less pronounced than in the first half of 2023, according to the SBP report.
On the funding side, deposits increased by 11.7 percent in H1CY24, driven largely by savings and current deposits. Despite the higher pace of asset growth, banks continued to rely on borrowing for additional funding. The asset quality of the sector remained satisfactory, with gross non-performing loans showing only a subdued increase.
