KARACHI: The local bank’s profitability has increased by 1.5 per cent or Rs816 million to Rs52.9 billion in the first quarter of calendar year 2016.
According to the quarterly banking statistics released by the State Bank of Pakistan (SBP), the Net Interest Margin (NIM) of banks narrowed down to 3.9% at the end of March, down from 4.4% a year ago, mainly because of a slowdown in the pace of profit growth.
Solvency of the banking sector, expressed as risk-weighted capital adequacy ratio (CAR), observed downward adjustment to 16.3% in March from 17.4% in March 2015. However, the SBP noted that the industry-wide average CAR was still above the minimum local required threshold of 10.25% and international benchmark of 8.625%.
Without naming the bank, the SBP said the slight drop in the CAR is due to the one-off accounting adjustment by a public-sector bank besides continued growth in private-sector advances and dividend payments by profitable banks.
The asset base of the banking sector registered an increase of 0.9% on a quarter-on-quarter basis in Jan-Mar. This growth was mainly contributed by banks’ investment in government securities, mostly Pakistan Investment Bonds (PIBs), as overall advances observed seasonal decline owing to net retirements against commodity financing and Small and Medium Enterprises (SMEs) financing.
