KARACHI: The banking system posted profit before tax of Rs 80 billion over the quarter indicating year on year on growth of 58 percent, says State Bank of Pakistan (SBP).
According to the quarterly performance review of the banking system for a period of three months ending on March 31, 2015 released by SBP here on Tuesday, the return on assets (ROA) increased to 2.6 percent in March 15 from 1.9 percent in March 2014.
Solvency of the system improved further as capital adequacy ratio (CAR) increased to 17.4 percent by the end of March 2015 from 17.1 percent on Dec. 31, 2014 (against local bench-mark of 10 percent and international benchmark of 8 percent).
During the quarter, asset base of the banking system rose by 3.5 percent (Rs 422 billion) to reach Rs 12.5 trillion.
This growth came on account of increase in banks’ investment in government securities, while advances observed net retirements primarily due to seasonal adjustments and drop in commodity prices.
With continuing accumulation of huge stock of liquid assets in the form of government securities, the liquidity of the system remained at comfortable levels.
According to the report, the asset quality slightly deteriorated, non-performing loans to gross loans ratio increases by 50 bps to 12.8 percent and net NPLs to net loans increased by 9 bps to 2.8 percent during January to March 2015.
However, with increase in capital base during the quarter, capital impairment ratio (Net NPLs to Capital) declined by 27 bps to 9.8 percent, thus decreasing risk to the future earnings and equity of the banking system.
State Bank of Pakistan has commenced publishing quarterly performance review (QPR) of the banking sector from December 2014.
