Fitch: Pakistan’s banking system improving
Fitch Ratings has said that the Pakistani banking system has, over the last decade, gradually evolved from a weak state-owned system to a slightly healthier and active private sector driven system. The agency notes in an upcoming special report that the private sector controls nearly 80% of the system assets, as opposed to the early 1990s when 90% of the system assets were controlled by the government.
The Pakistani banking system is made of 53 banks, which includes 30 commercial banks, four specialised banks, six Islamic banks, seven development financial institutions and six micro-finance banks.
The four largest commercial banks account for 44.2% of system assets, while eight second-tier banks account for a further 35% indicating moderate concentration. The system grew at a compounded annual growth rate (CAGR) of 17.8% between FYE01 and FYE06, supported by relatively strong growth in the domestic economy, with the underlying liability growth driven by both an influx of private and institutional capital, as well as inter-governmental receipts. Loans too grew at a strong CAGR of 24.2% during the same period, before slowing down to only 2% during the first nine months of 2007 (9M07) amidst greater political uncertainty, which in turn affected economic sentiment. — www.theasianbanker.com (February 29 2008)–