Recently released sector data shows aggregate deposit growth are up 4.1 per cent YTD (till Aug 19, 2011) driven by high NDA (Net Domestic Assets), while credit offtake remained subdued, and was recorded down 2.8 per cent YTD. On spreads front, July number is up 2bps MoM (37bps YoY) at 7.88 per cent – taking lieu from the flat like KIBOR in the period, with August onward number likely to adjust for the recent deposit rate cut. Moreover, on the asset quality front, aggregate NPL accretions came in at Rs5.7 billion, down from last quarter’s Rs25.7 billion.
Deposits up 4.1 per cent YTD, offtake down 2.8 per cent
Although industry wide deposits have taken a dip in 3Q to date (Aug 19th), likely on account of an inflated/window dressed June end number, they have grown 4.1 per cent YTD and reached Rs5.3 trillion (US$61.5b). A similar trend of late has also been witnessed in credit offtake, with aggregate number down by Rs108 billion to Rs3.40 trillion (US$39.1 billion), with credit to private sector showing net retirement of Rs84 billion (so far in FY12). Investments however continued to rise, up by almost a quarter from December and stand at Rs2.6 trillion (US$30.3 billion).
July spreads peak to 7.88pc
July spreads data revealed by the central bank show a 2bps MoM (37bps YoY) rise at 7.88 per cent. As per the breakup, average lending rates are down 2bps MoM, with a 4bps decline witnessed in the deposit rate. Going forward, we are likely to view some contraction as numbers adjust for a 50bps DR cut in end July, with average KIBOR down 43bps in August, said Mustufa Bilwani at JS.
NPLs accretion slows
Although sector NPL rose at a slower pace in 2Q-2011, by Rs5.7 billion, compared to Rs25.7 billion and Rs53.8 billion in the previous two quarters respectively, we remain wary of NPL risk in 2H-2011, he added. As per the break up, NPLs for local banks and specialised banks are up Rs5.2 billion and Rs4.0 billion respectively, same for public sector banks is a reversal of Rs3.4 billion. The public sector number is surprising; as NBP alone has witnessed accretions of Rs14.3 billion in 2Q, and thus a significant reversal would have come in possibly from Bank of Punjab.
