So MCB posts extraordinary first quarter results just when the banking sector must take centre stage if liquidity is to be brought back to choked credit markets, betting on just enough private sector offtake to grow out of persistent stagflation. Good development, especially since conditions have been just about right for much of the sector to follow suit.
Despite hawks prevailing in the monetary policy committee, the business environment has been busy over the last quarter, especially in the commerce ministry. Word has it that Islamabad’s recent spirited drive to reach out to new export markets has facilitated a welcome return to form on the part of commercial banks. As trade increases, so does the need for banks to innovate, offer facilities, do more business, create more money, and generate greater multiplier.
Yet more than the exogenous support, it is positive movement on NPLs that stands out, indicating a clear shift in near-to-medium term outlook. Risk management problems have long been central to the banking sector’s willingness to cater to abnormal government borrowing. Posturing proactively on the issue shows MCB’s policy in the days ahead, developing instruments aimed at facilitating private sector growth and innovation, the life and blood of an emerging economy.
Expect banks to do better in the local bourse, with hoards that rode the recent cement boom diversifying into banking scrips – a trend with its own irrefutable logic since increased cement demand that fed on enhanced trade opportunities played no small part in improving bank earnings over the quarter just ended.
MCB has set the tone with an impressive first quarter show. As the sector gains momentum and adds to market buoyancy, its bigger players will realize the central role it has to play in the wider economy. Coming quarters will tell much about which way the economy will tilt, and what role its money lenders play.
