At a time when there were fears of US recession and banking stocks remained under pressure in 2011, large private banks in the country posted above average growth of 27 per cent in 2011, said the analysts.
“Our analysis is based on four large private banks (based on bank deposits and branches), including HBL, UBL, MCB and ABL, which contribute to more than 50 per cent share of the listed private banks’ deposits and represent approx. 60 per cent of the total branch network,” said Farhan Mahmood of Topline Research.
He said cumulative earnings of these four banks reached Rs66bn in 2011, up 27 per cent from 2010. Amongst listed private banks, these four banks contribute to 70 per cent of the market capitalisation. A bank-wise profitability shows UBL posted highest profitability growth (39 per cent), followed by HBL (33 per cent), ABL (23 per cent) and MCB (15 per cent).
Thanks to higher return on advances and better yield on government papers, the overall Net Interest Income (NII) of these four banks grew by 17 per cent. This shows impressive core banking operations as average 6-months KIBOR increased by 70bps in 2011 compared to 2010, while cost of funds remained on the lower side.
Similarly, the analyst said, with overall improvement in trade activities, better opportunities in forex and money market, non interest income of these big banks grew by impressive 21 per cent. Moreover, restrictive lending resulted into lower provisioning in 2011 which stood at Rs21.5bn, down 10 per cent.
“Though we expect earnings growth to slightly cool down in 2012 amid decline in interest rate, however, gradual recovery in economy and infrastructure spending could create appetite for credit and will impact positively on banks with lower ADR,” he said.
Moreover, Farhan said, with decline in interest rates, there is a high probability that NPL accretion would slowdown in 2012 which could limit overall provisioning.
The ongoing global recession fear may not impact local banks having no or very little exposure to global bonds and stocks, the market observer concluded.
In the context of Pakistan "mixed economy" means inefficient public sector mixed with private greed border lining extortion of consumers.Banks pay almost nothing to their depositors and lend to few on usurious rates and now their current hunting ground is Government that borrows at rates of interest unheard of for risk free credit.
In this macabre game only public will end up footing the bill via rampart inflation that would accelerate its disaffection of its rulers further and further.
Thanks God the banks were privatized ,other wise Government would have made them bankrupt and all the banks would be in dire financial problem like PIA -Pakistan railways and other institutions.
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