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Loan infection ratio of banking sector rises to 9.3 percent

infection ratio

The banking sector’s infection ratio rose from 8 percent in December 2018 to 9.3 percent at the end of March this year, according to the latest data released by the State Bank of Pakistan (SBP). 

The infection ratio is the relationship between the non-performing portfolio and the total loan portfolio. It is used to work out the non-performing part of the portfolio (the loans which are not easy to recover) and the total loan portfolio of a bank or other financial entity. The ratio is used to evaluate infection in the loan portfolio between two different time periods or among different organizations. 

Read more: PM directs banks to simplify loan procedure under Naya Pakistan Housing Scheme 

The users of this financial management technique are the central banks, credit rating agencies, and institutions in the business of giving credit ones/loans. State Bank of Pakistan has issued the data which shows that the infection of the banking sector has increased from 8 percent in December 2018 to 9.3 percent by the end of March 2021.  

Surprisingly, despite many facilities, given to the textile sector, this sector has appeared as the biggest defaulter. The advance to the textile sectors was Rs 1,383.9 billion while the defaulter amount was Rs 166.4 billion. The infection ratio here is 12%. As compared to the textile sector, the advances to the production and energy sectors were Rs 1,438.4 billion but the infection ratio for these sectors was only 4.8%. The infection ratio of electronics was at 19.4%.  

Non-performing loans of this sector were Rs 23.3 billion against the advances of Rs 119.9 billion. The default amount of the agribusiness sector was Rs 72.9 billion and the infection ratio was 12 %. The advances, forwarded to the agribusiness sector were Rs 609 billion.  

Another astonishing story is of the sugar sector which has been amongst those sectors which earned very high profit but this sector is also amongst the highest defaulters. The price of the sugar also moved up beyond the limits. The ratio of this sector was 16.3 %.  

The Non-performing loans of the sugar sector were Rs.58.24 billion against the amounts of advances which was Rs 358.2 billion. The cement sector has a low infection i.e.,3.2%. The Non-performing Loans of this sector were Rs.146 billion against the total advances of Rs.193 billion.  

The infection ratio of the electronics sector was 19.4% and NPLs were Rs 23.3 billion against the number of advances which was Rs 119.9 billion. 

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