Analysts surprised by waiver of interest payments but view impact on banks as manageable
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An overview of the ECB s monetary policy strategy
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KARACHI: Classified assets of non-bank microfinance companies (NBMFCs) surged almost 347 per cent in 2020, according to the latest Financial Stability Review of the State Bank of Pakistan (SBP).
The central bank has dubbed the steep rise in the NBMFCs’ classified assets, which are loans with a high probability of default, a “real cause of concern”.
NBMFCs form the largest segment within the country’s non-bank financial institutions (NBFCs) after the asset management industry.
The SBP noted that the increase in associated provisioning has not been on a proportionate basis. This has resulted in a decline in the provisioning coverage from 54.5pc in 2019 to 41.5pc in 2020. Therefore, the ratio of classified assets to microcredit loans has risen from 1.5pc to 7.4pc in just one year.
Asset base of financial sector expands 14 % despite COVID-19: SBP
July 8, 2021
The Financial Stability Review (FSR) for CY20 issued by State Bank of Pakistan (SBP) on Wednesday indicated mild impacts of COVID-19 on the national economy while the financial system with over 14 percent expansion in asset base-exhibited resilience in a challenging environment.
The FSR highlights that Calendar Year 2020 was a challenging year for the financial sector as COVID-19 pandemic triggered deepest global recession since the Great Depression but in case of Pakistan, impact of coronavirus waves has been relatively mild as the output loss of 0.47 percent for FY20 was one of the lowest among Emerging Market and Developing Economies.