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State Bank of Pakistan building in this undated image. — AFP/File
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KARACHI: The central bank said Thursday that the security policies created by its impact on new prices and global economic growth could become challenges of Pakistan’s economy.
The State Bank of Pakistan’s financial stability reviews in 2024 that the global environment offers a mixed picture for the domestic economy. Global commodity prices are falling, and except for the Federal Reserve, the main central banks’ interest rate is continuing to reduce interest rates. It added, “However, the US -based trade policy changes may have the implications of the financial policy as well as the global financial situation. In addition, the change in the protection policies of other major economies can adversely affect the chances of global growth, which can also react to Pakistan.”
The SBP said in the report, “It deserves to emphasize that although the domestic economy is permanently on the path to recovery, it is very important to maintain the risks of external buffers and external financing risks, depending on the continuous progress on structural reforms, which depends on the continuous progress on structural reforms.”
It states that the latest diagnosis of the banking sector examination has revealed that the sector is expected to be flexible with a different, fictitious, but proud shock on the expected horizon of the three years and is expected to maintain its minimum investment.
The financial sector is financially and practically flexible
The report highlights that the economic conditions have improved significantly last year, such as reducing inflation pressure and consequently significant financial softening, financial stability, stable rupee dollar equation, selection in economic activity and external account improvement balance. Against this backdrop, the financial sector, which is increasing at a decent speed of 17.8 %, maintained its operational and financial flexibility during 2024.
Among the economic environment, the fluctuations in the financial markets decreased. The banking sector performed stable and maintained its financial good. In 2024, banks’ balance sheet increased by 15.8 %.
According to the report, extension of banks’ assets was through both investment and development. The private sector was observed due to the rehabilitation of economic activity, facilitating monetary policy and the rehabilitation of taxpayers for tax policy for government securities. This tax policy also reduced the deposit mobilization, which further increased the dependence of banks on loans.
The current level of credit for the banking sector remained within a comfortable limit, as the non -performance loan (NPLS) fell from 7.6 percent in December 2023 to 6.3 percent in December 2024.
During the implementation of IFRS-9, supply coverage improved further, which has allowances and provisions for debt losses than residual NPL reservoirs, which identify the least net credit risk for solones.
The volume of earnings remained stable, while important indicators of profit continued to observe moderation over a year. However, the capital’s capacity ratio improved by 20.6 % by the end of December 2024 and the least regulatory requirements went beyond the requirements. In the banking sector, Islamic banking agencies witnessed a tremendous increase in the base of the assets and a significant extension of the branch network, which also reflects the SBP’s attention on promoting financial services according to Sharia. Along with credit risk, the flexibility of Islamic banks remained stable in 2024. Nevertheless, the microfinance banks are under pressure.
The review shows that the non -bank financial sector has done mixed performance. The DFI’s balance sheet signed a contract while the NBFIS made a significant extension. Moreover, the insurance sector continued to perform permanently. Although a comfortable location has been presented towards the financial sector supply, the demand has led to severe financial conditions and economic activity before the demand. In particular, the sale of the non -financial major corporate sector observed the pressure and moderation of income. However, the sector’s liquidity profile and payment capacity remained comfortable. As an encouragement, though, the reputation and payment capacity of the major banking sector has remained stable over the past year.
Digital transactions advanced the pace of retail transactions. SBP signed a Memorandum of Understanding (MoU) with the Arab Monetary Fund to enable the integration of raids with cross -border payment systems, dwarf from the Gulf region, SBP. Further, Raast maintained a strong growth speed, which, especially after the introduction of the pepper module from the person at the end of 2023, was acquired.
