KARACHI - The market share of top five banks in the country has squeezed to 50.80 per cent during Jan-March 2007 from 52.30 per cent in 2006.
Although the banking system was highly skewed towards top few banks, yet this concentration has now been declining.
From Jan-March 2007 the share of top five banks has declined to 50.8 per cent from 52.3 per cent in December 2006. By size and assets the top five banks are National Bank of Pakistan, Habib Bank Limited, MCB Bank, UBL and Allied Bank.
However, the share of next five banks has marginally increased to 23.2 per cent in the first quarter of this calendar year from 22.80pc in calendar year 2006.
According to a latest report of SBP, the market risk and liquidity risk profiles of the banking system remained subdued. Volatility in the inter-bank rates and the key benchmark rates remained moderate. Yield curve based on PKRV rates experienced slight flattening since yield spread between the short-term and longer-term rates squeezed during the quarter.
Re-pricing GAPs were well within the acceptable limits. Rupee-dollar exchange rate hovered around Rs 60.70 during the quarter. Both the net open position and swap points remained positive. Direct equity exposure of the banking system experienced a decline to Rs33.9 billion from Rs39.9 billion in CY06.
As a result, equity investments in terms of capital also declined to 7.9 per cent from 9.9 per cent in CY06. Liquidity of the banking system eased during the quarter. A decline in the loans has also softened the loans to deposit ratio (net of export refinance) to 66.0 percent from 70.3 percent in CY06. Since major portion of the additional inflows shifted towards investments, liquid assets in terms of liquid liabilities also increased to 34.0 percent from 31.9 percent. Moreover, the investments’ classification strategy of the banks away from the Held to Maturity category, also adds to the market based liquidity of the banking system.
Another important development during March 07 quarter was a change in deposit mix, which shows that the share of fixed deposits increased to 31.5 percent from 30.0 percent during the quarter since it attracted around 41 percent of the additional inflows of deposits or Rs66.4 billion. A shift away from non-remunerative deposits has also been witnessed, thus reducing its share to 22.1 percent from 23.4 percent in CY06. Weighted average rates of return on fresh deposits are gradually on rise and hovered around 5.35 to 5.58 percent. Rate spread of fresh deposits and loans i.e. spread between the weighted average rate of return on incremental loans and fresh deposits has actually declined few basis points from 5.58 percent in December 2006 to 5.47 percent in March 07 and then further squeezed to 5.18 percent in May-07. Overall spread on outstanding loans and deposits also experienced a slight decline to 7.3 percent in March 07 from 7.4 percent in December 2006.
On the back of growing branch network and licensing new Islamic banks, the Islamic banking experienced further growth. Total balance sheet size of Islamic banks grew by around 14 percent to Rs135.6 billion over the quarter. With an increase in capital by 18 percent, capital to total assets ratio improved to 15.4 pc from 13.7pc in CY06.
Courtesy by “ The Nation “