New Market Study Published: Pakistan Commercial Banking Report Q4 2010

Aug. 29, 2010 - PRLog -- Our outlook for the Pakistani banking sector remains relatively downbeat despite the potentially vast consumer market in the country. We expect Pakistan's shaky fundamentals to limit the pace of sector development and highlight the major systemic risk facing Pakistani bank: elevated government Pakistan has several characteristics that make for a favourable banking sector outlook: buoyant demographics, a domestic economy geared towards pr ivate consumption and an extremely under-banked population. However, we do not expect rapid sector development over the medium term as these positive factors are neutralised by an unstable security outlook and a below-potential growth path for the economy. Underlining the weakness of the Pakistani economy, despite some indications of modest improvement in recent months ( see out online service, July 6 2010, 'Caution Warranted Despite 4.1% Growth Estimate' ), is the still-elevated level of non-performing loans (NPLs) in the banking sector. As the chart below illustrates, these have not shown any improvement in 2010 and still account for about 4.0% of loans. That said, the number of NPLs does app ear to be stabilising and this suggests that they do not pose a systemic risk to the banking sector over the short-to-medium term.     Further indicators released by the State Bank of Pakistan (SBP) also suggest that the overall banking sector landscape will remain positive into the medium term. The consolidated leverage ratio was only 8.7% in March 2010, down from 12.2% in 2005, while the loan-to-deposit ratio is around 70%, indicatingequally rosy picture, with Tier 1 capital-to-weighted ri sk assets at 11.4% and the sector's capital adequacy ratio (based on the Basel II framework) at 13.7% in March 2010. Still Feeling The Squeeze Consolidated Net Interest Margin Source: SBP, BMI However, move beyond these ratio measures and things start to look a little less attractive. For one thing, profitability remains depressed compared to historical levels. As the accompanying chart shows, net interest margins remain under pressure, and at 522 basis points (bps) in March 2010 the aggregate is well below the minimum 700bps regularly enjoyed in previous years. The sector also has relatively high operating expenses, reducing the return on assets for the sector to just 1.1% in March 2010. Shaky Government Finances = Shaky Banking Sector We also highlight the risk posed by the state of the government's finances. As we have argued consistently ( see our online service, April 9 2010, 'Fiscal Overspend To Continue', and May 18 2010, 'IMF Support Welcome, But Fiscal Position Remains Precarious' ), Pakistan is fiscally dependant on funds from the IMF and aid donor countries. Without such support, we believe the country would face an extremely testing time staying solvent. While we expect international aid to remain forthcoming, this situation still represents a sizeable risk.

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Partial Table of Contents:

Executive Summary
- Table: Levels (PKRbn)
- Table: Levels (US$bn)
- Table: Levels At March 2010
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (PKRbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Pakistan Commercial Banking SWOT
- Pakistan Political SWOT
- Pakistan Economic SWOT
- Pakistan Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Pakistan Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Asia Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Asia Banking Sector Outlook
- Table: Asian Banks' Bond Portfolios
- Table: Asia Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset & Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans & Client Deposits, 2008-2009 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates & Bond Yields, 2009-2010
Islamic Banking Overview
Pakistan Banking Sector Outlook
Economic Outlook
- Table: Pakistan GDP By Expenditure, 2007-2015
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Pakistan's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Foreign Banks
- Table: Local Private Banks
- Table: Public Sector Banks
- Table: Specialised Banks
Company Profiles
- Habib Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (PKRmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- National Bank Of Pakistan
- Table: Stock Market Indicators
- Table: Balance Sheet (PKRmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- United Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (PKRmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
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Full Table of Contents is available at:
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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.