Banking System in Pakistan


The Banking sector is an integral part of the country’s financial services industry. There are 39 scheduled banks (including 11 foreign banks) operating in Pakistan. Competition is relatively high, especially after the challenging capitaadequacy bench marks set by the State Bank of Pakistan to nourish a stable banking system. Attracting foreign investment and winning profitable customers are the only options left to banks for survival.

This year, United Bank Limited (UBL) has been declared as the country’s best bank in terms of its most significant contributions to national development and effective management of resources. A five-member jury of experts at Pakistan Banking Awards 2016 also declared MCB Bank, Bank Alfalah Limited (BAFL), Habib Bank Limited (HBL), Meezan Bank and Tameer Microfinance Bank (TMB) as winners in seven other categories of banking industry.

Quarterly Performance Review (QPR) of the banking sector for the period January-March, 2016 released by the State Bank on 9th June, 2016, shows that the banking industry of the country continues to earn handsome profits by investing their loan-able resources largely in government securities. Net profits raked in by the banking sector during the quarter amounted to Rs 52.96 billion (profits before tax were Rs 81.6 billion), showing an improvement of 2 percent over the same period of last year. According to the asset portfolio, banks invested Rs 7.421 trillion and most of the investments were made in government papers, mostly in Pakistan Investment Bonds (PIBs), as overall advances observed seasonal decline owing to net retirements against commodity financing and SME financing.

Lastly, global uncertainties may impact the economy and consequently financial sector of Pakistan through trade and financial linkages with Asia, the EU, and the UK. In addition, the low commodity prices, though beneficial for import dependent countries like Pakistan, could also impact revenues of export oriented sectors – including textile sector – which may impact the repayment capacity of borrowers of these sectors; which may stress the asset quality of the banks. However, Pakistan’s banking system is fully capable of confronting these challenges.


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