Includes special features of this country’s banking system and rules/laws that might impact U.S. business.
The banks have increased their loans to the government and the private sector credit has decreased in last few years. Though the banks’ investments in government securities are not as productive as lending to businesses and households, it has provided an avenue for banks for risk-free earnings and enabled them to post profits even in weak economic environment. The banking sector earnings continued to accumulate on the back of healthy returns on growing stocks of risk free government securities. In addition, the lower provisions also contributed towards buildup of profits. The financial sector in Pakistan is going through a major transition period. New groups are buying out Pakistan operations of foreign banks and the number of listed banks is also increasing. While the income from core banking activity is increasing due to higher business volume, earnings are also expected to further improve due to greater trends toward consumer finance, housing finance and enhanced lending to the agriculture sector.
Pakistan’s banking sector consists of commercial banks, foreign banks, Islamic banks, development finance institutions (DFI’s), and micro-finance banks. Presently there are 26 commercial banks, 6 DFI’s, and 11 micro-finance banks operating in the country.
Further details about banking in Pakistan are available here.