Pakistan: SMEs Non-Performing Loans Slide By Rs 5 Billion In 2015’s First Quarter

In Pakistan, among small and medium-sized enterprises (SMEs), non-performing loans (or NPLs) fell by roughly 6 percent in the first quarter of 2015 from the final quarter of last year, according to the State Bank of Pakistan.

As reported by the Business Recorder on Thursday (July 9), the bank stated that either writeoffs or recovery of loans could be factors in the declines.

The reversal in the first quarter of this year stems what had been a rising tide of NPLs, and the latest tally stands at Rs 82.13 billion. And the decline is even more marked, at 7 percent year over year in the first quarter.

In another measure, the ratio of non-performing loans to total SME financing came to 31 percent in March of this year, down from 34 percent at the end of last year. That trend, should it continue, would spark more lending to the enterprises, said the Recorder. 

And, as the state bank noted, some financial institutions have brought down their SME NPLs through the first quarter. In one example, JS Bank Limited managed to recover all of its NPLs in the quarter. And another bank, Albaraka Bank (Pakistan) Limited, recovered more than half of the NPLs in the March period.

Overall outstanding SME financing in the sector slid by 9 percent to a total of roughly Rs 262 billion when compared to the previous quarter. But that total number is up more than 4.4 percent year over year. In other metrics, total SME outstanding financing was almost 6 percent of all financing, the bank stated. A majority of the financing is tied to working capital, with 72 percent of all outstanding financing, trailed by fixed investment at 16 percent and trade financing with 11 percent. Private banks held the majority of the financed facilities at 70 percent.

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