Tag: Banking Sector

  • Pakistan’s forex reserves dip by $173 million, SBP cites debt repayments

    Pakistan’s forex reserves dip by $173 million, SBP cites debt repayments

    The State Bank of Pakistan (SBP) has reported a decrease of $173 million in its foreign exchange reserves on a weekly basis, revealing a total of $8.04 billion as of February 2, according to data released on Thursday.

    The country’s overall liquid foreign reserves are reported to stand at $13.09 billion, with commercial banks holding net foreign reserves amounting to $5.05 billion.

    The SBP has identified debt repayments as the primary factor contributing to the decline in reserves. In an official statement, the SBP stated, “During the week ending on 2-Feb-2024, SBP’s reserves decreased by US$ 173 million to US$ 8,044.0 million due to debt repayments.”

    This follows a trend from the previous week when Pakistan’s central bank reserves experienced a decrease of $54 million. The ongoing challenges related to debt servicing continue to impact the nation’s foreign exchange reserves.

  • Govt’s bank borrowings jump 3.15x in six months

    Govt’s bank borrowings jump 3.15x in six months

    The government’s reliance on bank borrowings has displayed a concerning upward trajectory, intensifying the nation’s debt burden and raising doubts about its optimistic economic outlook. 

    Recent data for the six months ending December 2023 reveals a substantial increase in borrowing through banks, soaring to Rs3.214 trillion compared to Rs1.019 trillion during the same period last year—an alarming surge of 3.15 times.

    Notably, this surge occurs amid a caretaker government’s administration, signalling that within six months, the government has amassed a level of debt equivalent to the entire fiscal year 2023. 

    While governments commonly borrow from banks to address financial gaps, refinance debts, and fund public projects, the scale of the borrowing indicates a matter of heightened concern.

    Despite the Federal Board of Revenue’s commendable performance in tax collections, with historic achievements of over Rs1 trillion in December and Rs4.468 trillion in 6MFY24, these impressive figures clash with the substantial reliance on bank borrowings.

     Economic apprehensions grow as these borrowing patterns contradict the government’s objective of optimising the allocation and expenditure of public funds.

    The caretaker government’s limited authorisation of Rs300.904 billion for development funds, out of a total allocation of Rs950 billion for ongoing and new social sector uplift projects, contrasts starkly with the escalating borrowing figures, hinting at the possibility of an expanding Public Sector Development Programme (PSDP).

    Furthermore, this escalating trend in government borrowings raises concerns among economists and financial experts who emphasise the importance of fiscal discipline. 

    The growing debt levels may not only impact the country’s creditworthiness but also strain future budgetary allocations, potentially limiting the government’s capacity to respond to unforeseen economic challenges. 

    As stakeholders closely monitor these developments, there is a pressing need for transparent fiscal policies and strategic measures to ensure a sustainable and resilient economic future for the nation.

  • Bank deposits in Pakistan hit all-time high, showing 17.80% increase in a day 

    Bank deposits in Pakistan hit all-time high, showing 17.80% increase in a day 

    In a statement released on Friday, the State Bank of Pakistan (SBP) announced that the country’s bank deposits had reached an all-time high.  

    On October 23, there was a notable increase of 17.80 per cent, amounting to Rs3,986 billion, compared to the figures on October 22. 

    According to the central bank, the total banking deposits for October 2023 reached a historic level of Rs26,000.398 billion. 

    Rupee expected to fall further 

    In other news, a Tresmark report suggests that the Pakistani rupee is anticipated to face pressure against the US dollar in the ongoing week until the completion of the International Monetary Fund’s (IMF) initial review of the country’s $3 billion loan programme.  

    The local currency experienced a depreciation of Rs2 or 0.60 per cent against the US dollar during the week, concluding at Rs287.03 on Friday.  

    It’s worth noting that the foreign exchange market was closed on Thursday due to a public holiday. 

    The IMF’s evaluation of Pakistan’s bailout package began on November 2, with expectations for the review to conclude by December 15. 

  • Pakistan Stock Exchange breaks six-year record, surpasses 50,000 points 

    Pakistan Stock Exchange breaks six-year record, surpasses 50,000 points 

    The recent surge in the performance of the benchmark KSE-100 Index at the Pakistan Stock Exchange (PSX) can be attributed to the combination of a positive earnings season and notable economic improvements. 

    On Tuesday, the index breached the significant 50,000-point threshold, marking the first time in over six years since June 7, 2017.

    Around 11 am, the benchmark index was trading at 50,017 points, reflecting a gain of 286 points, equivalent to a 0.58 per cent increase. However, it later retracted from this milestone. 

    This momentous achievement was supported by multiple factors, including an enduring upward trend observed in various sectors, such as automobile assemblers, commercial banks, cement, chemical, oil marketing companies, and oil and gas exploration firms.

    The bullish momentum on the Pakistan Stock Exchange has been a consistent theme, extending through 11 consecutive trading sessions. Intra-day trading on Monday nearly brought the KSE-100 Index to the 50,000 level, closing at 49,731.35 points. 

    One significant driver behind this surge has been the strengthening of the Pakistani rupee against the US dollar, with the exchange rate holding steady at around Rs275 in the inter-bank market.

    Additionally, the ongoing earnings season has instilled confidence in the market, with high expectations, especially in the banking sector, for positive financial results. These factors collectively contribute to the robust performance witnessed in the Pakistani stock market.

  • Pakistan Stock Exchange crosses 47,000-mark after five weeks

    Pakistan Stock Exchange crosses 47,000-mark after five weeks

    The Pakistan Stock Exchange (PSX) enjoyed a favourable trading session on Wednesday, with its key KSE-100 Index surging above the 47,000 level for the first time in five weeks. This uptrend was primarily driven by the robust performance of the banking sector.

    Throughout the trading session, the KSE-100 Index remained firmly in positive territory, ultimately settling at 47,079.83. This represented a notable gain of 323.03 points, or 0.69 per cent. The last instance the benchmark index closed above the 47,000 mark was on August 28.

    In a post-market report, Ismail Securities, a prominent brokerage house, attributed the positive momentum in the equity market to increased liquidity, particularly within the banking sector.

    On the preceding day, Tuesday, the KSE-100 Index managed to eke out a 0.28 per cent gain in a session characterised by a relatively narrow trading range.

    Shares of 342 companies were traded, with 172 witnessing an increase, 134 recording a decline, and 36 remaining unchanged.

    Topline Securities, another respected brokerage house, envisions the KSE-100 Index approaching the 50,000 level in a potential “pre-election rally.” They expressed their belief that the Pakistani market could experience an 8–10 per cent surge in the lead-up to the elections, assuming a smooth election process and the approval of the IMF tranche in November, stating this in an earlier note.

    Simultaneously, the Pakistani rupee continued its strengthening trend against the US dollar, registering a 0.37 per cent gain in the interbank market on Wednesday. According to the State Bank of Pakistan, the rupee settled at 284.68 after an increase of Rs1.04, marking the 20th consecutive appreciation against the greenback.

    Trading activity also saw an uptick, with the all-share index volume rising to 330.2 million shares from Tuesday’s 213.2 million. The value of traded shares also increased, reaching Rs7.3 billion compared to Rs6.1 billion in the previous session.

  • Customers express frustration over inability to pay for Netflix with Islamic Cards while being charged Sood for late payments

    Customers express frustration over inability to pay for Netflix with Islamic Cards while being charged Sood for late payments

    A Faysal Bank customer expressed his discontent with the bank on Facebook after his credit card was converted into a shariah-compliant card called “Noor Islamic Card”. The customer complained that he is unable to make transactions with Netflix or use the card for any “unislamic” purposes.

    He posted on Facebook, saying, “Just converted my Faysal Bank Credit into Noor Islamic Card. Now I can’t use the card on Netflix, bcoz they have become Islamic, and they cannot allow their customers to use their card on any unislamic things.”

    Other users also commented on the post, with one user pointing out that the bank still charges interest, which they refer to as Musawah payment, if a bill is not paid on time. Another user claimed that their conventional credit card was converted into a Noor Islamic Card without their consent and the bank’s response to their complaint was unsatisfactory.

    Many users expressed their frustration with the bank’s service, with some even stating that they would be closing their Faysal Islamic Card account due to the Netflix payment issue. One user also pointed out that Meezan Bank has the same policy regarding Netflix transactions.

    Another user shared their experience, stating that their Faysal Bank card did not work when they tried to buy movie tickets and food at the bank’s food court on the same day that their card was converted from a conventional card to an Islamic one. It was only then that they realized that their card had been converted.

    The conversion of conventional credit cards into shariah-compliant cards is a growing trend in Pakistan’s banking sector. While this is seen as a positive move by some customers, others are skeptical of the benefits and limitations of shariah compliant cards.