This website uses cookies to ensure you have the best experience. Learn more

Banking Sector Overview Essay

2987 words - 12 pages


The banking system, as a whole, remains healthy despite the economy going through a period of economic difficulty. The banking sector absorbed the build-up of non-performing loans in the system while maintaining profitability and robust balance sheets. Much of the credit for this must go to the SBP for the policies it has pursued over the last decade to ensure that banks are adequately capitalized and adhere to prudent risk management.

The investments, especially the Government papers, which declined in both absolute rupee terms as well as a proportion of total assets during the first FY08, registered a slight increase during the last quarter. ...view middle of the document...

The worsening business and economic environment somewhat increased the credit risk, which compelled the banks to adopt cautious lending strategy, particularly in consumer sector where the advances have been decreasing since the start of CY08. Some new loans have been issued of which a significant portion of these were disbursed to public sector enterprises (PSEs). Thus advances have shown a declining trend.

This rise in NPLs observed across all the banking groups except specialized banks, where NPLs have actually decreased. NPLs have been on the rise mainly due to poor economic performance of the economy and the FSV benefit therefore resulting in worsening of asset quality ratios.
Interestingly, in the wake of economic slowdown, banks seem to facilitate the businesses through rescheduling/ restructuring of loans; the Textile sector being the major beneficiary. Latest banking industry numbers show an effort to keep balance sheets clear of NPLs by recognizing and providing for NPLs on criteria that are more stringent. This approach might look costly in the meantime but in the long run it ll definitely benefit banks by providing a cushion to withstand losses.

The bank s profit after tax grew by 1.6% to Rs 15.536 billion as compared to last year. In a careful analysis, we see that bank has been able to withstand economic lows while still maintaining its profitability.

The net interest income grew by 16% to Rs 28.483Billion as compared to YF07 of Rs 24.463 billion. The interest earned in this year was 29% higher than previous years but it was matched by more than proportionate increase in interest expense by 37%. The main reason for the higher costs of funds is due to increase in the minimum rates of 5% return on deposits. Previously banks have saved a lot due to no protection of consumers on the returns. Furthermore, the returns on NSS (National Savings scheme) have also increased as part of tight monetary policy. These higher rates on NSS gave strong competition to deposits and also huge drains from the system. Also, this growth in net interest income is less than the industry average of 19.7%, thus the bank should take steps in this regard.

The Non interest income fell by 1.1%, though the industry average grew by 21%. Major decreases were seen in dividend income, Gain on Sale of securities and Income from Foreign Currencies. In most part of the last quarter the stock markets were closed due to shortage of liquidity and lack of investor confidence. These resulted in losses in values of securities and eventually the trade gains vanished due to collapse of stock markets. To match this revenue, the Non-markup expenses were up by 30.4%. So all in all, the Non-markup activities wore away profits. Wages, part of Non-markup expense was higher due to inflation in this year for the common reasons of fuel, power and food price hikes.

Return on Assets ratio stood at 3%, which is...

Other Papers Like Banking Sector Overview

Lone Disbrusment Essay

2557 words - 11 pages the report have a clear knowledge about the Islami Banking and get a detail overview about the Shahjalal Islami Bank Ltd. From the learning part of the report the readers can learn the advantages of various products and services of General Banking, Investment functions, Foreign Exchange activities and the financial condition of Dhaka Main Branch through graph and chart, and some suggestions about further development of the bank. As the study

Unethical Practice Essay

5078 words - 21 pages banking covers about 90 per cent of the banking sector. Islami Bank works with the concept of interest-free banking and it has proved that the new banking with interest free concept could be successful and expanded in the country. The Bank introduced projects like Rural Development Scheme, an investment project that conforms to social responsibility for the downtrodden in rural areas as its prime priority. The Rural Development Scheme has been

Commercial Banks And New Capital Regulation

3326 words - 14 pages role as the main form of a financial institution. Within the financial system it is crucial to have regulations and guidelines for financial institutions such as commercial banks to abide by and have the expectation that a minimum standard is to be consistently expected. Prescribing prudential standards for supervision of the banking sector is a necessity in increasing reliance and resilience with confidence in the banking sector, which is why

Information Technology (It) for Improving Banking Activities: - a Study on International Finance Investment and Commerce Bank Ltd

1395 words - 6 pages Activities-A study on IFIC Bank ltd” Dear Sir, It’s my pleasure to submit you my project paper on “Information Technology for improving Banking Activities-A study on IFIC Bank ltd.” I have completed my project paper on IFIC Bank ltd as a part of my study. Here is my overview on ‘Information Technology for improving Banking Activities-A study on IFIC Bank ltd. I have tried to explain my learning and experience which gathered knowledge from my thesis

Risk Management in Asia

3996 words - 16 pages risks to the Asian Banking sector and an overview of Asian financial crisis in 1997 and the current state of the South – East Asian economy. The Asian Financial Crisis of 1997 and the Result on Risk Management The Asian Financial Crisis was a time of economic turmoil that gripped Asia beginning in 1997. The meltdown started in Thailand when the Thai baht collapsed after it was taken off its peg to the US dollar and floated. This occurred due

Australia E Commerce Market Growth – JSB Market Research

3779 words - 16 pages players 1.2 Key e-commerce insights 1.2.1 Underlying trends 1.2.2 E-payments 1.2.3 Content Delivery Networks (CDNs) 1.2.4 Cloud computing and e-commerce 1.2.5 Security concerns 1.3 E-books and e-newspapers 1.3.1 Digital e-readers/e-books 1.3.2 The challenging newspaper publishing sector 1.4 Internet banking (E-banking) 1.4.1 The changing face of e-banking 1.4.2 Banks under e-pressure 1.4.3 Bitcoin 1.5 Global m-commerce

Stratagic Management Report on Hsbc

5173 words - 21 pages the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank with retrospective effect from 16 December 1971. State-owned commercial banks The banking system of Bangladesh is dominated by the 4 Nationalized Commercial Banks In which 3 is totally controlled by government and 1 (Rupali Bank) bank is controlled by both government and private sector., Nationalized Commercial Bank of Bangladesh: • Sonali Bank

Internship Report

2430 words - 10 pages complicated investment affairs. The Bank provides them with safety, liquidity, return, and safety of savings. The functions of the bank cover a wide range of banking and functional activities to individuals, firms, corporate bodies and other multinational agencies. A Bank is an economic institution whose main aim is to earn profit through exchange of money & credit instruments. The banking sector of Bangladesh is passing through a tremendous reform


3747 words - 15 pages Background of the research: BRAC Bank Ltd in our country top class contributor in banking system. In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceive an idea of balanced a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, BRAC Bank was created and commencement

Customer Satisfaction in Commercial Bank

1563 words - 7 pages report on “Customer Satisfaction: A Study on Standard Chartered Bank, which I have prepared based on my learning from twelve -week organizational attachment. I have tried my best to utilize the opportunity of working as an intern in a well reputed private commercial bank like Standard Chartered Bank. In this report I have tried to measure the customer satisfaction. This report includes a short overview of general banking activities, measuring

Joint Director

2706 words - 11 pages Bangladesh Bank 9 CET1 Ratio Minimum Capital Conservation Ratio (expressed as percentage of earnings) 4.5% - 5.125% 100% >5.125% - 5.75% 80% >5.75% - 6.375% 60% >6.375% - 7.0% 40% >7.0% 0%  10. Countercyclical buffer •Losses incurred in the banking sector can be extremely large when a downturn is preceded by a period of excess credit growth. •These losses can destabilize the banking sector and spark a vicious circle, whereby

Related Essays

History & Development Essay

4310 words - 18 pages Islamic Banking and Finance: History Development Slide #1 Some Issues History Of IBF Development of IBF -Overview- 2. Islamic Banking and Finance: History and Development History and Development of IBF in Bahrain Full Fledged IB vs. IB windows • Word ‘bank’ comes from the word ‘banco’ - A table or a bench on which Italian money-changers used to display their monies and records and conduct their transactions History of

Russian Commercial Banks Essay

1622 words - 7 pages ),Barclays  (England) and Goldman Sachs (USA)to understand the progress of developing Russian commercial banks. In 2012 active growth of retail lending in the Russian banking sector continued. Corporate lending was growing at slower rate and the share of corporate credit in the Bank assets decreased. At that, the share of deposits remained at a high level. Notwithstanding the fact that attraction of the population's funds grew at a slower rate

Termpaper Of Mis

4741 words - 19 pages progressive and dynamic financial institution in the country. The Bank had been widely welcome by the business community, from small entrepreneurs for forward-looking business outlook and innovative financing solutions. Thus, within this very short period it has been able to create an image for itself and has earned significant reputation in the country’s banking sector as a bank with vision. The company Philosophy –“efficiency is our strength

Transformation Of Banks Essay

4203 words - 17 pages respondents take against frauds. 2.2. INTRODUCTION The study presents a broad overview of the current state of the banking industry in India. It then goes on to identify some important forces for change and some important forces resisting change. Attention is paid finally to growth path of banking sector with technological advancement. It is depicted that banking is going to be intensely competitive and complex. The