22:41
Unknown
KARACHI: Bank financing to the small and medium enterprises (SMEs) continued to decline during the second quarter (April to June) of the current calendar year (2012), owing to adverse economic conditions, energy shortages and rising non-performing loans, according to the latest report issued by the State Bank of Pakistan (SBP).
The SME financing by banks and development finance institutions (DFIs), which has been witnessing a declining trend since 2008, continued to maintain it slower pace in April-June period as the share of SMEs in total industry advances dropped to 6.6 percent at the end of the quarter under review.
It was registered at 7.1 percent in January-March 2012 and 8.2 percent in the corresponding quarter of the last calendar year, it said. However, the non-performing loans of the SME sector saw a decline of 2.7 percent as of June 30, 2012.
The State Bank of Pakistan in its report titled “Development Finance Review June 2012 revealed that the share of private sector banks in total SME loans outstanding was highest at 81.7 percent and their share increased by around two percentage points in the second quarter of 2012 from their share in the previous quarter.
Private sector banks are followed by public sector banks, which share around 14 percent of the total SME outstanding amount, it said.
The report also revealed that floods in Sindh and Punjab in two consecutive years of 2010 and 2011 practically annihilated the small units, which have little financial resources to rebuild and revitalise their businesses.
“Given the deteriorating business conditions for the SMEs, the banks also took a more risk-averse posture and diverted significant funds to less risky asset classes such as market treasury bills and commodity operations of the government, which further squeezed the available funds and aggravated the prevalent conditions for the SMEs,” it said.
During April-June 2012, total SME advances declined by 4.5 percent on quarter-on-quarter basis. However, the decline was more than 15 percent as compared to year-on-year basis.
Moreover, the number of SME borrowers reduced by around 24 percent on year-on-year basis, which indicates that small enterprises are worse hit by the prevailing macroeconomic conditions.
Although absolute amount of non-performing loans of the SMEs decreased by more than Rs2.7 billion to Rs96.4 billion from Rs99.2 billion during the previous quarter, the decline is offset by faster decline in the SME advances, resultantly the non-performing loans as a proportion of the SME advances increased as compared to the previous quarter, revealed the report.
A breakup of the enterprise-wise position shows that the biggest share of 46.5 percent was taken by the trading SMEs, followed by manufacturing SMEs with 35.9 percent and services SMEs with 17.6 percent, it said.
The working capital financing constitutes for more than 77 percent of the SME financing followed by trade finance and fixed investment with their shares of 11.8 percent and 11.1 percent, respectively.
Furthermore, most of the banks financing of around 98 percent was collateralized, while only two percent of the total SME advances were clean without security.
Islamic financing to the SME sector stood at Rs10.85 billion at the end of June 2012, showing an increase of more than four percent on quarter-on-quarter basis, it added.
The SME financing by banks and development finance institutions (DFIs), which has been witnessing a declining trend since 2008, continued to maintain it slower pace in April-June period as the share of SMEs in total industry advances dropped to 6.6 percent at the end of the quarter under review.
It was registered at 7.1 percent in January-March 2012 and 8.2 percent in the corresponding quarter of the last calendar year, it said. However, the non-performing loans of the SME sector saw a decline of 2.7 percent as of June 30, 2012.
The State Bank of Pakistan in its report titled “Development Finance Review June 2012 revealed that the share of private sector banks in total SME loans outstanding was highest at 81.7 percent and their share increased by around two percentage points in the second quarter of 2012 from their share in the previous quarter.
Private sector banks are followed by public sector banks, which share around 14 percent of the total SME outstanding amount, it said.
The report also revealed that floods in Sindh and Punjab in two consecutive years of 2010 and 2011 practically annihilated the small units, which have little financial resources to rebuild and revitalise their businesses.
“Given the deteriorating business conditions for the SMEs, the banks also took a more risk-averse posture and diverted significant funds to less risky asset classes such as market treasury bills and commodity operations of the government, which further squeezed the available funds and aggravated the prevalent conditions for the SMEs,” it said.
During April-June 2012, total SME advances declined by 4.5 percent on quarter-on-quarter basis. However, the decline was more than 15 percent as compared to year-on-year basis.
Moreover, the number of SME borrowers reduced by around 24 percent on year-on-year basis, which indicates that small enterprises are worse hit by the prevailing macroeconomic conditions.
Although absolute amount of non-performing loans of the SMEs decreased by more than Rs2.7 billion to Rs96.4 billion from Rs99.2 billion during the previous quarter, the decline is offset by faster decline in the SME advances, resultantly the non-performing loans as a proportion of the SME advances increased as compared to the previous quarter, revealed the report.
A breakup of the enterprise-wise position shows that the biggest share of 46.5 percent was taken by the trading SMEs, followed by manufacturing SMEs with 35.9 percent and services SMEs with 17.6 percent, it said.
The working capital financing constitutes for more than 77 percent of the SME financing followed by trade finance and fixed investment with their shares of 11.8 percent and 11.1 percent, respectively.
Furthermore, most of the banks financing of around 98 percent was collateralized, while only two percent of the total SME advances were clean without security.
Islamic financing to the SME sector stood at Rs10.85 billion at the end of June 2012, showing an increase of more than four percent on quarter-on-quarter basis, it added.
Posted in: Business news
0 comments:
Post a Comment