KARACHI: Bank reserves grew by 17% in 2020, the fastest growth in four years, mostly due to remittances from abroad and data aimed at curbing the spread of epidemics due to low business activity. Shows.
A brokerage, Topline Securities, said in a report that the bank’s reserves increased in 2020 from Rs 14.632 trillion in 2019, well above the 10-year average of 13%.
“The increase in reserves has been largely driven by remittances (17.5% in US dollars and 27.5pc YoY in terms of PKR during the 11 months of 2020), while COVID-19 (cash-based) Due to the lack of business activity may have resulted in an increase in bank reserves.
M2’s growth was 16% in 2020, mainly due to excellent stockpiling this year and a 19% increase in the currency. CIC has increased to Rs 6.30 trillion by the end of December 2020, with CCC at 2% with M2 over the last 5 years average of 27%. The report further said that the reasons for the increase in CIC could be attributed to low interest rates and evasion from tax authorities.
“We expect reserves to grow by 12 to 14 per cent during 2021, while we expect growth to be around 4-6 per cent, where banks are expected to see more waves of COVID-19. Will be protected from the fears of Said in his report. Investment increased by 31% to Rs 11.5 trillion in 2020, adding that higher yields on offer at the beginning of the year had already tempted banks to invest, which is a serious business due to epidemics. Was affected. In turn, the growth of debt.
According to the report, advances increased by only 2% in 2020 as banks remained cautious about the overall economic situation due to Covid 19. However, growth has been relatively good in the last quarter of 2020 with a quarterly growth of 3.4%.
The report said, “After March 2020, aggressive cuts in interest rates by Pakistan’s central bank could begin to bear fruit as COVID-19 epidemics are less affected and so is economic activity.” Are growing. “
Investment in the deposit ratio (IDR) had already shown an improvement of 67% in September 2020, which has been maintained at the end of the year. It was 66% in June and 60% in December 2019.
The report said the high IDR was largely due to higher interest rates at the beginning of the year and a lower risk appetite due to Covid 19. In addition, the submission ratio has dropped from 49% in September (51% in June and 56% in December 2019) to 48%.
According to the report, banks also saw a significant increase in supply as they chose to increase general supply in the context of COVID-19. However, such provisions have been seen to be stable in the last quarter as banks feel that they have provided adequately by September 2020.