Details

Technical Note

Educator Copy

A Note on The Banking Sector in Pakistan: 2000-2009

Kamal Munir, Atiyab Sultan


INDUSTRY : Banking

AREA : Accounting & Control

ORGANIZATION : Pakistan

LENGTH : 15

LUMS No : 01-328-2010-2

PUBLICATION YEAR : 2010

DESCRIPTION

KEYWORDS:

Banking Sector,Pakistan,Equity Markets,Economy,Privatization,Profitability,Performance,ROE's


DESCRIPTION:

In a country where other modes of financing via bond and equity markets have not been developed, the banking sector assumes paramount importance as the primary source of capital in the Pakistan economy. Within this sector, most banks enjoyed a steady rise in profits between 2001 and 2007. Between 2004 and 2007, average ROEs of around 20% were seen and the banking industry in Pakistan was one of the most profitable in the world. This is remarkable given that only 15% of the population has bank accounts and a miniscule 3.6% of the population constitutes the borrower base. While wide-ranging reforms, privatization of large banks and large inflows of liquidity post September 9-11, account for some of this profitability, a generally overlooked aspect is the structure of the banking industry. This note will shed light on the various structural dynamics that underpin performance in the Pakistani banking sector.


LEARNING OBJECTIVES:


SUBJECTS COVERED:

Finance, Banking, Accounting