CONSUMER FINANCING IN PAKISTAN

S.M. ABBAS ZAIDI, S.KAMAL HAYDER KAZMI,
Research Analyst
, PAGE
June 1 - 7, 2009

CONSUMER FINANCING PORTFOLIO OF BANKS
(DECEMBER 2006 AND JUNE 2007)
YEAR PORTFOLIO CREDIT
CARDS
AUTO
LOANS
CONSUMER
DURABLES
MORTGAGE
LOAN
OTHER
PERSONAL
LOANS
TOTAL
Dec 2006 Amount (Rs. In Mn) 39,243.1 104,057. 2 1,301.5 49,245.4 131,324.2 325,171.4
No. of Borrowers 1,207,885 253,097 59,082 24,313 1,310,371 2,689,736
June 2007 Amount (Rs. In Mn) 44,460.5 107,575.7 1,003.6 58,052.2 143,286.0 354,378.1
No. of Borrowers 1,615,569 265,876 55,139 24,007 1,383,847 3,211,117
Source: State Bank of Pakistan (Communication with CRCP, November 16, 2007)

MONTHLY MARK-UP RATE ON AUTO LOANS (%)
Alfalah Bank 15.5
Askari 15.5
Dawood 14.46
HMP 14.5
KASB 14.5
Soneri 15
ABN Amro 16
Various sources
VARIATION IN MARK UP ON PERSONAL LOANS (%)
NBP 15
HMP 19
KASB 11.5
MCB 12
Soneri 15
ABN Amro 23
HSBC 12
Source: CRCP telephonic survey of banks, April 3, 2008

NINE YEAR AVERAGE INTEREST RATE SPREAD OF 14 COUNTRIES (%)
Pakistan 8.15
Italy 4.5
Australia 4.4
Singapore 3.9
France 3.6
Finland 3.5
Switzerland 3
U.S. 2.8
Norway 2.5
Spain 2.4
U.K. 2.1
Canada 2
Netherlands 1.9
Japan 1.71
Sources: (1) WEF, Global Competiti. Reports (1997 to 2005- 06). (2) SBP

SHARE OF PRODUCTS IN TOTAL CONSUMER FINANCING PORTFOLIO (%)
Personal Loans 40.40
Mortgage Loans 16.39
Auto Loans 30.36
Credit Cards 12.55
Source: Banking Surveillance Department, Quart Perf. Review of the Banking Sys. Jun-07
PATTERNS OF ACCESS TO PERSONAL LOANS (%)
Current borrowers 55.
Previous borrowers 15.7
Borrowers whose applications were rejected 29.2
Source: According to the CRCP survey.

SECTOR WISE NPL TO LOAN RATIO
SECTOR DEC-07 JUN-08 DEC-08
Corporate sector 7.14 7.58 8.88
Chemical & pharma 11.07 8.75 7.69
Agribusiness 17.86 13.57 8.85
Textile 10.74 12.62 14.60
Cement 3.54 8.01 6.55
Sugar 7.12 4.99 9.06
Shoes & leather garments 10.05 17.36 8.63
Auto & trans equipment 6.05 6.31 7.49
SMEs sector 9.25 11.22 15.79
Agriculture sector 18.68 16.55 15.77
Consumer sector 4.37 5.50 6.93
Credit cards 3.52 4.81 5.50
Auto loans 4.63 5.88 5.93
Consumer durable 7.85 10.52 7.79
Mortgage loans 5.28 5.64 7.41
Commodity financing 1.01 0.77 1.40
Cotton 2.63 2.22 2.75
Rice 0.66 1.13 2.87
Sugarcane 0.00 0.14 0.30
Wheat 1.47 0.64 0.57
Total 7.44 7.72 9.13
Source: SBP.
NPL: Non performing loans

GROWTH IN CONSUMER FINANCING (% )
PORTFOLIO JULY 2007 JAN 2008
Mortgage Loans 15.5 17.6
Credit Cards 19.2 6.9
Auto Finance 8.0 6.0
Personal Loans 7.9 3.0
All 10.4 6.6
Source: SBP. Second Quarterly Report for FY 08
CONSUMER FINANCE SHARE IN TOTAL LOANS
YEARS BN RS PERCENT
2004 130 9
2005 330 12.8
2006 380 13.8
2007 400 14
2008 300 12
Various sources

REGIONAL INTEREST RATES (%)
COUNTRIES END07 END08 JAN09
Korea 5.00 3.00 2.5
Thailand 3.25 2.75 2.0
Philippines 5.25 5.5 -
Taiwan 3.375 2.0 1.5
Indonesia 8.00 9.25 8.75
India 7.75 6.5 5.5
China 7.47 5.31 -
Turkey 15.75 15.00 13.00
Pakistan 10.00 15:00 14:00 (latest)
Various Sources