Research Analyst
Sep 26 - Oct 2, 2011

Banks have traditionally been in the forefront of harnessing technology to improve their products, services, and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services.

The delivery channels include direct dialup connections, private and public networks, and the devices including telephone, automated teller machines (ATMs) etc.

Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers.

Currently, in Pakistan the banking sector's profit posted an increase of 20 percent during the first half of current calendar year 2011 supported by interest-based income.

A detailed analysis of financial results of listed banks revealed that cumulative profit of banking sector rose Rs8.1 billion to Rs47.3 billion in January-June of calendar year 2011 compared with Rs39.3 billion in same period of last calendar year.

The massive surge in profit has driven mainly by higher net interest income (NII) and non-interest income on account of higher fee income.

Non-funded income, too, grew 17 percent to Rs48.0 billion, as fee income, because of increase in commissions from remittances and trade business rose by nine percent to Rs22.4 billion.

Loan losses soared 24 percent year on year (YoY) during January-July on account of new accretions and a downward shift of older NPLs.

Impact of rising inflationary pressures has also seen as administrative expenses surged by 17 percent YoY to Rs92.7 billion in first half of 2011.

While the payment systems infrastructure has retained an overall growing trend for the second quarter of FY11 as 172 ATMs were added to the e-Banking infrastructure bringing the number of ATMs in the country to the highest ever level of 4,734 while 309 more bank branches have been upgraded to real time online branches (RTOBs). Now 7,036 bank branches are offering real time online banking out of total 9,483 bank branches existing in the country.

The number of plastic cards has also increased by 19.21 per cent compared to the previous quarter. At the quarter end, there were 13.19 million plastic cards in circulation.

The volume and value of overall eBanking transactions in the country during the quarter under review reached 56.42 million and Rs5.5 trillion respectively showing an increase of 7.30 per cent in volume and 17.47 per cent in value compared to the previous quarter. ATM, being the largest channel for eBanking transactions, showed 5.6 per cent increase in number of transactions and 9.5 per cent increase in value which resulted in average value of Rs8,804 per ATM transaction.

Very significant increase was also recorded in transactions related to real time online branches. The number of such transactions grew 10.59 per cent and value of transactions increased 17.97 per cent. All other channels of eBanking, except call centers, also witnessed growth, but their share in the eBanking infrastructure composition was comparatively insignificant.

This increasing trend was also witnessed in the large value payments settled through Pakistan Real-time interbank settlement mechanism (PRISM), which increased by 12.73 per cent in volume and 13.49 per cent in value of transactions compared to the previous quarter.

The major portion of PRISM transactions, in terms of value, was settlements against securities, which accounted for 46 per cent of the total transactions followed by interbank funds transfers (38 per cent) and settlement of retail cheques multilateral clearing (16 per cent).


All Banks & DFIs 191,362
All Banks 185,972
All Commercial Banks 171,558
Public Sector Banks 77,067
Local Private Banks 93,737
Foreign Banks 754
Specialized Banks 14,414
DFIs 5,391
Note: Domestic and Overseas Operations

The volume and value of paper based retail payments during the quarter under review were 88.46 million and Rs39.07 trillion respectively which increased by 6.63 per cent in volume of transactions and 9.75 per cent in value of transactions compared to the previous quarter.

The contribution of paper-based payments in total retail payment transactions was 61.06 per cent in terms of volume and 87.73 per cent in terms of value. The rest of the transactions originated from eBanking.

The SBP has warned commercial banks to ensure round the clock ATM service to avoid stern action and heavy penalties. In addition, the SBP had set up special inspection teams, which would monitor the ATM network of commercials banks to ensure trouble free operations.

But, unfortunately, commercial banks failed to keep their ATMs functional especially on our main occasion, which caused severe problem for the bank customers.

However, on various locations, bank customers are seen standing in queues to withdraw money from ATMs. Customers are seen complaining that they have to visit a number of ATMs to get their money withdrawn but most of ATMs in the provincial metropolis run out of cash.


The customers feel insecure while using the ATMs especially during night. Government must provide the security when the customers use the ATMs. Killings of drawers have been reported many a times.