The share of consumer loan in the overall loans to private sector increased slightly to reach 15.8 percent during the financial year 2007 compared to 15.5 percent during FY 06.
State Bank of Pakistan (SBP) sources said that the growth in the consumer loans slowed down to 19.5 percent during the FY 07 compared to a growth of 43.8 in FY 06, the lowest growth during the preceding four years.
The sources said that the major factors responsible for a slower growth in consumer loans included increase in lending rates, high credit standards following the increase in NPLs to advances ratio within the consumer loans category, restricted lending by a few commercial banks in order to streamline their risk management system as per the international best practices and mandatory use of credit profile of the borrowers through the use of credit information bureau (CIB) of the SBP.
The weaknesses in consumer loans during FY 07 was broad based as all the major categories exhibited a slowdown, however the largest deceleration was visible in car financing, the growth of which slowed down to 7.8 percent during FY 07 from its phenomenal growth of 48.5 percent during FY 06, the sources added.
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