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The gross housing finance portfolio showed an impressive growth of over Rs 7 billion during the last calendar year (CY15), mainly due to higher demand. According to State Bank of Pakistan (SBP), the housing finance data confirms that primary housing finance market in Pakistan is gradually growing and secondly Islamic and private banks remained major contributors to gross outstanding of housing finance during the year.
The gross outstanding finance of all banks and DFIs stood at Rs 60.80 billion as on December 31, 2015 compared to Rs 53.65 billion in December 2014, showing an increase of 13 percent or Rs 7.15 billion over the year. The major portion of the total outstanding remained directed towards "outright purchase" category as 63.10 percent of gross outstanding was used to finance this category of housing loans. It was followed by "construction" and "renovation" products with 25.20 and 11.71 percent, respectively.
Islamic banks reported Rs 21.17 billion followed by private banks at Rs 18.63 billion, public sector banks at Rs 5.85 billion and others foreign banks and DFIs with Rs 0.42 billion. While, HBFCL remained the largest shareholder, in terms of gross outstanding, with the share of 24 percent. The outstanding loans of HBFCL were Rs 14.74 billion, up by 16.34 percent over last year.
Islamic Banking Industry has maintained the increasing trend throughout the year and of the gross outstanding in Islamic housing finance, Islamic banks accounted for Rs 21.16 billion; an increase of 10.44 percent over the quarter. IBDs of conventional banks posted Rs 3.31 billion.
Islamic banks showed an increase of 38 percent or Rs 5.85 billion to reach Rs 21.17 billion by the end of December 2015 compared to Rs 15.32 billion in December 2014. The cumulative gross outstanding housing finance of Islamic Banking Industry (Five Islamic Banks (IBs) & 14 Islamic Banking Divisions (IBDs) of conventional banks) stood at Rs 24.48 billion end of CY15, showing an increase of 33 percent over the year. During the period under review, the break-up of total outstanding in terms of loan size, HBFCL and all banks & DFIs reported outstanding loans net of NPLs in the category ''up to Rs 1 million'' as Rs 4.27 billion and Rs 1.37 billion, respectively.
In the second category ''above Rs 1 million to Rs 5 million'', HBFCL reported Rs 3.94 billion and all bank & DFIs reported Rs 10.26 billion outstanding. In the third category ''above Rs 5 million'', HBFCL reported Rs 2.32 billion and all banks & DFIs reported Rs 25.36 billion outstanding.
This reflects that major chunk of total outstanding in housing finance falls under the category "above Rs 5m". Furthermore, it also shows that HBFCL has large portion of its portfolio in small-sized loans (up to Rs 1m) compared to other institutions that are tilted towards larger loan size (up to Rs 5m & above). HBFCL, being the largest player in the housing finance market, accounted for 59.88 percent of new borrowers and contributed 24.17 percent of the new disbursements equivalent to Rs 1.37 billion. Similarly, during the last quarter (Oct-Dec) of CY15, housing finance portfolio surged by Rs 2.77 billion as it stood at Rs 58.03 billion in previous quarter.

Copyright Business Recorder, 2016

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