Housing finance is gradually growing and the gross outstanding of all banks and DFIs surged to Rs 65.70 billion as of June 30, 2016. According to State Bank of Pakistan (SBP) at present, 24 (Islamic and conventional) banks, House Building Finance Company Limited (HBFCL) and one microfinance bank are catering to the housing finance needs and the current data confirms that primary housing finance market in Pakistan is gradually growing which is a very positive sign for the economy.
"It also confirms that banks and financial institutions in Pakistan are taking interest in mortgage finance. This will be instrumental in increasing economic growth through positive changes in 40 industries allied to housing sector," it added. The SBP''s Quarterly Housing Finance Review revealed that the housing finance is continuously increasing and posted a healthy growth of some Rs 4.9 billion during the first half (Jan-June) of this calendar year (CY16). With the current surge, the overall housing finance portfolio of all banks and DFIs reached Rs 65.70 billion in June 2016 compared to Rs 60.80 billion in December 2015, showing an increase of 8 percent.
The major portion of total outstanding remained directed towards "outright purchase" category as 65.52 percent of gross outstanding was used to finance this category of housing loans. It was followed by "construction" and "renovation" products with 23.32 and 11.16 percent, respectively.
Quarter-on-quarter (QoQ) basis, housing finance portfolio registered an increase of Rs 2.74 billion or 4.35 percent in second quarter ending June 2016 up from Rs 62.96 in March 2016. Over the year, housing finance portfolio showed an impressive growth of 17.11 percent. The SBP reported that Islamic banks and HBFCL remained active in extending housing finance and current rise in disbursements is a reflection of efforts to create an enabling environment for housing finance in Pakistan.
HBFCL remained the largest shareholder, in terms of gross outstanding, with 24 percent as the outstanding loans of HBFCL were Rs 15.46 billion at the end of first half of this calendar year. However, based on category, Islamic banks remained the largest players with 38 percent share in gross outstanding. Overall Islamic and private banks are major contributors to gross outstanding of housing finance during the year. The share of private banks and Islamic Banks (IBs) in the gross outstanding stood at 30 percent and 38 percent, respectively as on June 30, 2016. Fourteen Islamic Banking Divisions (IBDs) and five IBs have 12 percent and 88 percent share, respectively in housing finance portfolio of Islamic Banking Industry.
As on June 30, 2016, Islamic banks reported Rs 25.07 billion outstanding house finance followed by private banks at Rs 19.79 billion, public sector banks at Rs 5.13 billion and others (foreign banks and other DFIs excluding HBFCL) with Rs 0.25 billion. Islamic Banking Industry has maintained the increasing trend throughout the year and Islamic banks showed an increase of 16 percent to reach Rs 25.07 billion by the end of June 2016 up from Rs 24.48 billion in December 2016. The gross outstanding housing finance of Islamic Banking Industry (five Islamic banks (IBs) & 14 Islamic Banking Divisions (IBDs) of conventional banks) stood at Rs 28.38 billion as on June 30.
According to SBP, number of borrowers decreased from 70,080 to 68,275 since June 2015 largely due to decrease in NPL borrowers. Moreover, 10.60 percent of total outstanding borrowers were female and 66.62 percent had primary source of income as salary.
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