National Bank of Pakistan President Ali Raza said on Tuesday that rising non-performing loans (NPLs) "are a big threat" for banking industry, which is already facing decline in profit due to slow economic activity. Talking with newsmen at NBP Iftar-dinner at a hotel here, he said that "it's a wrong perception that NBP profit has decline by 40 percent, and actually the bank's profit has posted a decrease of 20 percent on quarterly basis.
He said: "NBP's profit has declined, like other banks, due to rising NPLs and slow private credit growth. However, we are expecting some improvement in near future." He said that despite some shocks and decline in profitability, Pakistan's banking sector is on stable ground and has potential to grow more in the future. Power shortage and slow economic activity are the chief reasons of decline in private sector growth, while government borrowing has witnessed a surge of 50 percent, Raza said. He said that long-term deposits ratio is less than short-term deposits and current accounts have over 70 percent share in the banks' deposits.