Contrary to general perception, wounds from non-performing loans are getting even worse in corporate sector than in consumer segment. Central banks latest data reveals that bad loans for the corporate sector mounted to 11.5 percent, up 260 bps between January and March 2009, with about 63 percent share in total advances.
On the flipside, consumers behaved much better with NPLs rising just 120 bps to 8.1 percent, with 10.5 percent share in total loans. Within the corporate sector, the toll of bad loans in textile segment (nearly 30% of total NPLs) increased by 330 basis points in three months to stand at 17.9 percent by the end of March 09, followed by energy sector with 310 bps increase in NPLs to 6.5 percent.
This clearly mirrors the fragile picture of our macroeconomic stability, as falling textile exports and acute power shortage are the biggest impediments to economic growth. Even the farming sector that saw an improved growth last fiscal year on the back of higher wheat support price and bumper cash crops, has been suffering from the bad loans problem.
Data shows that agriculture sector NPLs jumped by 270 bps to 11.6 percent during the period. Likewise, the cement sector also seems ailing, with NPLs rising 260 bps between January and March to 9.6 percent.
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