Current calendar year is likely to again an impressive for the banking industry as the listed banking sector earnings has rose by a significant 26 percent during the first quarter (January-March 2011) as compared to the same period of last calendar year-2010.
According to an analysis, which includes 21 of the 25 listed banks at the bourse, representing 98 percent of the sector's total market capital, revealed that some banking sectors have earned Rs 23.573 billion in first quarter of 2011 as compared to Rs 18.742 billion in corresponding period of the last calendar year.
An analyst at JS global said that the results portrayed an encouraging trend of growing funded and non-funded income, likely to continue in second quarter as both interbank lending rate and trade, besides remittance business remain on the higher side.
However, he said loan losses linger as a concern, with many of the banks reporting a jump in the expense of first quarter. According to analysts in contrast to the impressive results, higher average 6 months KIBOR, leading to strong spreads, remained the prime driver for rising interest income, which augmented by 20 percent to Rs 73.6 billion.
"We believe, the loan re-pricing impact following tightening of the policy rate by the central bank has begun to surface," analyst said. He said rising trade and remittance business boosted fee income by 4 percent to Rs 10.2 billion. This along with higher 'other income,' led non-funded income to increase by 9 percent to Rs 20.9 billion. Interestingly, gains made on trading of securities declined by 18 percent, particularly because of the laggard KSE performance in the first quarter of the current calendar year.
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