KARACHI: Housing sector loans have been rapidly falling victim of high inflation and interest rates as the bad loans of this sector went up by 45 per cent in a year, said State Bank’s Development Finance Quarterly Review issued on Tuesday.

‘Non-performing loans have increased from Rs8.99 billion (March 2008) to Rs13 billion (March 2009), a 45 per cent increase over the year,’ said the report.

At the same time the SBP noted that housing loans lost attraction as the overall growth dropped instead of increasing.

The SBP report said over the last 12 months, the quarter ended March 2009 witnessed a slight decline of 1.43 per cent in gross outstanding portfolio of the housing finance.

The total outstanding reported by banks and DFIs as on March 31, 2009 was Rs80.87 billion compared to Rs82 billion as on March 31, 2008. The total number of outstanding borrowers has decreased from 126,595 to 121,368 since March 2008, a 4 per cent fall.

‘The overall rise in NPLs is due to high inflation and interest rates, which directly affects the affordability level and is constraining the access to credit which in turn has caused the growth of mortgage sector to slowdown,’ said the SBP report.

‘Approximately 51.5 per cent of total borrowers of housing loans have been classified as non-performing,’ said the SBP.

It further said that out of the total outstanding of Rs80.87 billion, commercial banks accounted for Rs63.97 billion while private banks accounted for of Rs38.6 billion, showing a 10.72 per cent decline since March 2008.

Public sector banks reported an outstanding of Rs10.39 billion, followed by Islamic banks with Rs8.99 billion and foreign banks with Rs5.91 billion. The highest growth of 21.5 per cent was reported among Islamic banks.

Excluding DFIs, all commercial banks (public sector banks, private banks, Islamic banks and foreign banks) together posted a 4.26 per cent decline when compared to quarter ended March 2008, said the quarterly review. The outstanding loans of HBFC were Rs16.4 billion, a 12.39 per cent increase over the last year. Other DFIs have a meagre share of Rs0.5 billion in outstanding loans.

Although growth of NPLs remains relatively low in absolute terms when compared to other banking sectors, its share in total outstanding, however, is the greatest, a 39 per cent of its total outstanding constitutes of NPLs, said the report.

‘Excluding HBFC, NPLs for all banks and other DFIs have increased by 111 per cent over the year from Rs3.17 billion to Rs6.69 billion,’ said the Review.

The share of NPLs that all banks and other DFIs (excluding HBFC) constitute is 10.37 per cent of the total outstanding.

Among banks, private banks have highest NPLs to outstanding ratio of 12.3 per cent followed by public sector banks with 10.1 per cent and foreign banks 7.7 per cent. Islamic banks have lowest NPLs to outstanding ratio of 3.7 per cent.

The report said that 65.15 per cent borrowers of HBFC are classified as non-performing.

‘Thus excluding HBFC in such an analysis will be important since HBFC caters to 76 per cent of the total outstanding borrowers in housing finance sector which accounts for only 20 per cent of total outstanding portfolio,’ said the SBP report.

The HBFC’s NPLs have increased from Rs5.82 billion to Rs6.40 billion during the year.

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