Car financing rises for the first time in over two years

ISLAMABAD: Automobile financing in Pakistan rose slightly to Rs227.54 billion in September 2024, marking a 0.11 per cent increase compared to Rs227.3 billion in August, according to data from the State Bank of Pakistan (SBP). This uptick breaks a 26-month streak of continuous decline in car financing.

However, on a yearly basis, car financing saw a notable drop of 16.43 per cent, down from Rs272.29 billion in September 2023. The decline over the year is primarily due to factors like higher interest rates, rising car prices, stricter loan regulations, and increased taxes on imported cars and parts.

Looking at housing loans, consumer financing for house building reached Rs201.8 billion by September 2024, reflecting a 3.11 per cent drop year-on-year. Month-on-month, it fell slightly by 0.3 per cent compared to Rs202.4 billion in August.

Personal loans also saw mixed results, with a year-on-year decline of 3.15 per cent, bringing the total to Rs240.65 billion, though there was a modest 0.87 per cent rise compared to the previous month.

Overall, consumer credit, which includes loans for automobiles, housing, and personal use, dropped by 3.59 per cent year-on-year to Rs809.25 billion. Yet, on a month-to-month basis, consumer financing increased by 0.66 per cent, up from Rs803.94 billion in August.

Additionally, the SBP data revealed that loans to the private sector rose by 4.88 per cent year-on-year, reaching Rs8.41 trillion in September. Month-on-month, private sector loans saw a 2.05 per cent rise from Rs8.24 trillion in August.

Breaking it down by sectors, the manufacturing sector borrowed Rs4.71 trillion in September, a 6.57 per cent increase year-on-year and a 1.72 per cent rise from the previous month.

The construction sector saw its borrowing reach Rs205.49 billion, reflecting a 6.22 per cent increase year-on-year and a 6.96 per cent rise month-on-month.

According to Mettis Global, loans to the agriculture, forestry, and fishing sectors grew to Rs397.26 billion, up 6.01 per cent year-on-year, with a modest month-on-month increase of 0.46 per cent.

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