19th straight decline: car financing drops by 25.82%

WEB DESK: In January 2024, automobile financing in Pakistan witnessed a decline, reaching Rs246.26 billion, marking a YoY decrease of 25.82 per cent and a MoM decrease of 1.98 per cent.

This is in contrast to Rs331.98 billion in January 2023 and Rs251.25 billion in December 2023, according to the latest data released by the central bank.

Notably, this marks the nineteenth consecutive monthly decline in automobile financing, with a total decline of Rs114.29 billion over the past 19 months.

The factors contributing to this decrease include higher interest rates, an increase in car prices, regulatory constraints on acquiring loans, and elevated taxes on the import of automobiles and their components.

According to the State Bank of Pakistan (SBP) data, consumer financing for house building stood at Rs207.62 billion at the end of January 2024, reflecting a 3.44 per cent YoY decline compared to Rs215 billion in the same month last year.

On a month-to-month basis, financing for house building saw a slight decrease of 0.26 per cent compared to the previous month’s Rs208.15 billion.

Simultaneously, financing for personal use amounted to Rs243.1 billion, showing a 4.47 per cent YoY decrease and a 0.54 per cent MoM decline.

Consequently, the overall credit disbursed to consumers registered a decline, totaling Rs813.96 billion during the review month, with a YoY fall of 9.04 per cent and a MoM decrease of 0.52 per cent.

The outstanding credit to the private sector experienced a 0.76 per cent YoY decrease, amounting to Rs8.35 trillion in January 2024. On a monthly basis, it declined by 2.21 per cent compared to the credit of Rs8.54 trillion in December 2023.

Specifically within the private sector credit, loans to the manufacturing sector were reported at Rs4.81 trillion in the review period, showing a slight 0.33 per cent YoY increase.

However, on a monthly basis, there was a decline of 0.89 per cent compared to the Rs4.85 trillion reported in December.

Borrowing from the construction sector in January 2024 stood at Rs190.15 billion, indicating a 0.97 per cent YoY decrease and a 5.05 per cent MoM decline compared to the previous month.

Looking ahead, the data reveals that loans to the agriculture, forestry, and fishing sectors rose significantly to Rs397.27 billion in the month under review, marking a substantial 16.95 per cent YoY increase.

However, on a sequential basis, loans to the same sector recorded a fall of 4.82 per cent MoM.

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