Decrease in automobile financing
In July 2023, the central bank’s data revealed that automobile financing in Pakistan dropped to Rs285.19 billion. This represents a 20.90% year-on-year (YoY) decrease and a 2.91% month-on-month (MoM) decrease compared to Rs360.55 billion in July 2022 and Rs293.73 billion in June 2023, respectively.
The decline can primarily be attributed to higher interest rates, rising car prices, regulatory restrictions on loan acquisition, and increased taxes on automobile imports and parts.
According to the State Bank of Pakistan (SBP) data, consumer financing for house construction reached Rs211.11 billion by the end of July 2023, marking a 4.82% YoY increase, primarily due to SBP’s efforts to promote housing and construction in the country.
However, on a monthly basis, house construction financing remained nearly unchanged, with a 0.57% decline.
Meanwhile, personal use financing amounted to Rs250.24 billion, reflecting a 0.09% YoY decrease. Similarly, on a monthly basis, financing for this category decreased by 0.95%.
As a result, the total credit disbursed to consumers increased to Rs851.22 billion during the review month, showing a 4.70% YoY decrease and a 0.99% MoM decrease.
Outstanding credit to the private sector decreased by 0.06% YoY and 1.12% MoM, reaching Rs8.19 trillion in July 2023.
Loans to the manufacturing sector increased by 1.12% YoY, totaling Rs4.48 trillion in the review period. However, on a monthly basis, loans to this sector decreased by 1.44% MoM.
Borrowing from the construction sector amounted to Rs190.23 billion in July 2023, reflecting a 1.89% YoY increase and a slight 0.01% MoM decrease.
Simultaneously, loans to the agriculture, forestry, and fishing sectors rose to Rs346.17 billion in the month under review, representing a 6.23% YoY increase. On a sequential basis, loans to this sector recorded a 0.53% MoM increase. Thus there seems a decrease in automobile financing.
