Thanks to our conservative provisioning regime, the net NPLs are still at a reasonable level at 5.5%, but we are aware that unless an economic turnaround is achieved within a reasonable time, the impact of high credit risk can cause serious problems, at least for some banks. Since FY07, banks in Pakistan have been able to withstand the headwinds from weakening macroeconomic fundamentals.
While they have remained largely insulated from the first round of shocks from the global financial crisis, we cannot ignore the adverse trends that have risen since then. The Global Financial Crisis (GFC) has continued despite the recovery efforts of advanced economies and has morphed from a financial crisis to a sovereign credit crisis with serious political implications.