the reasons for the annual 20% decline in vehicle financing

LAHORE: Due to skyrocketing inflation, high interest rates, increase in car prices and reduced purchasing power of the people, The reasons for the annual 20% decline in vehicle financing in June 2023.

The data released by the State Bank of Pakistan (SBP), in June 2023, banks provided automobile financing facilities worth 293 billion rupees, which was 367 billion rupees in June 2022, and about 300 billion rupees in May 2023. Less than financing.

Among the main reasons for the decline in vehicle financing are high interest rates, increased car prices, regulatory restrictions on availing loans, and increased taxes on the import of vehicles and parts.

On the other hand, according to the State Bank, consumer financing for house building by the end of June 2023 was 212.32 billion rupees, which shows an annual increase of 15.75 percent compared to June 2022, which is mainly due to the State Bank’s measures to promote the housing sector in the country. However, house building finance declined by 0.2 percent on a monthly basis.

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Meanwhile, personal financing reached Rs 252.63 billion in June, which is 0.48 percent higher on an annualized basis, while financing for the same category increased by 0.19 percent on a monthly basis. Due to this, the total credit given to consumers during the period under review increased to Rs 859.73 billion, which saw a decline of 4.4% per annum and 0.57% per month.

Loans to the manufacturing sector increased by 2.01 percent annually to Rs 4.54 trillion in the period under review and loans to the same sector increased by 0.33 percent annually on a monthly basis.

In June 2023, credit to the construction sector stood at Rs 190.23 billion, an annual increase of 0.99 percent, while a month-on-month decrease of 0.24 percent.

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Meanwhile, loans to the agriculture, forestry and fisheries sector rose to Rs 344.33 billion in the month under review, up 5.48 percent year-on-year and recorded a 1.8 percent increase in loans to the same sector on a sequential basis.