Traditional Banks - Pakistan

Pakistan

In 2024, it is projected that the net interest income in Pakistan's Traditional Banks market market will reach a staggering amount of US$52.39bn.
The market is primarily dominated by Traditional Retail Banking, which is expected to have a market volume of US$46.92bn in the same year.
Looking ahead, the net interest income is anticipated to demonstrate an annual growth rate (CAGR 2024-2029) of 5.13%, resulting in a market volume of US$67.29bn by 2029.
When compared globally, it is noteworthy that China is expected to generate the highest net interest income, reaching US$3,869.0bn in 2024.
The traditional banking sector in Pakistan is experiencing a decline in market share due to the increasing popularity of digital banking services.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

Over the past few years, the Traditional Banks market in Pakistan has been experiencing significant growth and development.

Customer preferences: Customers in Pakistan have shown a strong preference for traditional banking services offered by brick-and-mortar banks. This can be attributed to the cultural importance placed on face-to-face interactions and personal relationships in business dealings.

Trends in the market: One notable trend in the Traditional Banks market in Pakistan is the increasing adoption of digital banking services by traditional banks. While digital banking is on the rise globally, in Pakistan, traditional banks are strategically incorporating digital elements to cater to the tech-savvy population while still maintaining the personalized touch that customers value.

Local special circumstances: Pakistan's regulatory environment plays a crucial role in shaping the Traditional Banks market. The State Bank of Pakistan, the country's central bank, has been proactive in implementing policies that support the growth of traditional banks while also encouraging innovation and competition in the sector.

Underlying macroeconomic factors: The macroeconomic landscape in Pakistan, including factors such as GDP growth, inflation rates, and government policies, has a direct impact on the Traditional Banks market. As the economy continues to grow and stabilize, traditional banks are poised to benefit from increased lending opportunities and a growing customer base looking for a variety of financial products and services.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.