Auto financing in Pakistan fell to PKR 234.64 billion in November 2024, registering a decline of 0.53% month-on-month from PKR 235.88 billion recorded in October 2024, according to data released by the State Bank of Pakistan (SBP). On a yearly basis, the decline was more pronounced, with funding declining by 8.72% compared to PKR 257.05 billion in November 2023.
The decline in auto financing is primarily due to several factors, including rising interest rates, rising vehicle prices, stringent loan regulations, and increased taxes on importing vehicles and their parts. These challenges have dampened consumer demand and financing activity in the automotive sector, reflecting broader economic pressures.
Conversely, other sectors of consumer finance showed different trends. Home construction financing reached PKR 200.21 billion by the end of November 2024, showing a decline of 3.24% year-on-year. On a monthly basis, it decreased by 0.62% from PKR 201.46 billion recorded in October.
Meanwhile, personal finance recorded significant growth, rising by 16.68% year-on-year to reach PKR 287.01 billion. On a monthly basis, this category saw an increase of 1.89%, reflecting consumers’ preference for more flexible borrowing options.
Total consumer credit disbursed increased by 4.99% year-on-year, reaching PKR 866.02 billion in November 2024, compared to PKR 861.02 billion in the previous month, representing a monthly increase of 0.58%.
In terms of private sector credit, outstanding loans witnessed strong growth, rising by 20.84% year-on-year to PKR 9.9 trillion in November 2024. Sequentially, loans to the private sector also increased by 6.07% from PKR 9.33 trillion in October.
The manufacturing sector remained a key driver, with loans reaching PKR 5.75 trillion in November, reflecting an increase of 25.53% year-on-year and 8.05% month-on-month. Borrowing in the construction sector also showed growth, rising by 4.66% y/y and 0.8% m/m to PKR 202.87 billion.
The agriculture, forestry and fishing sectors recorded loans totaling PKR 434.77 billion in November, up 10.52% year-on-year and 6.19% month-on-month.
These numbers come after interest rates rose. Going forward, a lower benchmark interest rate may signal an improvement in borrowing in the coming months.