Analyzing the third quarter (Q3) report, we came to know the industrial growth of listed commercial banks have slowed down to 12% this year. The same was above 20% in the previous years. The logic for this is simple, the growth rate of expenses has exceeded the growth rate of income and as a result the net profit growth has decreased its pace.
Reviewing the expense side of profit and loss in commercial bank’s balance sheet, one can easily notice the tremendous growth of interest expense. The unhealthy competition between banks and financial institutions (BFIs) to attract the deposits has resulted in an enormous increase of interest expense. The average interest expense growth of commercial bank stood astounding 95% in last one year.
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