With ongoing political turmoil, foreign banks may have all but packed up and left Pakistan, but the financial sector has barely noticed. Indeed, assets and deposits have doubled between the end of 2008 and June 2014, while Islamic banking has begun to make its impact felt.
Pakistan's microfinance industry has slowly been gaining traction in recent years, and is in for a huge boost when new biometric identification methods are brought into the mainstream – primarily to help combat terrorism – which will allow banks to verify new customers remotely.
Having had a long and successful career in the commercial sector, Mohammad Zubair, Pakistan's privatisation minister, understands the importance of the country's privatisation drive. But, not everybody shares his enthusiasm, with the heavily unionised companies putting up resistance to the privatisation plans, and foreign investors wary of the country's less-than-perfect track record in denationalisation deals.
Dogged by a history of political instability, Pakistan has struggled to secure trading partners or attract much in the way of foreign investment, at the expense of its economy. However, a new pro-business government and a revival in GDP growth suggest that the country's economic fortunes might finally be on the up.
The Banker has identified 13 banks to keep an eye on in the coming year based on a variety of factors. Pakistan-based Tameer Bank has been selected for its mobile banking service, which is one of the first successful mobile banking schemes to employ a bank-led, commercially driven model.
Despite an extremely challenging fiscal, political and security environment, Pakistan's banks have remained remarkably resilient. But high interest rates, low economic activity and a bruised consumer portfolio continue to suppress loan growth. Writer Michelle Price