This is Jensen Huang, the CEO of Nvidia, the world's biggest tech company. But first tell me - how big is Nvidia exactly? Very big. Bigger than the entire economies of Canada, UK, Japan and India combined. In the last 3 years Nvidia's stock has gone from $20 to almost $200. That's a 10x return in 3 years.
But Nvidia's returns are nothing compared to
what's happening closer to home. Meet Zubair Bhai. After his retirement he
bought 1 lakh shares of NBP in June 2023 when the share price was ₹20. You know
what NBP's share price is today? ₹275. That's 14 times in less than 3 years.
There is no doubt that the stock market has been
on fire for the last 3 years. It's one of the best performing in the world.
Growth has come in every sector. But the banking sector has had its fingers in
the butter and its head in the pot. Let me show you. UBL 10x. Meezan Bank 7x.
Askari Bank 10x. Bank of Punjab 12x. Half the points that came in the KSE-100
index in 3 years came from these banks alone.
But if you're a regular WordsHvPower website viewer you probably
have a critical thinking mind and you're wondering - Nvidia's growth makes
sense because in the last three years AI tools have taken over the world. From
script writing to call centers, from movies to self-driving cars, everything is
using AI. ChatGPT, Midjourney, Gemini, Claude, a new product keeps hitting the
market. But whether it's Google or Microsoft, OpenAI or Meta, Tesla or Amazon -
one heart beats inside all their data centers. Nvidia. Because all these
platforms use Nvidia chips for data processing.
But why are Pakistani bank stocks rising so much?
Especially when the Pakistani economy is going through one of the worst cycles
in its history?
Look, we always say - follow the money.
Understand where the money goes and the world's biggest secrets start making
sense. In today's documentary we are going to lift the curtain on all the
secrets of Pakistan's banking sector. We'll tell you why and how a sector that
is only 2 to 3% of our economy dominates the stock market. And what is the
reason that from Moeen Qureshi and Shaukat Aziz to Shaukat Tarin and Muhammad
Aurangzeb - no matter which party is in power, the treasury is always in the
hands of a banker.
We will analyse with data and evidence whether
these banks are a wrong number. And maybe during reading this article a question will come to your
mind - banks have been operating for 78 years, they employ so many people, they
look after our money. Who are you to question banks? Why hasn't anyone raised
these questions before?
Shah Ji already answered that question many years
ago. Deep pockets. What does that mean? Very influential people who control the
media. But we are not controlled by these big companies because our funding
comes from your viewership and subscriptions, not from them.
By the way, we have a question for you. You
happily pay money for services like plumbers, mechanics, carpenters and
tailors. So why do you want to hear and see the truth for free? Remember, truth
has a price. And in Pakistan the truth is very expensive. Nobody knows this
better than WordsHvPower.
So please support and join our community.
Who Are The Banks in Pakistan?
Before understanding what banks do, let's take a
look at who they actually are. In Pakistan there are three types of banks.
Number one - Commercial. Number two - Development Finance Institutions or DFIs.
Number three - Microfinance Banks.
In this blog article we will keep our focus on the elephant in the room -
commercial banks. Right now 28 commercial banks are operating in Pakistan and
these banks hold $37 trillion worth of deposits from the Pakistani public which
comes to roughly 120 billion dollars. Around 50% of these deposits are with
three big banks - HBL, National Bank and United Bank. While Sharia compliant
Meezan Bank holds 10% of total deposits.
Now the critical question - who owns these big
banks?
The biggest bank is HBL and it belongs to the Aga
Khan Foundation. National Bank is owned by the Government of Pakistan. UBL is
controlled by the UK based Best Way Group. 65% of Meezan's shares are held by
Kuwaiti companies. Bank Al Habib is owned by Karachi's Dawood Habib Group. Bank
Alfalah belongs to the Abu Dhabi Group. MCB is Mian Mansha's bank. Faisal Bank
is owned by Bahrain's Ithmaar Bank. Habib Metropolitan is owned by
Switzerland's Habib Bank AG Zurich. Standard Chartered Bank is a subsidiary of
the British Standard Chartered. And if you live in Pakistan and don't know who
owns Askari Bank - please close Raftar and go watch Cocomelon.
What Do Banks Actually Do?
Now the most important question - what do banks
actually do? It's basically a shop for the transaction of money. People who
have extra money give it to banks. And banks give that money to people who need
it. By keeping their commission in the middle of this transaction, banks make
money.
People could technically do this among themselves
directly. But the risk would be very high. Someone could run away with the
money, someone could get robbed. It's a big responsibility and for this you
always need a trustworthy person or institution. These days banks do this job.
But 1000 years ago this responsibility belonged to religious leaders.
In ancient times temples and places of worship
were considered safe places because of their religious sanctity and people's
fear of God. Laying hands on them was considered dangerous. But with time these
places of worship started giving loans, charging interest, financing trade and
even lending to kings. In practical terms places of worship became the world's
first banks. Now you understand why our Ghaznavi brothers kept showing up at
Somnath?
Who Gets the Money?
Anyway, back to the future. These 120 billion
dollars sitting in banks belong to roughly 9 crore people in Pakistan. 35% of
Pakistani adults have bank accounts which is the lowest in our region. In India
around 90% of adults have accounts. In Sri Lanka the number is 82% and even
Bangladesh has 43% of adults with accounts.
In recent years the State Bank has done a lot of
work on this issue. Especially because of digital accounts this number has
improved significantly. But opening a physical account in Pakistan is still not
easy. In this country it's easier to buy smuggled gold than to open a bank
account.
You call right now and someone will tell you the
current gold rate. Say you want one tola delivered. They'll come, take the
cash, say salaam and leave. Fine. Now say you want to open a bank account. Oh
that's a difficult thing. Go downstairs, there are four banks right there, go
open one. Nobody will open it for you. Who are you? Why did you come here? And
if you're a woman - God help you. They'll say where's your proof of income? No
income? Then there must be a father or someone whose salary we can verify
because we won't accept yours.
The Lending Problem
Now the second important question is - who do
banks give money to?
Last year for the first time we needed financing.
We have a private limited company with audited records that show we can handle
and repay the financing. But I was shocked when they told me that no matter how
good your company is, no matter how good your records are, you cannot get
financing above 10 million without real estate collateral. When I heard their
criteria I realized that even the Islamic banks here are not incentivized
enough to finance smaller companies. No matter how good their standing is. No
matter their track record.
And he's absolutely right. Pakistan's private
sector debt is less than 10% of the country's GDP. In the Philippines this
number is 50%, in Bangladesh it's 35% and even in a country like Egypt this
ratio is 26%.
According to the State Bank, Pakistani banks'
Advance to Deposit Ratio - ADR - is only 35%. This is unique to Pakistan. And
essentially the function of banks is to provide lending to individuals,
corporates and businesses in order to grow the economy. The ratio of private
businesses to government deposits - normally that was around 70% roughly in
2003 and 2004 - it is now at 30%. Which means government deposits in banks are
increasing. Private business deposits are decreasing. Giving loans to common
people is not even the goal of this current banking system in my opinion. The
focus - what we always call elite capture - the entire banking system has
always been focused there and it still is.
So banks give only ₹35 out of every ₹100 in
deposits to the private sector. Which includes home loans, car loans, credit
cards and business loans etc. Meaning out of all the money you and I have
deposited in banks, only 35% is used to fulfill the needs of people like us.
Where Does the Rest of the Money Go?
Now you must be wondering where the rest of our
money goes. Practically speaking, all the money we keep in accounts is given by
banks to the government in the form of loans. The Investment to Deposit Ratio -
IDR - indicates exactly this and it reached 100% in June 2025.
You might be thinking what's the problem with
that? Well the IMF says that in poor countries whenever government debt goes
above 35%, the pace of that country's development starts to slow down. That's
because governments use this money for their own extravagant spending instead
of using it productively. And because governments are a big and safe client,
banks keep all their attention on them. Why bother giving housing loans of 50
lakhs to 1 lakh different people when you can give ₹500 billion to one big
client - the government - in one go? Less running around and the risk of
lending to the government is practically zero. If nothing else works they'll
just print notes and pay back.
But the question is - is all the blame on the
banks?
In 2008 the government of Pakistan was borrowing
24% of its needs from the banking sector to cover its fiscal deficit. That 24%
in 2008 is now at around 85 to 86%. The government's fiscal needs are now being
met from the banks' balance sheets.
The second thing is that the legal position in
Pakistan's industries and economy right now is such that banks are scared. If
let's say we give a mortgage and there's a default - in developed countries or
where mortgages are very common - it doesn't take too long for banks to go to
court, get a verdict in their favor and then sell the property and give a loan
to someone else. Here we still need to cover that distance.
In this whole deal banks and the government stay
safe but the economy gets wrecked. Because the economy runs not from the
government and banks but from businesses. And liquidity or cash flows are like
blood in any business. If the body is short of blood it suffers from severe
weakness, fatigue and pain. This is exactly the condition of our private
sector.
Someone rightly said that the safest place for
ships is airports and hangars. But ships are not made to stand in hangars. This
is somewhat the case
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