KARACHI - The banks total non-performing loans (NPLs) swelled by Rs2.6 billion to Rs460 billion during the second quarter (April-June) of current calendar year 2010, compared with Rs458 billion in the first quarter this year. However, the net NPLs of banks amounted to Rs124 billion in April-June 2010 from Rs134 billion, showing Rs10 billion decline over the last quarter. The Net NPL ratio for the all banks declined to 3.81 per cent from 4.2 per cent registered at the end of 1Q2010. The cash recovery against NPLs swelled to Rs19 billion in (Apr-Jun) from Rs15 billion in Jan-Mar) same year. Although, the raise in the volume of NPLs show some deterioration in the asset quality of the banking system, but a significant drop in accretions compared to the past two quarters due to improved macroeconomic situation of the country. The SBP reported on Thursday that all commercial banks witnessed Rs2 billion increased in bad loans as such loans amounted to Rs432 billion at end-June from Rs430 in the first quarter of the prevalent calendar year while total number of NPLs of the banking system including Development Financial Institutions (DFIs) reached Rs129 billion as against Rs139b in 1Q2010. Banks category-wise breakup on NPLs show that NPLs in 2Q2010 for private sector banks rose by Rs4.7 billion to Rs308 billion (Rs15bn in 1Q2010) whereas those for specialized banks up by Rs1.1 billion to Rs29 billion (reversals of Rs852mn in 1Q2010). Interestingly, NPLs for the public sector banks (NBP, BOP, BOK & First Woman Bank Ltd.) reflected reversals of Rs4.3 billion, bringing down NPLs to the level of Rs116 billion, as against Rs121 billion or accretions of Rs4.8 billion in 1Q2010. It may be mentioned here that NPLs in the all banks category had raised by Rs19.6 billion in 1Q2010 and Rs16 billion in 4Q2009. The declining NPLs trend has been confirmed via the banking results announced so far, where NPL build up has slowed and thus most of the provisioning on loans is down to category shifting in NPLs. Resultantly, this has led to improved coverage ratios. Many analysts believe that Banks volume of non-performing loans (NPLs) are expected to be ballooned much more and banking, and lending institutions including commercial banks, which has one of the largest share in credit disbursement market may face bigger-than-anticipated difficulties in recovering and paying back the loans especially distributed to agriculture, cropping and live stock sectors borrowers in the flood-hit areas of the country. Although, it is premature to assess the losses of the devastation caused by this worst-ever natural calamity, but it is said that the losses are billions in rupees. Moreover, according to World Bank report, floods in Pakistan may have destroyed crops worth around $1 billion. The cropping sector has adversely affected by this disaster as cotton, wheat and sugarcane, rice harvests totally wiped out in the Southern Punjab and in upper parts of Sindh province. In addition to that, floods triggered by torrential monsoon downpours have badly impacted agri-production areas in Khyber Pakhtunkhwa.