Category: Money & Banking

Money and banking drive economic activity by facilitating transactions, savings, and investments. Banks manage financial resources, offer credit, and regulate money supply, ensuring stability and growth in Pakistan’s financial sector.

National Bank declares marginal growth in profit with over 20 percent high earnings in nine months

KARACHI: National Bank of Pakistan (NBP) has declared marginal growth in after tax profit of one percent for nine months period ended September 30, 2019. However, income of the bank posted over 20 percent increase for the period.

According to a statement issued by the bank, after-tax profit for the nine-months period amounted to Rs 16.3 billion being marginally 1.0 percent higher than Rs 16.2 billion earned during the corresponding period of 2018.

Meeting of the Board of Directors (BoD) of the bank held on October 29, 2019 (Tuesday) at the bank’s Head Office in Karachi in which the BoD approved financial statements of the bank for the nine-months period ended June 30, 2019.

For the nine-month period, total income of the bank amounted to Rs 79.4 billion which is 20.3 percent higher than Rs 66.0 billion YoY. While net interest income closed at Rs 53.9 billion, non-mark-up / interest income closed at Rs 25.6 billion, up by 23.7 percent and 13.7 percent respectively.

With an increase of 26.2 percent YoY, the bank’s profit before taxation amounted to Rs 29.2 billion as against Rs 23.1 billion for September 2018.

The drop in after-tax profit is mainly attributed to higher taxation charge of 44.0 percent as compared to 30.0 percent for the corresponding period last year. Net profit translates into earnings per share of Rs 7.68 as against Rs 7.60 for the corresponding nine-months period of prior year.

Total assets of the bank amounted to Rs 3,025.4 billion which is 8.1 percent higher than Rs 2,798.6 billion as at December 31, 2018.

These represent 13.8 percent of the banking industry total assets. The bank’s market share in deposits, advances and investment is around 14 percent, 12 percent, and 15 percent respectively.

Representing 12.0 percent of the total industry loans, gross advances of the bank amounted to Rs 1,093.4 billion, marginally higher than Rs 1,059.5 billion as at December 31, 2018.

However, compared to Rs 953.3 billion of September 2018, gross advances stand increased by Rs 140.1 billion or 14.7 percent. As of September 30, 2019 deposits of the bank amounted to Rs 1,938.0 billion, depicting a drop of Rs 73.3 billion or 3.6 percent as against Rs 2,011.4 billion as of December 31, 2018.

Deposits constitute translate into ~13.5 percent share in total banking industry deposits. Customer deposits that form 87.5 percent of the bank’s total funding pool remained stable during the period and amounted to Rs 1,695.0 billion (2018: Rs 1,674.12 billion).

Year 2019 is NBP’s 70th year of service to the Nation, and it continues to deliver strong results. Its business strategy is evolving to ensure a focus on inclusive development through reaching and supporting underserved sectors including SME, Microfinance, Agriculture Finance, and finance for Micro-Housing on a priority basis.

This is in addition to the bank’s dominant role in dealing with public sector enterprises and its employees. Building a digital banking capability and a technology platform will be a central part of this strategy as will the inculcation of a performance driven culture within the institution.

For achieving the strategic goals of the bank, certain functions at the Head Office level have been re-organized to create synergies and enhance risk controls.

October 30, 2019
Rupee gains eight paisas on better economic projections

KARACHI: The Pak Rupee gained eight paisas against dollar on Tuesday owing to better economic projections of the central bank.

The rupee ended Rs155.78 to the dollar from previous day’s closing of Rs155.85 in interbank foreign exchange market.

Currency experts said that the rupee gained on the back of projection made by the State Bank of Pakistan (SBP) a day earlier about improved economic conditions were visible due to reforms taken.

The foreign currency market was initiated in the range of Rs155.80 and Rs155.85. The market recorded day high of Rs155.84 and low of Rs155.77 and closed at Rs155.78.

The exchange rate in open market also witnessed appreciation in local currency value. The buying and selling of dollar was recorded at Rs155.70/Rs156.00 as compared with previous day’s closing of Rs155.80/Rs156.10 in cash ready market.

October 29, 2019
Consumer financing loses pace on housing, car loan shocks

KARACHI: The consumer financing has lost pace in fiscal year 2018/2019 to total loans of Rs57.3 billion as compared with Rs86.5 billion in preceding fiscal year. The major drag came from auto and house financing segments, State Bank of Pakistan (SBP) said in its annual report on Pakistan Economy 2018/2019.

The SBP issued the report a day earlier, stating that the auto and housing financing suffered due to the government’s ban on non-filers from purchasing/ registering assets such as cars and residential properties (above Rs 5 million), several price hikes of cars, and rising interest rates.

The anticipation of new product launches and phasing out one popular model also played their part, as some customers may have adopted a wait-and-see approach.

The SBP data shows that the car financing fell to Rs22.2 billion in fiscal year 2018/2019 as compared with Rs43.3 billion in preceding fiscal year. Similarly, housing loans fell to Rs10.4 billion in 2018/2019 as compared with Rs22.3 billion in the preceding fiscal year.

The SBP said that since interest rates were on an upward trajectory, the substantial increase in installment amount compelled borrowers to either opt for high equity participation ratio or avoid bank financing altogether.

Apart from these factors, the popularity of ride hailing services, which itself was an early contributing factor to the rise in auto financing, also seemed to have reached its saturation level, thereby negatively contributing to the growth in advances.

The SBP said that in terms of outstanding portfolio, Islamic banks were able to keep their share intact at around 46 percent as of June 2019. However, in flow terms, the increase stemmed mainly from conventional banks where medium-sized players dominated.

Nonetheless, the ban on non-filers on purchasing property (above Rs. 5.0 million) kept this segment suppressed during the year. As per industry sources, the increased price levels also eroded the capacity of many households to afford residential units in close vicinity of urban centers.

Moreover, as per anecdotal evidence, consistent interest rate hikes during the year significantly raised the installment amount for potential borrowers, many of whom stand disqualified due to the breach of the maximum required debt-burden ratio.

Compared to other segments, personal loans and consumer durables performed better. The flow of FY19 for consumer durables was historically highest, but price impact mainly explained this phenomenon, as there was more than double-digit inflation in consumer durables during the year.

The argument also gets support from the fact that while banks received around 20 percent lower applications, the average loan size of accepted applications more than doubled to Rs 2.8 million in FY19 from Rs 1.2 million last year.

October 29, 2019
SBP emphasizes more efforts for taking Pakistan out of FATF grey list

KARACHI: Dr. Reza Baqir, Governor State Bank of Pakistan (SBP) on Monday emphasized on putting more effort against money laundering and terrorist financing to ensure that Pakistan is out of grey list in the next meeting of FATF.

While inaugurating the conference on Anti-Money Laundering (AML)/ Combating Financing of Terrorism (CFT) and Trade-Based Money Laundering (TBML), Dr. Reza Baqir, Governor State Bank stated that significant progress has been made between May and September 2019 to meet the action plan items set by Financial Action Task Force (FATF) in different areas to demonstrate effectiveness of AML safety regime of Pakistan.

There was a major rethink of the approach being taken by the authorities in early to mid 2019. Consequently, a number of steps were taken to significantly strengthen our approach to making progress on these issues.

He however, stressed for the need of putting more effort to make progress on remaining areas to ensure that Pakistan is out of grey list in the next meeting of FATF.

He was speaking to the conference conducted by SBP and Asian Development Bank today at SBP, Karachi in a collaborative effort to mitigate the risks of money laundering and financing of terrorism.

Speaking at the conference, the Governor informed the audience that since the grey-listing, State Bank has arranged many AML/CFT outreach and awareness programs for its regulated entities and stakeholders and that the conference is a useful platform to understand the AML/CFT challenges being faced globally and the best practices followed in mitigating such challenges.

In the context of implementing AML/CFT requirements, the Governor urged the financial sector to make efficient use of technologies for assessment of risks, controls and ongoing monitoring of financial transactions and enhance capacity by continuous training of their employees.

Dr. Baqir emphasized that trade based money laundering poses complex and sophisticated challenges and that SBP inspection teams conducted thematic inspections of banks with respect to export and import of specific goods.

He also referred to State Bank’s framework for managing risks of trade based money laundering and terrorist financing which has been issued to encourage authorized dealers (banks) to effectively manage the trade based money laundering and terrorist financing risks.

Ms. Xiohang Yang, Country Director ADB, and Mr. Mohsin Ali Nathani, President & CEO HABIBMETRO Bank also spoke on the occasion. Ms. Yang stated that ‘AML/CFT is a critical issue for trade finance, which is why ADB’s Trade Finance Program is playing an increasing role in this space. She stated that ADB has a strong commitment to work with Pakistan’s banking sector and the SBP on this issue.

Ms. Yang further stated that the FATF has identified enhanced capacity building/training in AML/CFT as an immediate priority requirement and they are pleased to partner with the SBP and thankful to HABIBMETRO Bank for organizing the same.

Mohsin Ali Nathani, President & CEO HABIBMETRO Bank while addressing the conference added, ‘Enhancement of AML & CFT efforts through increased awareness and strengthened systems, controls and processes is imperative for our country and the banking sector. HABIBMETRO Bank is pleased to organize this conference and bring together relevant stakeholders from the region, regulator and banking sector to re-affirm our collective commitment to mitigating the risks of Money Laundering and Terrorism Financing.’

During the conference several prominent speakers and panelists discussed the requisites and obligations with regard to AML and CFT, including Terrorism Financing Risk Assessments, Transnational Risks in Trade Based Money Laundering (TBML), risks posed by DNFBPs & NPOs and Ultimate Beneficial Ownership.

The conference also included a detailed discussion on the impact of Trade Based Money Laundering and the repercussions of the same for the banking sector especially in the context of grey listing.

The conference was organized by HABIBMETRO Bank and attended by the Deputy Governor State Bank of Pakistan, Country Head Asian Development Bank and international experts in the field of AML/ CFT and trade from the United States, Australia and UAE.

Participants included CEOs and senior management of Banks, DFIs, Microfinance Banks and Exchange Companies and representatives from the SBP, Financial Monitoring Unit (FMU) and Securities & Exchange Commission of Pakistan (SECP).

October 29, 2019
Rupee gains four paisas amid dollar demand

KARACHI: The Pak Rupee gained four paisas against dollar on Monday amid higher demand for import and corporate payments.

The rupee ended at Rs155.85 to the dollar from last Friday’s closing of Rs155.89 in interbank foreign exchange market.

Currency experts said that the rupee was under pressure during the day owing to higher demand for the greenback due to past two weekly holidays.

However, supply from workers’ remittances and export receipts helped the rupee to make gain at the end of the day.

The exchange rate in open market however witnessed stable rupee value. The buying and selling of dollar was recorded at Rs155.80/156.10, the same last Friday’s closing, in cash ready market.

October 28, 2019
SBP issues common red flag indicators for trade based money laundering

KARACHI: State Bank of Pakistan (SBP) has issued common red flag indicators for banks to take care in avoiding trade based money laundering and terrorist financing.

Following are the common Red Flag indicators:

i. Obvious over or under/over pricing of goods (significant discrepancies appear between the value of the goods reported on the invoice/EIF/MIF, EFE/MFE, Advance Payment Voucher and the known fair market value of the goods).

ii. The description of goods on the Goods Declaration Form/Transport documents significantly varies from the description declared on EIF/MIF, EFE/MEF or underlying contract.

iii. Significant variation is found between the description of the goods on the bill of lading and the invoice.

iv. There are indications that the description of the goods is disguised.

v. The tenor of the transaction does not commensurate with the nature of the underlying goods – for example perishable goods are traded on terms involving lengthy usance period.

vi. Documents such as a letter of credit is received through unverified channels such as unauthenticated SWIFT message.

vii. The type of goods being shipped appears to be inconsistent with the exporter’s or importer’s regular business activities.

viii. The size of the shipment does not commensurate with the size of the exporter’s or importer’s regular business activities.

ix. The packaging of goods is inconsistent with the commodity or shipping method.

x. The goods are transshipped through one or more countries/jurisdictions for no apparent economic or logistical reason.

xi. The country from which goods are being shipped is designated as “high risk” for money laundering activities.

xii. The transaction involves the receipt of payments from third parties that have no apparent connection with the transaction.

xiii. The method of payment apparently does not commensurate with the risk characteristics of the transaction e.g. the remittance of funds in advance payment for a shipment from a new supplier in a high-risk country.

xiv. The transactions involving consecutive trade discount offered by exporters to the same importer.

xv. The transaction involves repeatedly amended or frequently extended letters of credit.

xvi. An exporter receives advance payment(s) but does not make shipment(s) there against.

xvii. An Importer remits advance payment(s) but does not receive shipment(s) there against.

xviii. The transaction appears to involve use of front or shell companies for the purpose of hiding the true parties involved.

xix. The transaction involves import/export of dual use goods.

xx. The item ordered is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing equipment being shipped to a country that has no electronics industry.

xxi. Where important details are missing on commercial invoice(s) or mentioned vaguely.

xxii. Where some of the shipping documents are provided in photocopies instead of original against the regularity instructions or against normal business scenarios.

xxiii. Where goods declarations in commercial invoice(s) are not proper, incomplete or otherwise not mentioned at all to conceal the facts.

xxiv. Receipt of proceeds from non-cooperative countries as per FATF list against the shipment made to a third country.

xxv. Where export proceeds are received from unrelated/third party with differing nature of business from that of exporter.

October 28, 2019
Banks disburse Rs26.76 billion business loans to youth

KARACHI: Banks have disbursed an amount of Rs26.76 billion under Prime Minister’s Youth Business Loans (PMYBL) till June 30, 2019 as against the amount of Rs25.13 billion disbursed till June 30, 2019.

The number of borrowers has been increased to 26,679 by end June 2019 as compared with 25,128 borrowers by end June 2018, State Bank of Pakistan (SBP) said on Friday.

The government, being cognizant of the important role played by youth and small businesses in the economic development, introduced Prime Minister’s Youth Business Loans (PMYBL) Scheme in 2013 with the aim of providing youth the opportunities of financial independence through self-employment.

Under the Scheme, small businesses are provided loans up to Rs 2,000,000/- at a service charge of 6 percent p.a.

Total number of applications received by the Executing Agencies (EAs) under PMYBL Scheme as of June 30, 2019 stood at 101,938. Of the total applications received so far under the scheme, 88 percent were from male applicants.

Moreover, since launch of the scheme, number of sanctioned applications stood at 33,145 as on June 30, 2019, while cumulative disbursements of Rs 26,760 million had been made to 26,679 beneficiaries till June 30, 2019.

The SBP said that small businesses have potential to revitalize economic activity by creating employment opportunities, reducing poverty and providing economic linkages and services to the corporate sector.

The growth of small businesses and their access to formal finance is imperative for the development of economy.

However, despite their strong potential, the small businesses, particularly of young entrepreneurs, have traditionally remained credit constrained due to high risk perception of banks towards them.

The government introduced Prime Minister’s Youth Business Loans (PMYBL) Scheme in 2013 for providing the opportunities of financial independence to youth through self-employment.

Under the scheme, unemployed youth are extended loans upto Rs 2,000,000/- at a service charge of 6 percent p.a. for setting up new business or strengthening existing business.

The rate of return for lending banks is one year KIBOR+500 bps. Difference of banks’ rate and borrowers’ rate is being absorbed by the federal government in the form of subsidy.

As a further incentive to the banks, GOP also shares 5 percent of credit losses of total outstanding loan portfolio of the banks under the scheme.

Currently, eighteen banks are participating in the scheme, of which three are public sector banks (NBP, FWBL and Sindh Bank Limited) while the remaining fifteen are private sector banks.

October 25, 2019
Meezan Bank declares net profit of Rs11 billion for nine months

KARACHI: Meezan Bank has declared around Rs11 billion net profit (profit after tax) for the 11-month period ended September 30, 2019. The Board of Directors of Meezan Bank Limited, in its meeting, held October 24, 2019 approved the condensed interim unconsolidated financial statements of the bank and its consolidated financial statements for the nine months period ended September 30, 2019, a statement said on Friday.
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October 25, 2019
Rupee ends unchanged in interbank

KARACHI: The Pak Rupee ended unchanged against dollar on Friday amid lackluster demand for import and corporate payments.

The rupee ended Rs155.89 to the dollar, the same previous day’s level, in interbank foreign exchange market.

The market was initiated in the range of Rs155.88 and Rs155.89. The market recorded day high of Rs155.89 and low of Rs155.86 and closed at Rs155.89.

Currency experts said that the rupee was remained stable in foreign currency market ahead of weekly holidays.

The exchange rate in open market was also witnessed stable rupee value. The buying and selling of dollar was recorded at Rs155.80/Rs156.10, the same previous day’s level, in cash ready market.

October 25, 2019
SBP facilitates overseas Pakistanis in biometric verification

KARACHI: State Bank of Pakistan (SBP) has facilitated overseas Pakistanis in their biometric verification for operating bank accounts.

In a statement on Thursday, the SBP said that realizing difficulties being faced by overseas Pakistan in operating their bank accounts due to non-biometric verification of their accounts, State Bank of Pakistan has issued detailed instructions on the alternate arrangement to facilitate their biometric verification.

It may be mentioned here that as per alternate arrangement, overseas Pakistanis may approach their respective banks through email/surface mail and provide identity documents like valid Passport, Visa, CNIC and NICOP (National Identity Card for Overseas Pakistanis) as an alternative arrangement for biometric verification for operating their bank accounts as usual.

The arrangement has been made in line with State Bank’s continuous monitoring of the progress of the banking industry with respect to biometric verification; and it has been reiterated to banks for extending their fullest cooperation to their overseas customers.

October 24, 2019