Comment by Riaz Haq on March 26, 2018 at 9:34pm

Solid performance by Pakistan’s banking sector in 2017, State Bank reports

http://www.arabnews.com/node/1271156/business-economy

Pakistan’s banking sector remained sound and stable in 2017, with total assets growing to Rs18.34 trillion ($159.5 billion) from Rs15.83 trillion the previous year.
However, in its latest Quarterly Performance Review of the Banking Sector — covering the final quarter of 2017 and published on March 21 — the State Bank of Pakistan (SBP) revealed the number of loss-making banks rose to five, from three in 2016.
“Two additional loss-making banks posted marginal profits in 2016 and they belong to the lowest quartile of the banking sector in terms of asset base,” said SBP. “Rising cost of operations has compelled these banks to incur losses in 2017.”
Equity increased by Rs36.7 billion (2.7 percent) during the quarter, compared with Rs28.4 billion (2.1 percent) during the same period in 2016.
“Banks have added 305 branches and 416 ATMs during the fourth quarter of calendar year 2017, while 304 additional branches have been linked to the online network,” SBP noted. “There has also been a rise in point of sales machines and plastic cards.”
In terms of assets, the sector performed as per trend during the quarter. They increased by 4.5 percent, compared with 4.6 percent quarterly growth recorded a year earlier. About 70 percent of the growth in total assets came from net advances and net investments.
On a year-on-year basis, assets grew by 15.9 percent in 2017 compared with 11.9 percent the previous year. Net advances grew by 18.4 percent, and net investments by 16.2 percent.
As for liabilities, growth in deposits was subpar, the central bank said. During the quarter, banks recorded a 3.2 percent increase in deposits, and an annual increase of 10.3 percent. These compare with 2016 figures of 6.4 percent in the fourth quarter, and 13.6 percent for the year. As a result, borrowing by banks substantially increased to Rs280.1 billion, compared with retirement of Rs69.4 billion during the same period last year.
Islamic banking institutions, which represent 12.4 percent of banking-sector assets, contributed 24.1 percent (Rs 188.6 billion) of asset growth during the quarter, compared with the same period a year earlier. Year on year, they accounted for 16.7 percent (Rs 418.8 billion) of total asset growth.
The seasonal pick up in private-sector advances stands at 7.3 percent for the quarter, down from 10.6 percent in the final quarter of 2016.
“This is on account of a decline in advances to the chemical and pharmaceuticals sector, and lower advances flows to sugar and energy sectors,” SBP noted. “Within the chemical and pharmaceuticals sector, fertilizer companies have retired their advances during [the quarter]. Higher cash flows resulting from release of the stocks accumulated since 2016, and lower fertilizer production in 2017 due to higher liquefied natural gas prices and its limited availability have led to the decline in advances by fertilizers.”

Comment by Riaz Haq on March 8, 2020 at 11:37am

#Citibank #Pakistan scaled back, and became bigger than ever. Just 7 years after ending its retail operations in the country, the #global #bank is more #profitable than at any point in its history in Pakistan… and remains a breeding ground for top talent

https://profit.pakistantoday.com.pk/2020/02/24/citibank-pakistan-sc...


And its return on equity – the all-important measure of bank profitability – is higher than it has ever been over the past two decades for which data is publicly available. Despite accounting for just 0.7% of the banking industry’s deposits, as of September 30, 2019, the latest period for which financial data is available, Citibank Pakistan accounts for 2.5% of its profits.

And Citibank was able to do this by going back to its roots: a global corporate and investment bank, with a presence across most economies around the world, a connecting financial institution that forms part of the backbone of the global financial system.

Citibank’s unique place in Pakistan

There is perhaps no foreign bank that captures the Pakistani imagination more than Citibank. Despite being much smaller than its current rival Standard Chartered, Citibank seems to have produced more financial leaders in Pakistan than any other financial institution. In both Corporate Pakistan – as well as the government – it means something special to be able to call oneself an “ex-Citibanker”, more so than any other financial institution.

The bank’s alumni in Pakistan include two former federal finance ministers – Shaukat Aziz and Shaukat Tarin – one of whom (Aziz) went on to become Prime Minister. They also include two provincial finance ministers – Murad Ali Shah of Sindh and Hashim Jawan Bakht of Punjab – one of whom (Shah) went on to become provincial chief minister. While Shah and Bakht are both from politically influential families, Aziz and Tarin’s rise in the federal government was in no small part due to the stature they gained as being highly successful global bankers who spent a significant portion of their careers at Citigroup.

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Standard Chartered, while a London-headquartered global bank, does not have a significant presence in investment banking. It is a strong corporate and commercial bank, but not an investment bank. In the world of capital markets and investment banking, Standard Chartered shows up nowhere in the global league tables (essentially, a ranking of financial institutions by total investment banking revenue).

Citi, on the other hand, is consistently in the top 5, earning $4.3 billion in investment banking revenue in 2019, according to data from Refinitiv, a financial data provider owned by Reuters.

What does any of this mean?

It means that while Standard Chartered can use its rupee-denominated local deposits to buy local, rupee-denominated bonds from the government of Pakistan, if Islamabad wants to issue dollar-denominated bonds to investors outside the country, the only bank with a local office it can talk to is Citi. (Technically, Deutsche Bank has also been a global investment banking powerhouse, and has offices in Pakistan, but its global investment bank has effectively self-immolated, so the less said about that, the better.)

And this is not just a theoretical capability: it is one that Citigroup has actively cultivated, having served as the government of Pakistan’s investment banker on nearly all global bond issuances, and several privatisation transactions as well.

Comment by Riaz Haq on December 24, 2022 at 9:50am

Banks’ income, assets flourish in 1HCY22

https://www.dawn.com/news/1723769

https://www.sbp.org.pk/press/2022/Pr-28-Nov-2022.pdf

Banking in Pakistan flourished during the first half of the calendar year 2022; both assets and income noted a strong increase while the balance sheet of banks expanded by 16 per cent over the same period of last year.

The State Bank issued a “mid-year performance review” (MYPR) of the banking sector for 2022 on Monday.

The review covers the performance and soundness of the banking sector for the January-June period (1HCY22).

It also covers the performance of financial markets and microfinance banks (MFBs), as well as the results of Systemic Risk Survey (SRS), which represents independent respondents’ views about key risks to financial stability.


The sustained economic activity during 1HCY22 supported the expansion of banking sector balance sheet by 16pc during 1HCY22, said the report.

A robust increase in the asset base was mai­nly driven by the flow of private sector advances and increases in investments, particu­larly government securities, said the report.

Investments rose by 22.5pc (Rs3.3 trillion) during 1HCY22. “These funds were almost entirely invested in government securities,” said the SBP report.

Investments in MTBs (market treasury bills) and PIBs (Pakistan Investment Bonds) observed a rise of Rs684 billion and Rs1.7tr, respectively.

Also, Ijara Sukuk attracted substantial bank funds of Rs838 billion in the first half of the present calendar year. Accordingly, the share of MTBs in banks’ total holding of federal government securities declined to 33.6pc by the end of June this year from 46.6pc a year ago. The share of PIBs shot up to 52.6pc from 46pc in June -2021.

“Increased share of long-term investments demonstrates the government’s strategy to improve its debt maturity profile,” said the SBP. The pace of growth in private sector advances during 1HCY22 was the highest in comparable periods of the previous three years. Improved manufacturing activity, as reflected in double-digit growth in the Large-Scale Manufacturing (LSM) index during 1HCY22, higher input prices and SBP’s refinance schemes augmented the overall flow of advances.

Individuals and the sugar sector availed a major chunk of financing, followed by the textile sector.

However, the monetary policy announced on Nov 24 had said that in line with the slowdown in economic activity, private sector credit continued to moderate, increasing only by Rs86.2 billion during Q1 FY23 (July 1 to Sept 30, 2022), compared to Rs226.4 billion during the same period last year.

This deceleration was mainly due to a significant decline in working capital loans to wholesale and retail trade services, as well as to the textile sector in the wake of lower domestic cotton output, and a slowdown in consumer finance, said the monetary policy.

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