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Offline Learner7

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Banking Sector
« Reply #-1 on: November 24, 2009, 09:31:21 AM »
All about the Banks
« Last Edit: February 01, 2012, 10:03:41 PM by M&M »

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Banking Sector
« Reply #-1 on: November 24, 2009, 09:31:21 AM »

Offline Learner7

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Re: Banking Sector
« on: November 24, 2009, 09:32:21 AM »
Banks may be under pressure today because of the news of increased Govt. borrowing from the commercial banks instead of the SBP.

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Re: Banking Sector
« Reply #1 on: November 24, 2009, 10:18:52 AM »
MP rate cut will offset it.

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Re: Banking Sector
« Reply #2 on: November 24, 2009, 04:08:43 PM »
SBP ensures sound financial system: Raza  


KARACHI (November 24 2009): State Bank of Pakistan Governor Syed Salim Raza has said the central bank strived to strike a balance between price stability and growth in a challenging economic environment and ensured a stable financial system by proactively responding to emerging risks and challenges to the banking system and taking appropriate corrective measures in time.

In his message embodied in the Annual Report (Vol. II) on the State Bank's Performance Review for 2008-09, released on Monday, Raza said the implementation of the macroeconomic stabilisation programme was primarily driven by tightening monetary and fiscal conditions to facilitate the resolution of structural problems.

"These measures yielded results in subsequent months: fiscal deficit was substantially contained, from Rs 777.2 billion in FY08 to Rs 680.4 billion in FY09, at 5.2 percent of GDP (down from 7.4 percent in FY08), on the back of elimination of subsidies as well as cut in development expenditure," he added.

He said monetary tightening had a visible impact on CPI inflation which fell from its peak of 25.3 percent in August FY09 to 13.1 percent by June FY09; giving the SBP the much-needed breathing space to shift the direction of its policy stance. Furthermore, after unabated expansion in the last four years, the current account deficit contracted considerably to 5.3 percent of GDP during FY09, from 8.4 percent in FY08.

"These positive developments need to be viewed with caution, however, given that the economy continues to be fragile, and an assessment of the balance of risks continues to present a mixed picture," he added. Raza said as inflationary pressures began to ease, the SBP reduced its policy rate by 100bps each in April FY09 and August FY10, to 13 percent.

Notably, it was the consistent approach to curbing excessive demand pressures which helped subdue inflation. In FY09, the SBP issued three monetary policy statements (MPSs), ie, for the first half and then one each for the last two quarters of the year. In November FY09, the SBP also announced interim monetary policy measures.

Cognisant of the uncertain and rapidly changing macroeconomic environment, and to enhance the effectiveness of monetary policy, the SBP decided in January FY09 to increase the frequency of its monetary policy statements; first to quarterly basis, and from August FY10, the frequency was further increased to six times in a fiscal year, he added. Similarly, to further enhance the transparency and credibility of the monetary policy formulation process, the SBP constituted an independent Monetary Policy Committee (MPC) comprising both internal and external members.

He said segregation of debt and monetary management with an objective of strengthening the monetary policy framework was the highlight of FY09. In January FY09, the responsibility of deciding the cut-off yields in the primary auctions of Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs) was shifted to the Ministry of Finance, while the SBP's role was to manage the operational aspect of the auctions.

"This measure was taken to communicate that changes in the cut-off rate are not reflective of the monetary policy stance, while allowing the SBP to focus on liquidity management consistent with the requirements of monetary policy implementation," he added.

The SBP Governor said in response to the changing economic and business cycle, the central bank also stepped in to facilitate the banking sector by rationalising the minimum capital requirement to Rs 10 billion, to be implemented in a phased manner by December 2010, and allowing the use of 30 percent of the Forced-Sale Value (FSV) of collateral in calculating provisioning requirements for the rising base of Non Performing Loans (NPLs).

In view of the complexed regulatory requirements of large financial conglomerates, the SBP also signed a Memorandum of Understanding with the SECP to undertake consolidated supervision. Similarly, progress on modernisation of the legislative framework including the revamping of SBP Act, 1956, and the Banking Companies' Ordinance 1962 is under way, while efforts are also under way to introduce a Deposit Protection Scheme and a Consumer Protection Act.

Raza said first half of FY09 was characterised by a continuation of pressures in the foreign exchange market. During July-October FY09, the trend of deterioration in current account deficit seen in FY08 accelerated further, mainly owing to higher import prices and a sharp fall in financial inflows. This led to a rapid depletion of foreign exchange reserves along with substantial pressure on the exchange rate.

However, subsequent implementation of a macroeconomic stabilisation programme led to a marked improvement in the external account position in the ensuing months. This also helped the SBP build up foreign exchange reserves which had dropped to $6.7 billion in October FY09, back to the almost end-June FY08 level of $11.4 billion, he added.

He said in continuation of the SBP's efforts to strengthen its reserve management capabilities, substantial value were added to its profitability through active management of the investment portfolio in FY09. On gross return basis, the SBP managed to earn a return of 2.31 percent, which while less than the 4.9 percent return in FY08, is still significant given the situation in the global financial markets, he added.

Referring to several initiatives taken by the SBP to broaden access to financial services to the marginalised sectors of the economy, Raza said the SBP in partnership with the UK Department for International Development launched the Financial Inclusion Programme in July FY09.

The Financial Inclusion Programme worth 50 million pounds is being implemented by the State Bank of Pakistan and the programme was designed and developed through broader consultations with the stakeholders. This will help the SBP implement Pakistan's Microfinance Strategy which was approved by the Prime Minister.

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Re: Banking Sector
« Reply #3 on: November 24, 2009, 05:12:13 PM »
SBP ensures sound financial system: Raza  


KARACHI (November 24 2009): State Bank of Pakistan Governor Syed Salim Raza has said the central bank strived to strike a balance between price stability and growth in a challenging economic environment and ensured a stable financial system by proactively responding to emerging risks and challenges to the banking system and taking appropriate corrective measures in time.

In his message embodied in the Annual Report (Vol. II) on the State Bank's Performance Review for 2008-09, released on Monday, Raza said the implementation of the macroeconomic stabilisation programme was primarily driven by tightening monetary and fiscal conditions to facilitate the resolution of structural problems.

"These measures yielded results in subsequent months: fiscal deficit was substantially contained, from Rs 777.2 billion in FY08 to Rs 680.4 billion in FY09, at 5.2 percent of GDP (down from 7.4 percent in FY08), on the back of elimination of subsidies as well as cut in development expenditure," he added.

He said monetary tightening had a visible impact on CPI inflation which fell from its peak of 25.3 percent in August FY09 to 13.1 percent by June FY09; giving the SBP the much-needed breathing space to shift the direction of its policy stance. Furthermore, after unabated expansion in the last four years, the current account deficit contracted considerably to 5.3 percent of GDP during FY09, from 8.4 percent in FY08.

"These positive developments need to be viewed with caution, however, given that the economy continues to be fragile, and an assessment of the balance of risks continues to present a mixed picture," he added. Raza said as inflationary pressures began to ease, the SBP reduced its policy rate by 100bps each in April FY09 and August FY10, to 13 percent.

Notably, it was the consistent approach to curbing excessive demand pressures which helped subdue inflation. In FY09, the SBP issued three monetary policy statements (MPSs), ie, for the first half and then one each for the last two quarters of the year. In November FY09, the SBP also announced interim monetary policy measures.

Cognisant of the uncertain and rapidly changing macroeconomic environment, and to enhance the effectiveness of monetary policy, the SBP decided in January FY09 to increase the frequency of its monetary policy statements; first to quarterly basis, and from August FY10, the frequency was further increased to six times in a fiscal year, he added. Similarly, to further enhance the transparency and credibility of the monetary policy formulation process, the SBP constituted an independent Monetary Policy Committee (MPC) comprising both internal and external members.

He said segregation of debt and monetary management with an objective of strengthening the monetary policy framework was the highlight of FY09. In January FY09, the responsibility of deciding the cut-off yields in the primary auctions of Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs) was shifted to the Ministry of Finance, while the SBP's role was to manage the operational aspect of the auctions.

"This measure was taken to communicate that changes in the cut-off rate are not reflective of the monetary policy stance, while allowing the SBP to focus on liquidity management consistent with the requirements of monetary policy implementation," he added.

The SBP Governor said in response to the changing economic and business cycle, the central bank also stepped in to facilitate the banking sector by rationalising the minimum capital requirement to Rs 10 billion, to be implemented in a phased manner by December 2010, and allowing the use of 30 percent of the Forced-Sale Value (FSV) of collateral in calculating provisioning requirements for the rising base of Non Performing Loans (NPLs).

In view of the complexed regulatory requirements of large financial conglomerates, the SBP also signed a Memorandum of Understanding with the SECP to undertake consolidated supervision. Similarly, progress on modernisation of the legislative framework including the revamping of SBP Act, 1956, and the Banking Companies' Ordinance 1962 is under way, while efforts are also under way to introduce a Deposit Protection Scheme and a Consumer Protection Act.

Raza said first half of FY09 was characterised by a continuation of pressures in the foreign exchange market. During July-October FY09, the trend of deterioration in current account deficit seen in FY08 accelerated further, mainly owing to higher import prices and a sharp fall in financial inflows. This led to a rapid depletion of foreign exchange reserves along with substantial pressure on the exchange rate.

However, subsequent implementation of a macroeconomic stabilisation programme led to a marked improvement in the external account position in the ensuing months. This also helped the SBP build up foreign exchange reserves which had dropped to $6.7 billion in October FY09, back to the almost end-June FY08 level of $11.4 billion, he added.

He said in continuation of the SBP's efforts to strengthen its reserve management capabilities, substantial value were added to its profitability through active management of the investment portfolio in FY09. On gross return basis, the SBP managed to earn a return of 2.31 percent, which while less than the 4.9 percent return in FY08, is still significant given the situation in the global financial markets, he added.

Referring to several initiatives taken by the SBP to broaden access to financial services to the marginalised sectors of the economy, Raza said the SBP in partnership with the UK Department for International Development launched the Financial Inclusion Programme in July FY09.

The Financial Inclusion Programme worth 50 million pounds is being implemented by the State Bank of Pakistan and the programme was designed and developed through broader consultations with the stakeholders. This will help the SBP implement Pakistan's Microfinance Strategy which was approved by the Prime Minister.

Can someone pl update me with Intrest CUT as i am in office and not able to hear it  :o
Mistakes are painful when they happen. But year's later collection of mistake is called experience which leads to success.

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Re: Banking Sector
« Reply #4 on: November 24, 2009, 05:18:57 PM »
SBP ensures sound financial system: Raza  


KARACHI (November 24 2009): State Bank of Pakistan Governor Syed Salim Raza has said the central bank strived to strike a balance between price stability and growth in a challenging economic environment and ensured a stable financial system by proactively responding to emerging risks and challenges to the banking system and taking appropriate corrective measures in time.

In his message embodied in the Annual Report (Vol. II) on the State Bank's Performance Review for 2008-09, released on Monday, Raza said the implementation of the macroeconomic stabilisation programme was primarily driven by tightening monetary and fiscal conditions to facilitate the resolution of structural problems.

"These measures yielded results in subsequent months: fiscal deficit was substantially contained, from Rs 777.2 billion in FY08 to Rs 680.4 billion in FY09, at 5.2 percent of GDP (down from 7.4 percent in FY08), on the back of elimination of subsidies as well as cut in development expenditure," he added.

He said monetary tightening had a visible impact on CPI inflation which fell from its peak of 25.3 percent in August FY09 to 13.1 percent by June FY09; giving the SBP the much-needed breathing space to shift the direction of its policy stance. Furthermore, after unabated expansion in the last four years, the current account deficit contracted considerably to 5.3 percent of GDP during FY09, from 8.4 percent in FY08.

"These positive developments need to be viewed with caution, however, given that the economy continues to be fragile, and an assessment of the balance of risks continues to present a mixed picture," he added. Raza said as inflationary pressures began to ease, the SBP reduced its policy rate by 100bps each in April FY09 and August FY10, to 13 percent.

Notably, it was the consistent approach to curbing excessive demand pressures which helped subdue inflation. In FY09, the SBP issued three monetary policy statements (MPSs), ie, for the first half and then one each for the last two quarters of the year. In November FY09, the SBP also announced interim monetary policy measures.

Cognisant of the uncertain and rapidly changing macroeconomic environment, and to enhance the effectiveness of monetary policy, the SBP decided in January FY09 to increase the frequency of its monetary policy statements; first to quarterly basis, and from August FY10, the frequency was further increased to six times in a fiscal year, he added. Similarly, to further enhance the transparency and credibility of the monetary policy formulation process, the SBP constituted an independent Monetary Policy Committee (MPC) comprising both internal and external members.

He said segregation of debt and monetary management with an objective of strengthening the monetary policy framework was the highlight of FY09. In January FY09, the responsibility of deciding the cut-off yields in the primary auctions of Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs) was shifted to the Ministry of Finance, while the SBP's role was to manage the operational aspect of the auctions.

"This measure was taken to communicate that changes in the cut-off rate are not reflective of the monetary policy stance, while allowing the SBP to focus on liquidity management consistent with the requirements of monetary policy implementation," he added.

The SBP Governor said in response to the changing economic and business cycle, the central bank also stepped in to facilitate the banking sector by rationalising the minimum capital requirement to Rs 10 billion, to be implemented in a phased manner by December 2010, and allowing the use of 30 percent of the Forced-Sale Value (FSV) of collateral in calculating provisioning requirements for the rising base of Non Performing Loans (NPLs).

In view of the complexed regulatory requirements of large financial conglomerates, the SBP also signed a Memorandum of Understanding with the SECP to undertake consolidated supervision. Similarly, progress on modernisation of the legislative framework including the revamping of SBP Act, 1956, and the Banking Companies' Ordinance 1962 is under way, while efforts are also under way to introduce a Deposit Protection Scheme and a Consumer Protection Act.

Raza said first half of FY09 was characterised by a continuation of pressures in the foreign exchange market. During July-October FY09, the trend of deterioration in current account deficit seen in FY08 accelerated further, mainly owing to higher import prices and a sharp fall in financial inflows. This led to a rapid depletion of foreign exchange reserves along with substantial pressure on the exchange rate.

However, subsequent implementation of a macroeconomic stabilisation programme led to a marked improvement in the external account position in the ensuing months. This also helped the SBP build up foreign exchange reserves which had dropped to $6.7 billion in October FY09, back to the almost end-June FY08 level of $11.4 billion, he added.

He said in continuation of the SBP's efforts to strengthen its reserve management capabilities, substantial value were added to its profitability through active management of the investment portfolio in FY09. On gross return basis, the SBP managed to earn a return of 2.31 percent, which while less than the 4.9 percent return in FY08, is still significant given the situation in the global financial markets, he added.

Referring to several initiatives taken by the SBP to broaden access to financial services to the marginalised sectors of the economy, Raza said the SBP in partnership with the UK Department for International Development launched the Financial Inclusion Programme in July FY09.

The Financial Inclusion Programme worth 50 million pounds is being implemented by the State Bank of Pakistan and the programme was designed and developed through broader consultations with the stakeholders. This will help the SBP implement Pakistan's Microfinance Strategy which was approved by the Prime Minister.

Can someone pl update me with Intrest CUT as i am in office and not able to hear it  :o

Dont worry it wil be updated on the forum as it is announced.

Offline Learner7

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Re: Banking Sector
« Reply #5 on: November 27, 2009, 01:35:36 PM »

Offline Learner7

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Re: Banking Sector
« Reply #6 on: December 24, 2009, 05:31:39 PM »
NPLs increased to Rs422bn in Q1, says State Bank  
 
 
 
Thursday, December 24, 2009
By By Saad Hasan
 
KARACHI: The State Bank of Pakistan’s (SBP) banking performance review for July-Sept 2009 says that the overall banking system is still under stress as a consequence of rising non-performing loans (NPLs) amid an uncertain economic environment.

NPLs rose at a faster rate of six per cent to Rs422bn in the quarter under review compared with some let-up in its growth in the previous April-June 2009 quarter.

Helped by quick recovery in the global financial meltdown, Barclays Bank is fast catching up with other foreign banks operating in Pakistan by mobilising deposits and increasing advances, shows a State Bank of Pakistan (SBP) report.

In a little over a year since its launch, Barclays saw deposits and advances rising to Rs28.2 billion and Rs13.6bn respectively in the quarter that ended on September 2009, the SBP said in the banking sector’s review report.

Among foreign banks, Citibank holds the highest deposits and advances of Rs63.5bn and Rs27.2bn, respectively followed by HSBC’s deposits of Rs42.9bn and advances of Rs20.7bn.

With respect to capital base, Citibank has equity of Rs8.7bn while Barclays maintains the second highest equity at Rs6.6bn. Albaraka Islamic Bank, which recently expanded its publicity drive, has deposits and advances of Rs19.5bn and Rs14.1bn respectively.

Barclays started business in Pakistan at the peak of international financial turmoil in July 2008. It has opened up 14 branches in six cities. All other foreign banks have been operating for many years but none have expanded business so vigorously.

Citibank, which has long been the leading foreign financial institution in the country, has rolled back part of its business in the past year. It reduced the number of branches to 18 from 23 earlier this year. It is also in talks with a local Islamic bank to sell off its auto and housing finance portfolio.

The deposits of the banking system declined by 1.7 per cent in the wake of competition from the national saving schemes. “Disaggregated analysis of deposits shows that over the quarter the decline was contributed by financial institutions deposits and current accounts,” the report said.

Advances to both public and private sector also went down. SBP said lending to private sector declined because of low aggregate demand in the economy, high borrowing cost, unresolved political and security issues and risk of defaults.

But the overall reduction in advance portfolio of the banking system came mainly from SME and consumer sectors. The corporate sector including energy firms, in fact, borrowed more.

It said since last year banks have been inclined towards parking their funds in government papers. Investments surged by 13.1 per cent, mainly in treasury bills and bonds issued by public utilities.

The SBP said the last Oct-Dec 2009 quarter will see a rise in advances, but cautioned that much depended on the ability of banks to raise deposits.

It said the risk-based capital adequacy ratio (CAR) of all banks improved to 14.3 percent in the quarter. “Overall profitability of banking system remained fair. However, the earnings were largely skewed towards large and medium-sized banks as most small sized banks saw little profits and losses.”

Banks posted an aggregate pre-tax profit of Rs70.1 billion for the first three quarters of 2009 with pre-tax return on assets of 1.6 per cent.
 

Offline abcd

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Re: Banking Sector
« Reply #7 on: December 24, 2009, 10:05:53 PM »
Invest in banks n earn season.Preferance order nbp,mcb,ubl,abl,bahl and bafl
Stock trading is a science and art too

Toshi

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Re: Banking Sector
« Reply #8 on: December 24, 2009, 11:30:55 PM »
Quarterly performance review of banking system: Heightened credit risk, rise in infected loan portfolio pose major challenges



KARACHI: The general slowdown in economic activities and associated deterioration in the business environment continued to reflect slow growth of banking system and increase in non-performing loans (NPLs), the State bank’s quarterly review of the banking system said.

Going forward, the heightened credit risk and increase in infected loan portfolio will remain a major challenge for the banking system. Nevertheless, the system shows strong capacity to withstand unusual shocks in the major risk factors and chances of any systemic risk remains contained.

The NPLs of the system after showing some let up in last quarter, again increased at relatively fast pace during the quarter under review, while the asset base with shift in asset mix from advances to investments and decline in deposit base remained stable.

The increased macroeconomic vulnerabilities and constrained repayment capacity of borrowers have resulted in significant increase in NPLs of the banking system during the last three quarters or so. The quarter under review witnessed an inch up in infection rate as the NPLs accumulated at relatively faster rate of 6.0 percent to Rs 422 billion. Due to a reduction in loans and advances, the infection ratio deteriorated

Risk Assessment: The asset quality of the banking system further deteriorated during the quarter. Owing to a number of factors including the continuous recessionary trends, poor law and order situation, energy shortfall and uncertain external environment, the system has been experiencing a consistent and significant increase in NPLs for the last one-year or so. Since there was a reduction in overall lending portfolio of banks, the infection ratio (NPLs to Loans) of the system further inched up during Sep-09.

Commenting on the risk outlook of the banking sector, Sayem Ali, Country Economist at the standard chartered bank said the corporate earnings are weak along with the buying power of the consumers and the cost of production is continuously on the rise as the power and gas rates have been spiked, further increasing the burden on the production and exporting—textile and cement—sectors of the economy. Domestic as well as external demand remains weak. “Hence the credit risk to the banking sector is very high across the board,” Ali believed.

Asset base: The asset base of the banking system with marginal growth remained stable during the quarter under review. The deposits base, which grew significantly during the last quarter, contracted over the present quarter.

Deposits of the banking system declined marginally by 1.7 percent. Since the later half of CY08, the banking system has been facing a tough competition from Central Directorate of National Savings (CDNS) schemes in mobilizing the additional funds. Total investment in CDNS scheme further increased by 5 percent over the quarter (28 percent YoY basis); these investments now come to around 34 percent of banks’ domestic deposits as against 30 percent in corresponding quarter of last year.

Decline in advances took place in both public and private sector lending.

However, reduction in deposit base and slow growth in monetary aggregates (M2) coupled with banks’ increased investments in government papers kept the market liquidity under strain for most part of the quarter under review.

During the quarter deposit base of the system as well as its share in broad money (M2) declined, almost corresponding to Oct-08’s level when banking system experienced a significant liquidity stress. Though the post quarter statistics are indicating some improvements in the level of banks’ intermediation, however, due to slow growth in banks’ deposits and M2, the overall liquidity settings remain constrained because of multiple factors like Ramadan and post Eid-ul-Fitr deposit withdrawals and stagnancy in the retraction of these funds to the banking system.

These difficulties in retraction of funds to the system means that money has gone to those people who are not bank depositors. “This money has been invested in the non-productive sector of the economy otherwise it would have been reflected in increased economic activity,” said an analyst of a major bank.

“One likelihood is that this money is being used for dollar buying as the real rate of return on deposits is still around negative 4 percent forcing people to go for forex buying,” he added.

Investments: The investments in government papers and bonds of public sector utility corporations have been particularly attracting increased preference of banks since the last quarter of CY08. During the quarter under review, the investments again posted a strong increase of 13.1 percent – mainly in the government papers followed by bonds of public utilities and a marginal increase in equity investments. The further breakup of GoP papers indicates that short-term Market Treasury Bills were the focus of banks’ preference.

Toshi

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Re: Banking Sector
« Reply #9 on: December 25, 2009, 08:03:45 PM »

NPLs moving up again: State Bank report



KARACHI: The State Bank reported that non-performing loans of the banking system once again increased in the third quarter of the calendar year, reflecting poor performance of the economy.

The SBP issued third quarterly report, ended Sept 30, 2009, as ‘quarterly performance review of the banking system.’

‘The non-performing loans of the banking system, after showing some let-up in the last quarter, again increased during the quarter under review,’ said the SBP report.

The failure of business and poor economy has affected performance of the banking system and banks have to accommodate losses in their balance-sheets, thus slashing their profits.

‘Due to increase in non-performing loans, the net infection ratio increased to 4.1 per cent, the report added.

The very high rate of non-performing loans, which finally ends as write-offs, appeared as a critical issue these days and write-offs are now under scrutiny of Supreme Court.

The report said during July-September 2009 quarter, the overall profitability of the banking system remained fair.

However, earnings were largely skewed towards large and medium-sized banks as bottom line of most of small sized banks was low or in negatives. Banks posted aggregate pre-tax profit of Rs70.1 billion for the first three quarters of the outgoing year with the pre-tax return on assets of 1.6 per cent (1.2 per cent for CY-08), the report added.

SBP’s report said that accumulation of year-to-date earnings and equity injections raised the equity base of the banking system.

‘This growth was also augmented by improvement in revaluation surpluses on equity investments, and the leverage of the system slightly came off,’ it said and added that improvement in eligible capital and reduction in risk weighted assets occurred as banks shifted their asset mix from private sector credit to investments in federal government papers, improved the risk based capital adequacy ratio.

The Sate Bank said the risk-based capital adequacy ratio of all banks operating in the country has improved to 14.3 per cent in the quarter ended Sept 30.

The report said that the banking system shows strong capacity to withstand unusual shocks in major risk factors and chances of any systemic risk remains contained.

‘In the wake of traditional pick-up in the economic activity during the outgoing quarter, credit to private sector is likely to gain momentum,’ it added.

Credit to private sector remained symbolic for the last 18 months. However, borrowing by the private sector started picking up from the 3rd quarter. Banks managed to place their liquidity with the treasury bills and earned risk-free profit.

The advances to public sector set new record while it surpassed the credit to private sector, showing that borrowing from banks was made to accumulate debt instead of making it a catalyst for manufacturing, trading and other economic activities.

The report said that asset base of the banking system, with marginal growth, remained stable during the quarter under review.

The deposits base, which grew significantly during the last quarter, contracted over the quarter under review. On the asset side, decline in advances took place in both public and private sector lending.

However, lending to private sector corporations in power and energy sector actually showed a significant growth while asset base with shift in asset mix from advances to investments and decline in deposit base remained stable.

Toshi

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Re: Banking Sector
« Reply #10 on: December 26, 2009, 05:09:08 AM »
SBP all set to launch e-bond trading


RIZWAN BHATTI
Saturday, 26 Dec, 2009 4:27 am
KARACHI : The State Bank of Pakistan is all set to launch first-ever Electronic Bond Trading Platform (e-bond) in January 2010 to develop a secondary market for trading of the government securities. Sources in the banking sector told Business Recorder that arrangements for the formal launch of the e-bond are in final stages and it is likely to be launched in the first or second week of January next.

In line with the SBP policy of active involvement of market participants in any development initiative, a committee had been formed comprising representatives from commercial banks as well as the SBP tasked to develop a trading platform in line with the needs of the domestic fixed income market, they added. "The committee has almost finalised all the arrangements and after carefully evaluating the proposals of vendors, the committee has recommended that Bloomberg better suits the needs of domestic fixed income market," sources said.

In the first phase, three government securities including Government of Pakistan Ijara Sukuk, Market Treasury Bills and Pakistan Investment Bond would be traded at the platform through 10 primary dealers, they added. While, in the second and third phase non-primary dealers, Asset Management Companies, Insurance Companies and Provident Fund Management Companies, which required high rate of interest, would be encourage to trade in the e-bond market, sources added.

However, every person or company, who want to trade in the government securities would be required to open an 'Investors Portfolio Security Account' in bank. "The primary reason for introducing an electronic trading platform in the fixed income market is to enhance efficiency, as unlike equity markets, there is no real-time information source for fixed income markets in Pakistan," said Ali Sultan, Director, Financial Market Strategy and Conduct Department (FMSCD).

He said the government securities launched in 1991 under the deregularisation and financial reforms aimed to create secondary market by selling these securities to the non-bank companies. However, since then the secondary market has yet developed and these government securities are being traded between limited institutions.

Sultan said currently, the country has equity markets (Karachi Stock Market, Islamabad Stock Market and Lahore Stock Market) for the trading of shares and National Commodity Exchange Limited (NCEL) for commodity related trading. There is no platform for the trading of government bonds, he said and added that keeping in view secondary market objectives, the SBP is going to launch the e-bond for the trading of government securities.

"The SBP would launch e-bond with the co-operation of the primary dealers and in the initial phase, the system will capture only outright buying and selling of government bonds, but going forward, the technology will be used for trading in other instruments such as repos and swaps," Sultan said. He said new platform would provide a wider investors base for the government securities, as presently general masses and companies have limited information about the government bonds.

"We have three primary objectives with the launching of e-bond through Bloomberg, including creation of secondary bond market, price efficiency of the government securities and to generate liquidity," he said and added that it would also help reduce the cost of borrowing of government, besides good return. In addition, the implementation of this system in Pakistan, which is also widely used in some 18-20 countries, will provide international investors with a new information avenue on domestic financial markets, Sultan said.

He said with zero percent risk, the government securities have high interest rate as compared to banks, however due to the lack of information investors base is still limited. "The platform would not just be a trading platform, it will serve as a central database for all fixed income activity in the country resulting in much improved pre-trade price discovery," Sultan added.

This will provide investors real-time information about market yields resulting in enhanced liquidity and better price discovery in the fixed-income market, he said and added that it will also help in shifting government debt from banks to other institutional investors thus freeing up funds for private sector credit hence facilitating the development of real economy. He said Pakistan's government bond market has a size of Rs 1.5 trillion and offers massive opportunities for the investors.

Toshi

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Re: Banking Sector
« Reply #11 on: December 30, 2009, 01:26:26 PM »
Banks: ‘Transitional’ provision introduced

1. FBR has allowed ‘transitional’ provision through an amendment in 7th Schedule of
Income Tax ordinance to clarify tax benefits on NPLs in tax year 2008 and prior.
2. Following the clarification, banks can continue to avail the benefits of deferred tax
assets of 2008 and prior tax years.
3.The outcome of Rule 8A is line with our earlier expectations and does not lead to a
tweaking of our estimates, as there should be no adverse impact on profitability.

Offline abcd

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Re: Banking Sector
« Reply #12 on: December 30, 2009, 01:42:47 PM »
Built a suitable portfolio in this sector and earn at least 20%gain
Stock trading is a science and art too

Offline Learner7

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Re: Banking Sector
« Reply #13 on: December 30, 2009, 01:53:48 PM »
Banking sector spread plunges to 7.33pc in Nov

By: Erum Zaidi | Published: December 30, 2009


KARACHI - The spread of the banking sector fell by 30 basis points (bps) to 7.33 per cent during November 2009 from the level of 7.63 per cent recorded in the similar month of last year.
However, average spread for the period Jan-Nov 2009 still showed high growth and reached at 7.49 per cent as against 7.25 per cent during the same period of last calendar year.

The slowdown in the growth of spread is attributed to decline in the lending rates of the banking sector, which was caused by soft monetary policy stance of the central bank.

The State Bank of Pakistan (SBP) released banking spread numbers for the month of November 2009. According to SBP statistics, after a consecutive rise during last two months, banking spread once again dropped by 8bps in the month of November 2009.

The pre-policy impact of monetary easing was clearly evident on the spread numbers. Sectoral analysis of spread showed that during November 2009, lending rates dropped slightly by 9bps on monthly basis to 13.58 per cent while cost of deposits remained almost flat at 6.25 per cent versus 6.26 per cent, a month earlier. This mainly ensued from falling KIBOR rates ahead of Monetary Policy (MP) announcement as 6-month KIBOR settled at 12.4 per cent on end-November 2009 (post MP) from a 12.8-12.85 per cent in the initial week of the month.

Analysis further revealed that as domestic economy is passing through a declining interest rate scenario after a tight monetary stance, lending rates have also come down to 13.58 per cent inline with KIBOR after posting a peak level of 14.66 per cent in January 2009.

Banking sector analyst Kamran Rehmani predicts the spread of the banking sector will be settled in the vicinity of 6.9 per cent to 7.0 per cent in the upcoming year on average basis which would be 50-60bps down from the spread of 2009. This is based on the assumption of continuation of 5 per cent floor on saving rates.

“However, it is pertinent to mention that decline in spread would be somehow mitigated by volumetric increase as the demand for credit would increase with growth in nominal GDP and recovery in manufacturing sector, Rehmani said.
“The banking sector could witness a rally on 2009 annual results as some banks may record handsome reverse provisioning in the wake of relaxation in FSV benefit rules and loan
restructuring/rescheduling”, he added.

It is important to mention that weekly balance sheet position issued by the SBP indicates a major slowdown in additional provisioning expenses during 4Q2009 (Sept-Dec). As per the data, all scheduled banks have provided credit provisions of only PRs355mn during September 26, 2009 to December 19, 2009. This number was PRs26bn, PRs19bn and PRs15bn in 1Q, 2Q and 3Q of current year, respectively.



Offline Learner7

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Re: Banking Sector
« Reply #14 on: December 31, 2009, 12:30:31 AM »
Negative outlook for Pakistani banks over security concerns  

December 30, 2009 - www.financialmirror.com

The fundamental credit outlook for the Pakistani banking sector is negative, reflecting challenging operating conditions as a result of the continued economic slowdown, domestic security instability and the weak sovereign position of Pakistan. However, the banking system remains relatively resilient overall, Moody's Investors Service said in its new Banking System Outlook on Pakistan.  

"Overall credit conditions in Pakistan remain unfavourable as the security situation hinders both foreign and domestic confidence, lending rates are high, the political environment remains fragile and structural impediments in the supply of power and gas persist," said Christos Theofilou, a Moody's analyst and author of the report.

Amid the challenging operating conditions, Pakistan's banks have become more risk-averse, preferring the higher perceived security of government-related or backed loans and investments. However, given the low rating of these assets (B3), Moody's views the banks' high concentrations to government and government-related entities as a significant rating constraint. Government ownership in the three largest banks also raises related-party and quasi-related party risk concerns.

Asset quality has traditionally been an issue for the rated Pakistani banks, weighing on their balance sheets and restricting any upgrades. Problem loans have leaped in recent quarters and the success of loan recovery, restructuring and rescheduling operations will play an important role in future asset quality levels and any additional provisioning requirements.

Capitalisation metrics do not indicate any imminent threats to the banking system's solvency, ensuring a level of stability amid the more volatile operating environment. Nonetheless, Moody's believes the banks' equity is compromised to a certain extent and their capacity to absorb losses or any major unexpected credit shocks is now lower than what it was a couple of years ago. The rated banks' liquidity profiles are adequate and are a positive rating driver, while they all have strong franchise positions in the domestic market. Their profitability indicators also remain strong, despite coming under pressure and are in fact commensurate with those of higher-rated banks in other markets.

Looking ahead, Moody's expects both profitability ratios and asset quality metrics to remain under pressure despite the downturn forecasted to have bottomed out. The strength of the economic recovery, a material drop in the still high lending rates and the success of banks in mobilising fresh low-cost deposits should play an important role in the timing and magnitude of any meaningful rebound in private sector loan growth and an improvement in asset quality.

"Despite the negative credit outlook, all of the Pakistani bank financial strength ratings (BFSRs) have stable outlooks, as strong capitalisation levels and adequate liquidity profiles ensure a level of stability. However, if the economic recovery is sluggish or Pakistan's repayment capacity is impaired, leading to a further deterioration in the rated banks' financials, downward rating pressure may result," cautioned Theofilou.

http://www.financialmirror.com/News/Business_and_Finance/18827
« Last Edit: December 31, 2009, 12:49:41 AM by Learner7 »

Toshi

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Re: Banking Sector
« Reply #15 on: December 31, 2009, 06:40:22 AM »
SBP notifies 7.5% refinance rate under EFS

KARACHI: The State Bank of Pakistan has notified that the rate of refinance under the Export Finance Scheme (EFS) applicable from January 1, 2010 and onward till further instructions shall be 7.5 percent per annum. According to a Circular (SMEFD Circular No. 20) issued today by SBP, the commercial banks shall ensure that where financing facilities are extended by them to the exporters for availing refinance facilities under EFS, their maximum margin/spread does not exceed 1 percent per annum. Reimbursement of mark-up rate benefit to exporters, on excess performance under Part-II of the Scheme, as specified in the SMEFD Circular No. 15 dated October 31, 2009, will be adjusted accordingly keeping in view the revised mark-up rates, says the Circular. staff report

Offline Karuli

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Re: Banking Sector
« Reply #16 on: December 31, 2009, 11:10:12 AM »
MOODY'S report taking its tool on banking sector today.

Toshi

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Re: Banking Sector
« Reply #17 on: December 31, 2009, 08:59:49 PM »
Banking spreads – November 2009
AHL Research
According to the data released by the State Bank of Pakistan (SBP), banking
spread for the month of November 2009, slipped to 7.33% persisting a downward
trajectory from its peak of 7.78% in January 2009. Despite this declining trend,
spreads are exhibiting a downward stickiness since the past few months, even
with a substantial decline in 6M – Karachi Interbank Offered Rates (KIBOR).
MOM analysis reveals a decline of 8 bps attributed to a 9 basis points MOM
decline in average lending rate to 13.58%. Average spreads for 11M-CY2009 were
recorded at 7.49%. We expect average spreads to hover around 7.45% for
CY2009 as compared to 7.31% in CY2008.
Due to continuation of easing monetary stance by the State Bank of Pakistan,
average 6 months KIBOR for November 2009 was recorded at 12.71% after
mounting to the level of 15.67% in December 2008. Average lending rates,
followed the same course as they declined from 14.66% in January 2009 to
13.58% in November 2009. The decline in lending rates was steeper than the
deposit rates, which caused the spreads to shrink during 11M-CY2009, as bulk
of the advances are based on floating rates.
During November 2009, deposit rate averaged at 6.25% down by 71 bps from its
peak level of 6.96% witnessed in February 2009. On a MOM basis a modest
decline of 1 bps was observed in average deposit rates.
We expect that average banking spreads to shrink going forward as easing off
monetary policy is likely to put downward pressure on the KIBOR taking average
lending rates down, whereas deposit rates can not trace the similar trend with
floor of 5% on deposit rates in place.
We have a positive stance on the banking sector on account of 1) declining
growth in non-performing loans, 2) improved liquidity, and 3) revival of business
confidence that may accelerate advances growth. NBP, AKBL, UBL and BAFL
remain our top picks in the sector.

Offline Karuli

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Re: Banking Sector
« Reply #18 on: January 01, 2010, 01:52:31 PM »
Non-performing consumer loans: banks told to frame rescheduling policy
RECORDER REPORT
KARACHI (January 01 2010): The State Bank of Pakistan on Thursday instructed banks and DFIs to frame policy for rescheduling or restructuring of non-performing consumer loans approved by the Board of Directors. However, the SBP said banks/DFIs must ensure that consumer financing facilities of any borrower should not be rescheduled/restructured more than once in 12 months and three times during five-year period.

According to the SBP circular 43, some amendments have been made in regulations based on review of Prudential Regulations for Consumer Financing and feedback of the stakeholders. The status of classification of the non-performing loans shall not be changed because of rescheduling/restructuring unless borrower has paid at least 10 percent of the rescheduled/restructured amount or six instalments as per the terms & conditions of the rescheduling/restructuring, the circular said. The SBP has issued the following circular BPRD Circular Letter No 43

AMENDMENTS IN PRUDENTIAL REGULATIONS FOR CONSUMER FINANCING Please refer to Prudential Regulations for Consumer Financing as amended from time to time. Based on review of Prudential Regulations for Consumer Financing and feedback of the stakeholders, following amendments are made with immediate effect:

1) PART-C The following new regulation will be added after Regulation-5 in the Part-C of the Prudential Regulations for Consumer Financing:

REGULATION R-5A Rescheduling/Restructuring of Non-Performing Consumer Loans:

a) Banks/DFIs should frame policy for rescheduling/restructuring of non-performing consumer loans. The policy should be approved by the Board of Directors or by the Country Head/Executive/Management Committee in case of branches of foreign banks.

b) For the purpose of rescheduling/restructuring, banks/DFIs may:

i) Club or consolidate outstanding amounts on account of personal loans and credit cards and create one loan. The new loan so created shall be placed in the lowest category of classification amongst the classifications of the loans clubbed.

ii) Convert revolving facility into an instalment loan.

iii) Change the tenure of the loan by maximum two years beyond any regulatory cap on maximum tenure.

c) Rescheduling/restructuring should not be done just to avoid classification of loans/advances and provisioning requirements. In this connection, banks/DFIs shall ensure that consumer financing facilities of any borrower should not be rescheduled/restructured more than once within 12 months and three times during five-year period.

d) While considering rescheduling/restructuring, banks/DFIs should, inter alia, take into account the repayment capacity of the borrower. The condition of 50 percent of Debt Burden Requirement (DBR) mentioned at Regulation R-3 of Prudential Regulations for Consumer Financing shall not be applicable to loan rescheduled/restructured. However, any new consumer financing facility extended to a borrow who is availing any rescheduled/restructured facility shall be subject to observance of minimum DBR prescribed in the Regulation R-3 of Prudential Regulations for Consumer Financing.

e) The status of classification of the non-performing loans shall not be changed because of rescheduling/restructuring unless borrower has paid at least 10 percent of the rescheduled/restructured amount or six instalments as per terms & conditions of the rescheduling/restructuring. However, for internal monitoring purpose, banks/DFIs may re-set the dpd (days past due) counter of the newly created loan to "0" dpd.

f) Provisions already held against non-performing loan, to be rescheduled/restructured, will only be reversed if condition of 10 percent recovery or six instalments is met.

g) If the borrower defaults (ie reaches 90 dpd) again within one year after declassification, the loan shall be classified as under:

-- Type of Consumer Loan

-- Classification

-- Unsecured

-- Loss

-- Secured

Same category in which it was prior to rescheduling/restructuring. Banks/DFIs, however, at their discretion may further downgrade the classification based on their own internal policies.

2). Regulations for Credit Cards

REGULATION R-7: MAXIMUM CARD LIMIT: The following paragraph will be added in Regulation R-7:

Banks/DFIs may merge the clean limits to single person for Credit Cards and Personal Loans subject to the condition that total clean limit availed by him/her from all banks/DFIs does not exceed Rs 2,000,000 at any point in time. It is re-emphasised that the aggregate clean limit of the borrower should not exceed Rs 2,000,000 in any case.

3). Regulations for Personal Loans including Loans for the Purchase of Consumer Durables.

Regulation R-23: Clean Limit per Person for Personal Loan: The following paragraph will be added in Regulation R-23: Banks/DFIs may merge the clean limits to single person for Personal Loans and Credit Cards subject to the condition that total clean limit availed by him/her from all banks/DFIs does not exceed Rs 2,000,000 at any point in time. It is re-emphasised that the aggregate clean limit of the borrower should not exceed Rs 2,000,000 in any case. All other instructions on the subject shall, however, remain unchanged, the circular said.