Banking sector’s profit almost flat in 2016

KARACHI: Earnings of the banking industry grew by just one per cent in 2016, though analysts believe that even this much increase was higher than expectations.

According to a JS Research report released on Monday, the profitability of the JS Banking Universe, representing 83pc of the banking sector market capitalisation, came in slightly higher than in-house estimates as some banks booked reversals under “diminution in value of investments” (largely related to oil stocks) in the fourth quarter of 2016.

However, the net interest income (NII) fell 7pc on the back of declining benchmark rate and investment yields and hefty maturity of PIBs during 2016, nullifying the impact of double-digit asset growth.

The non-interest income dropped 3pc year-on-year on lower realised capital gains. Fee Income growth was recorded at 9pc, accounting for 50pc of total non-interest income compared to 44pc a year ago.

The report expects NII to improve by 9pc during 2017, where double-digit growth in fee income is also likely to support bottom-line growth.

The report anticipates lower accretion in non-performing loans to cut down provisioning expenses by one-third of its historic average of Rs33 billion a year.

Published in Dawn, February 28th, 2017

Bank Alfalah’s profit rises to Rs7.9bn

KARACHI: Bank Alfalah posted a net profit of Rs7.9 billion for 2016, up 5 per cent from a year ago, a press release said on Friday.

The bank did not announce a cash dividend. Earnings per share were reported at Rs4.96 against Rs4.73 last year.

The bank’s total revenue remained Rs37.6bn against Rs37.5bn recorded in 2015. Growth of non-markup expenses remained restricted to 3.7pc.

The bank’s total assets at the end of 2016 stood at Rs917bn against Rs903bn a year ago.

Published in Dawn, February 25th, 2017

Transfers, postings in FBR

ISLAMABAD: The government has transferred and posted senior tax officers of the Federal Board of Revenue (FBR). Notifications issued on Friday night showed that Member Customs Nasir Masroor was transferred and posted as member SPR&S. He was recently promoted to grade 22.

Chief Collector (Enforcement), Karachi Muhammad Zahid was posted as member customs.

Ms Tasneem Rehman was transferred and posted as member FBR. She was Chief Commissioner Corporate Regional Tax Office Lahore. Rehmatuallah Khan Wazir was transferred and posted as member IR Operations, while Dr Muhammad Iqbal was posted as member policy IR.

Ms Iram Adnan was posted as DG Training IR Lahore and Ms Nausheen Javaid Amjad posted as member IT FBR.

Published in Dawn, February 25th, 2017

Banking sector in Xinjiang steps up funding to support OB-OR projects

Northwest China’s Xinjiang Uyghur Autonomous Region’s banking sector has stepped up efforts to support the “One Belt and One Road” initiative by providing loans to projects under the framework, head of the Xinjiang office of the China Banking Regulatory Commission Wang Junshou said.

Addressing a press conference here Friday, he said, the Xinjiang banking sector had provided funding of 293.77 billion yuan ($42.71 billion) for the purpose as of end-2016, up 16.2 percent compared with the beginning of the year, data from the office showed.

Under the framework of the initiative, the region has supported the construction of infrastructure facilities such as the Karakoram Highway connecting Xinjiang and Pakistan, and helped local companies including Xinjiang Tebian Electric Apparatus Co and Xinjiang Goldwind Science and Technology Co “go global,” Wang said.

In 2016, the Xinjiang office of China Development Bank provided $260 million to the Astanalight rail project in Kazakhstan, the implementation of the first important program under the China-Kazakhstan capacity cooperation.
The Xinjiang branch of Industrial and Commercial Bank of China made loans of 127.57 billion yuan in 2016, mainly targeting the two big channels of the core area of the Silk RoadEconomic Belt and supporting 243 projects in sectors including electricity, railway and urban transit systems.

General Director of the Xinjiang Uyghur Autonomous Region Rural Credit CooperativesAssociation Mi Li Gu Li said Xinjiang aimed to inject 1.5 trillion Yuan into infrastructure construction covering transportation, water conservation and energy.

The growth rate of fixed-asset investment was expected to be above 50 percent to realize the goal, she said.—APP

Published in Pakistan Observer, February 27th, 2017

Training for Citi Bank staff held

The Special Security Unit (SSU) organized an awareness program to educate Citi Bank staff to combat the nefarious activities of terrorists with confidence, mental resilience, self-defense techniques, weapon awareness, security awareness skills, threat management and survival techniques at its Headquarters here on Saturday.

Commandant Special Security Unit, Maqsood Ahmed, speaking on the occasion of the ‘Hostile Environment Awareness Training’ (H.E.A.T) program said that modern professional trainings were being provided to the officers and commandos of Special Security Unit and they are capable to foil any nefarious design of anti-state elements.—APP

Published in Pakistan Observer, February 26th, 2017

MCB Bank, Qatar Airways enter into alliance

LAHORE - MCB Bank Ltd has entered into an agreement with Qatar Airways for mutually beneficial services.

MCB Institutional Sales Head Ali Raza said that under the three month campaign, MCB Bank debit and credit card holders will benefit from specially reduced fares on airline tickets booked online. The MoU was signed by Ali Naqvi, Business Head Digital Banking MCB Bank and Qatar Airways Country Manager Sherif Ismail in the presence of Retail Banking Head – North, Zargham Khan Durrani and senior executives from both organisations. The signing ceremony was held at MCB House, Lahore.

At the ceremony, Durrani said, “This collaboration provides MCB Bank debit and credit card customers access to one of the world’s premier international airlines at specially discounted rates. We look forward to facilitating our customers on their future travel plans and dream trips abroad.”

Published in The Nation, February 28th, 2017

NPB holds meeting with WPF BoDs members

ISLAMABAD (PR): The National Police Bureau (NPB) has organised a one-day meeting with the members of the Board of Directors of the Women Police Forum (WPF).

The meeting was attended by the women members from all provinces, GB, AJK and ICT. They shared their concerns and challenges in a resource constraint environment and need for a gender policy.

The USIP in collaboration with the NPB is doing a series of media outreach activities to build greater trust between the citizens and police. Some of the video clips from the said series were also shared with the forum to seek their insights and feedback.

The WPF also developed its next quarter’s plan that revolves around key activities like social media advocacy, data collection on gender sensitive indicators and creating a mentor’s forum to enhance their own skills and promote gender responsive policing. These activities will be implemented with Gender Crime Cell and the gender team of the phase III of gender responsive policing.

Published in The Nation, February 27th, 2017

Islamic Finance Centre disburses Rs14 million in two months

ISLAMABAD -  The recently established Islamic Finance Centre has disbursed Rs14 million among common people in first two months under Ijarah mode of Islamic financing for purchase of motorcycles and other products.

The Islamic financing facility center was inaugurated by SECP Chairman Zafar Hijazi in Rawalpindi on December 2016. The initiative was taken by the Modaraba sector on the patronage of the SECP chairman for providing Islamic financial products to the masses. Initially four modarabas, Allied Rental Modaraba, First Habib Modaraba, Orix Modaraba and Trust Modaraba has opened their offices in the this Islamic Finance Centre.

The establishment of Modaraba-based Islamic Finance Centre was initiated to promote legal modes of financing and to curb the illegal and unlicensed informal lending practices throughout the country.

The Islamic Finance Centre received overwhelming response and common people are approaching the centre to avail Islamic finance for purchase of motorcycles to cater their conveyance needs. The Modarabas in this centre are providing microfinance to the customers at cheaper rate ranging in between 20 to 25 percent, as against the prevalent market rates of 40 to 45 percent.

The SECP has shown its firm commitment to provide all the support to other Modarabas, which have plans to open similar centres in other parts of the country for the benefits of the common people.

This will increase the outreach of Modarabas to the smaller cities and towns for greater financial inclusion of the underserved sectors.

Published in The Nation, February 25th, 2017

MCB inks accord with Qatar Airways

LAHORE: MCB Bank Ltd has signed an agreement with Qatar Airways for mutually beneficial services and customer facilitation, a statement said on Monday. 

“This collaboration enables the debit/credit card holders of the bank to fly Qatar Airways at special discounted rates,” MCB Bank's representative Zargham Khan Durrani said addressing the signing ceremony. 

“We look forward to facilitating our customers on their future travel plans and dream trips abroad.”  Voicing his views, Sherif Ismail, Country Manager Pakistan Qatar Airways, evinced excitement over the prospects of newly signed understanding.

 “We are delighted to enter into an alliance with MCB Bank and are eagerly waiting to welcome MCB Bank customers to our airlines’ premium aviation experience," said he.  The MoU was cosigned by Ali Naqvi, Business Head Digital Banking MCB Bank and Qatar Airways Country Manager Pakistan, at MCB House.

Published in The News, February 28th, 2017

Banks disburse Rs583.8 billion for infrastructure projects in July-Dec

KARACHI: Financial institutions provided a cumulative Rs583.8 billion worth of loans for construction of infrastructure projects in July-December 2016, showing a 28.8 percent increase over the same period of the previous year, the central bank said on Monday. 

The project finance market is growing, backed by the government’s economic stimulus initiatives and China-Pakistan Economic Corridor (CPEC), the State Bank of Pakistan said in its infrastructure finance review.

Banks and development finance institutions (DFIs) extended Rs453.2 billion infrastructure credit in July-December 2015. Such loans registered a half yearly growth of 12.5 percent to stand at Rs518.8 billion in January-June 2016.

“The total amount outstanding at banks, against infrastructure finance at the end of December 2016 reached Rs471.2 billion, recording an increase of 12.8 percent when compared with Rs417 billion at the end of June 2016,” the SBP said in its review.

Infrastructure project finance deals with loans used to build power plants, roads, bridges, and flyovers. Besides, such loans are also obtained by telecom, petroleum, and oil and gas exploration companies.

The review revealed that banks and DFIs provided an amount of Rs297.6 billion in power generation finance, followed by Rs45.9 billion given for the development of road, bridges and flyovers during the six-month period under review.

Banks disbursed Rs38.8 billion to telecom, Rs29.4 billion to oil and gas exploration, and Rs17.5 billion to the petroleum sector in July-December 2016.

The SBP’s review showed that during this period, banks and DFIs sanctioned Rs1.104 trillion for the development of infrastructure, compared against Rs706.9 billion in the corresponding period of 2015.

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Analysts said a number of energy projects are underway, while several highways 
and motorways are also being constructed by the federal and provincial governments under the CPEC framework in certain parts of the country.      

“Since the economic activity is growing, infrastructure spending going up and interest rates are at multi-decade low levels, there has been a marked increase in bank appetite for infrastructure projects,” said a financial analyst.  

“The central bank is also pushing financial institutions to enhance the outreach of infrastructure credit in the country.” SBP issued prudential regulations last month on important features of infrastructure project finance, facilitating banks to assess the cash flow generating capacity of the projects.

These included the requirement of technical feasibility, comprehensive risk assessment, project insurance, technical monitoring of the project during loan tenure, and requirement of supply and off-take agreements.

The SBP said Pakistan faces acute lack of infrastructure facilities, and energy, communication networks, water and sanitation, educational institutions and recreational facilities were some major infrastructure areas requiring urgent attention.

Banks are encouraged to prepare their own structured lending schemes for the development of infrastructure project financing. The central bank is also encouraging banks to develop infrastructure products based on Islamic principles.

Published in The News, February 28th, 2017

Banking sector’s tax payment drops 56 percent in July-Jan

KARACHI: The Federal Board of Revenue’s (FBR) income tax collection from the banking sector sharply fell 56 percent to Rs29.37 billion during the first seven months of the current fiscal year of 2016/17 as the soft interest rate regime bit profitability of banks, sources said on Monday.

The sources said tax contribution of banks registered with the Large Taxpayers Unit (LTU) Karachi plunged Rs38.34 billion in July 1, 2016 to January 31, 2017 when compared with Rs67.7 billion collected in the corresponding period of the last fiscal year. “Decline in revenue from the banking sector added to the difficulties as the revenue body is already facing challenges in revenue collection due to incentives announced by the government for various sectors in the last budget besides the lower sales tax on petroleum products,” said an official.

The officials said the revenue from banking sector is a major component of the total income tax collection.  In January-December 2016, the collection from nine banks, registered with the LTU Karachi, including three top banks, amounted to Rs66.745 billion, up 27.53 percent over a year earlier.

The fall in revenue collection from the banking sector was due to setback in its profitability. The banking sector’s profitability declined 6.31 percent to Rs138.91 billion during the nine-month period of the last year.

The State Bank of Pakistan (SBP), in its banking system’s review, attributed the fall in profitability to declining interest rate. “Declining revenues on lending activity, lower returns on high stock of risk-free government securities and higher expense on repo borrowings has decelerated the net interest income, which has led to a decline in net interest margin of the banking sector,” said the SBP.

The FBR officials said the revenue board evolved a strategy to make up for the fall in revenue collection from the banking sector as well as from other key revenue spinners, including petroleum and fertiliser companies. The counterstrategy also deals with the situation amid zero-rating sales tax facility announced for the five export-oriented sectors.

An analysis of revenue contributed by the banks registered with LTU Karachi showed that major fall was recorded in Bank Al-Falah as its tax payment fell 80 percent. UBL followed suit with 72 percent decline, Sindh Bank (56 percent), HBL (50 percent), National Bank of Pakistan (50 percent), Habib Metropolitan Bank (49 percent), Meezan Bank (43 percent), Faysal Bank (41 percent) and Standard Chartered Bank’s tax contribution decreased 41 percent.

Published in The News, February 28th, 2017

FBR raises no tax revenue from CPEC projects

KARACHI: The Federal Board of Revenue (FBR) is raising not a single penny from the projects related to China-Pakistan Economic Corridor (CPEC) as they are exempt from taxes, a senior official said on Saturday.

“Neither there is an expectation of revenue generation from CPEC projects due to tax holiday,” said Rehmatullah Khan Wazir, member Inland Revenue (Operations) of FBR, “but, it (CPEC) will have far reaching economic benefits for the country.”

Wazir, addressing a gathering of business community, said Pakistan’s economic ranking has improved because of CPEC, which also restored investor confidence. “Earlier, the foreign investment in the country was at standstill, but now it is gaining momentum.”

On the tax system, Member Inland Revenue conceded that the country has a complex tax system, which lacks transparency. “Some laws are also hampering the growth of tax broadening,” he said.

He added that agriculture sector contributes Rs5.5 trillion to GDP, but the sector’s share in the tax collection was only Rs1.9 billion during the last year.

The tax official said withholding sales tax exists nowhere in the world. He said an average sales tax rate in Asia is 12.5 percent.

“The FBR is endeavoring to bring down the sales tax rate from the current 17 percent.” 

During the last fiscal year, the FBR proposed the reduction of sales tax to 16 percent. “But, one percent sales tax cut means loss of Rs72 billion in revenue, and so it was difficult for the government to take such a decision,” he added.

Member Inland Revenue said the tax revenue is a cornerstone for the economy. “It is unfortunate that people are not willing to pay tax on their actual income,” he added.

The official stressed the need for listing of companies on the stock exchange. “The listing will improve formal economy in the country and will increase revenue collection,” he said.

He said the FBR will propose, for the next budget, to eliminate difference of taxes imposed on commercial and industrial importers.

On complaint of harassment by tax officials, Wazir said there will not be any raid at a business premise without evidence.

He said the government would introduce harsh measures in the upcoming budget to broaden the tax base. The FBR will also propose a law for conducting audit of non-filers.

Published in The News, February 26th, 2017

Bank Alfalah full-year profit up five percent

Bank Alfalah posted full-year net profit of Rs7.9 billion in 2016, depicting a five percent increase, compared to Rs7.5 billion recorded by the bank in 2015, a statement said on Friday.   

The earnings per share were reported at Rs4.96 as compared to Rs4.73 in previous year.

“Bank Alfalah’s performance in 2016 reflects yet another year of sound financial results amidst a challenging business environment," said Atif Bajwa, president at Bank Alfalah. “During the year, we continued to create value for our shareholders and customers. We have strived to promote financial and digital inclusion in the country through various initiatives, and remain committed to expand our impact further, and to touch the lives of as many people as possible.”

The bank’s total revenue remained at Rs37.6 billion in 2016 against Rs37.5 billion last year. “While we continued investing in innovation, the management of the bank placed further controls over expenses. Resultantly, growth of non-markup expenses was restricted to 3.7 percent,” Bajwa said.

The bank’s total assets till December 31, 2016 stood at Rs917 billion as compared to Rs903 billion last year.  Deposits remained at Rs640 billion with current and savings account mix improved to 83.3 percent.

The bank’s lending activity remained healthy with gross advances increased by 13 percent to Rs396 billion in December 2016.    The bank had a gross advance-to-deposit ration at 62 percent in 2016, one of the highest amongst peers.

Published in The News, February 25th, 2017

SBP imposes 100pc cash margin on imports

KARACHI: The State Bank of Pakistan (SBP) has imposed 100 percent cash margin requirement on import of certain non-essential consumer items, a statement said on Friday.

The regulatory measure would discourage the import of items including motor vehicles (both CKDs and CBUs), mobile phones, cigarettes, jewelry, cosmetics, personal care, electrical & home appliances, arms and ammunition and would have nominal impact on the general public, the bank said. 

The central bank has taken this initiative in exercise of powers entrusted to it under Banking Companies Ordinance, 1962.   “The State Bank expects that this regulatory measure would help accommodate incremental import of growth-inducing capital goods,” it added.

Published in The News, February 25th, 2017

FBR to deploy digital hub for withholding tax monitoring

KARACHI: The Federal Board of Revenue (FBR) is developing an online hub to accumulate details of withholding tax agents, their collection and further disbursal to the tax authorities in order to plug revenue leakages and address discrepancies, a senior official said on Friday.

“The digital directory will be ready in a week and instructions in this regard have been issued to the Pakistan Revenue Automation Private Limited,” Rehmatullah Khan Wazir, Member Inland Revenue (Policy) told The News.

Presently, the data of withholding taxes is scattered and the tax machinery takes action on random basis.  Withholding agents collect taxes on behalf of the FBR and deposit them to national exchequer. Withholding taxes make around 68 percent of the total collection of direct taxes. 

The FBR collected Rs831.4 billion in withholding taxes during the 2015/16 fiscal year as compared to Rs691.2 billion in the preceding fiscal year, depicting 20.3 percent growth. Wazir said the whole tax machinery would be able to access this database to take an appropriate action. The data would be available at the national level.

“The main database will be available with the Director General Withholding Taxes,” he added, “while chief commissioners will have an access to the data on jurisdiction basis. Commissioner of Inland Revenue will also be given an access to zone-wise data.”

Member Inland Revenue said the authorised tax officials will compare the tax deduction and payment by each withholding agent. “In case of any discrepancy, the zone will take further action.”

Wazir, who also holds an additional charge of Member Inland Revenue (Operations), said the digital directory will have details of all withholding agents along with their collection and payments in term of value and volume.

The digital directory will display the withholding agents corresponding to their sectors.  The FBR convened a meeting of commissioners of Inland Revenue (Withholding Tax) at its headquarters in Islamabad this week to review the existing position of collection under various heads of withholding taxes. Member Inland Revenue (Policy) presented the digital directory proposal during the meeting.

A couple of years back, DG Withholding Taxes issued procedure for monitoring of withholding taxes, considering an ever-increasing size of withholding tax collection. It was told that in a number of cases tax was deducted by withholding tax agents but not timely deposited to the government treasury and the defaulters went unpunished.  “Due to no desk audit and no real time check on the business transaction/evasion, timely deposit of tax deducted by the withholding agents is open to doubts,” said a document.

Published in The News, February 25th, 2017

HabibMetro posts profit of Rs10.33b

In a meeting of Habib Metropolitan Bank’s Board of Directors, held recently, the financialresults of the Bank for the year ended December 31, 2016 were approved.A 30% cash dividend of Rs.3was declared for the year 2016.

The Bank posted a profit-before tax of Rs. 10.33 billion for the year 2016. Total assets amounted to Rs. 526.6 billion, while depositsincreased toover Rs. 430 billion and gross advances increased to Rs. 160 billion.Return on Equity and Assets marked at 17.41% and 1.2%, respectively. The profitable financialperformance led HabibMetro Bank to record an annualized Earning PerShareof Rs. 5.84.

Net Equity stood at Rs. 37.2 billion with Capital Adequacy marking at a comfortable18.21%. This demonstrated a financial robustness that was further validated by the Pakistan Credit Rating Agency (PACRA) assigning premium credit ratings of AA+ and A1+ credit ratings to HabibMetro Bank for the 16th consecutive year.In recognition of the Bank’s role in facilitating regional trade, HabibMetro Bank was also awarded as Asian Development Bank’s ‘Leading Partner in Pakistan’ for the 2ndconsecutive yearin 2016, in addition to the ‘Leading SME Trade Bank’ award.

HabibMetro continues to expand its footprint across Pakistan, with 31 branches being added to its network in 2016. The Bank now operates with a growing network of 307 branches in 87 cities across Pakistan, with an aim to further enhance its branch outreach in 2017.HabibMetro Bank is a subsidiary of Habib Bank AG Zurich, a multi-national banking group that enjoys a financial presence in 9 countries across 4 continents.

Published in Pakistan Observer, February 24th, 2017

Russia seeks to implement Islamic finance in its banks

The global Islamic finance industry, which is witnessing phenomenal growth rates with expansions in Europe and sukuk listings, will see a new entrant in Russia that hopes to cash in on the substantial Muslim population in the European country.
They have already started the process of getting acclimatized with the Islamic finance industry by learning from the established model of the Islamic Development Bank (IDB), headquartered in Jeddah. “Russia is hoping to implement Islamic Finance system in its banks,” said a member of the Russian delegation that was paying a visit to the IDB.
He said, “Our principal goal is to get acquainted with the Islamic finance system and implement it later in Russia where there are 25 million Muslims living,” Abubakar Arsamaskof, president of Moscow Industrial Bank said. Islamic banking refers to a system of banking or banking activity that is consistent with the principles of the Shariah and its practical application through the development of Islamic economics.
Asked if Russia is ready for such a move, he said that though there is an absence of some legislations that would facilitate Islamic banking, the president and the government are ready to implement Islamic finance at the earliest and, added that they as banking officials have been asked to provide the government with needed mechanisms.

“Hence the need for us to study a successful role model and that’s the IDB,” he said. Arsamaskof noted that they want to develop a partnership with the IDB to develop and implement Islamic finance in Russian banks. He said that their industrial bank has 7,000 employees working in 260 branches that provide different products and services. He added that their main focus is on industry, construction and agriculture. He also highlighted that they issue Muslim debt card to those wanting to perform Haj.

He also indicated that Russian companies are moving towards the Halal industry in a big wayand have investments that are estimated at $100 million. “Halal products,” said Arsamaskof, “are popular also among non-Muslims who buy these products with pleasure because they are sure about their high quality.” Sheikh Roshan Abasof, the first vice president of the Shoura Council of Muftis for the Muslims of the Russian Federation Administration, explained that in 2000 a regulatory body to certify, control and monitor was established under the name to International Center for Halal Standardization and Certification (ICSC).

Till date 200 companies have been given the ICSC certification and their products are being exported to five different countries, including ones in the Gulf region. Abasof said, “Russia and the IDB already have collaboration in different sectors — mainly the philanthropy sector, Waqf, and education. And this cooperation in the Islamic banking system will further boost relations.”

He added that more than 70 students have benefited from IDB scholarships in completing their university education. The Russian delegation was visiting the IDB to collaborate with regard to Awqaf and enhance the Islamic finance system in Russia.—Agencies

Published in Pakistan Observer, February 24th, 2017