NIB reports big jump in lending to FIs, trims borrowings By Javed Mahmood/Daily The Pak Banker (pakbanker.pk) ISLAMABAD NIB Bank has reported a substantial growth in lending to the financial institutions in nine months of the ongoing calendar year. From Jan-Sept 2013, NIB Bank had given about 18 billion rupees credit to different financial institutions as against only 3.44 billion credit provided to the FIs in 2012. The NIB Bank also trimmed its borrowings to 46.15 billion during Jan-Sept 2013, from 76.18 billion rupees in 2012. The bank says that its lending to the financial institutions and reduction in borrowings gave a major boost to its profitability and the bank earned over one billion rupees (1009 million rupees post-tax and Rs 1324 million pre-tax) profit in 9 months of 2013 against a post-tax loss of 628 million rupees in the corresponding period of last year. The deposits of the bank, however, showed a marginal growth this year and amounted to 98 billion rupees from 91 billion rupees in 2012. In its 9-month financial statement, the bank appreciated the government’s economic policies saying that the new IMF program will provide the much needed Balance of Payment support and Pakistans economy is expected to gradually improve. In its efforts to narrow the fiscal deficit, the government has taken some aggressive steps including but not limited to a phased elimination of energy subsidies. Privatization and restructuring plan for state owned enterprises (SOEs) has been placed high on the reform agenda of the policy makers as it will address both the issue of continuing losses and mobilize proceeds through the sale process. Progress vis a vis auction of 3G licenses is gathering pace and if successful is expected to generate an additional 1.2 billion dollars in the first half of 2014. The measures outlined above are likely to bear fruit over the medium term, however, the immediate impact of the increase in the GST rate and the power tariff have impacted the inflation rate which has registered an increase from 5.6% in Q2 2013 to 8.1% in the period under review. Depreciation of the Rupee, coupled with the incremental impact of the above mentioned initiatives is expected to drive inflation higher over the next two quarters. In response to current and expected inflationary pressures, the SBP increased its policy rate by 50bps in its last monetary policy statement. Whilst business confidence / perception has shown signs of improvement, the demand for private sector credit, continuing its recent trend, continues to lag. Demand for credit remaining closely tied to the overall economic climate and realization of governments plans towards energy reforms, privatization and law and order, is keenly watching the governments resolve in pursuing its agenda before committing itself to new investment. Going forward, the increase in minimum rate on savings deposits by 0.50% and its tie-in with the interest rate corridor is expected to constrain banking sector profitability especially in absence of the revival in credit demand. NIB Bank further said it had made significant progress in the first nine months of 2013 despite a challenging operating environment. Low economic growth, weak credit demand and a number of regulatory changes impacted banking spreads which translated into lower profitability growth across the industry. The Bank however has delivered significantly improved performance across all metrics. The Banks earnings derived from deposit growth, lower cost of funds and measured credit growth in top tier corporate names continued to drive core revenues higher. Continuing to keep costs flat in the first nine months of 2013 compared to the same period in the prior year despite high inflation and growth challenges was encouraging. The Bank also continued to benefit from controlling incremental credit provisioning and from its relentless and focused recovery efforts from customers in default or whose loans had been written off. On the other hand, weak credit conditions in the Consumer and SME segments and lower interest rates continued to adversely impact asset yields during the reporting period. Revenue growth of 26% in the 9 months ended September 30, 2013 compared to the same period last year is mainly driven through growth of the Wholesale Banking portfolio. The Bank booked high quality corporate names during the period and achieved a good cross-sell of foreign exchange, trade and cash management products driven by dedicated product teams. Income from money market and forex trading activities also contributed to revenue growth. End
Posted on: Thu, 31 Oct 2013 15:08:24 +0000
Trending Topics
Recently Viewed Topics
© 2015