KARACHI (May 14 2003) : National Bank of Pakistan (NBP) President Ali Raza said about Rs 150 billion were not borrowed from the banking sector due to huge inflow of foreign money, issuance of term finance certificates (TFCs) and public sector loan adjustments.
He was speaking to the shareholders of the NBP in its 54th annual general meeting on Tuesday. Banks performance, restructuring and future strategy were presented through various graphs and tables.
The shareholders approved the accounts of the NBP, which earned a pre-tax profit of Rs 6.045 billion for the year 2002 as compared to the last year's Rs 3.016 billion.
Ali Raza, while expressing optimism about the growth of the bank, said the future was highly competitive for the banks in Pakistan, especially when the interest rate has come down to a single digit.
He said 20 to 25 percent investment of all the banks was in the government papers and the yield has drastically declined, impacting upon the earnings of banks.
The banks need to come out with new products and offset the situation and remain profitable.
The NBP president said that $1.5-2 billion (or Rs 90-120 billion) landed in the country through Pakistanis and invested in various fields in the last couple of years.
This money of over Rs 90-120 billion would have been borrowed from the banks.
He said TFCs were new thing in Pakistan and its volume reached Rs 30 billion.
Again, this money could have been borrowed from the banks. Similarly, loans worth billions of rupees were adjusted, while the commodity borrowing remained low.
“These are the reasons which reduced the credit off-take from the banks,” he said.
He saw great potential for the growth of NBP fee income considering its 10 million customers, out of the total 24 million banking customers.
He said the NBP would introduce fee-related products. If a product with Rs 1,000 fee was introduced, and only four million customers bought it, the bank would earn Rs 4 billion just from the fee, which was 26 percent of the bank's previous year's revenue.
However, he said, the World Trade Organisation (WTO) would also impact upon the banking industry and would create awareness among the staff of the banks and business community, the NBP would hold seminars on the WTO.
NBP has 21 percent of total banks' deposits but dealt with 37 percent transactions and received 70 percent utility bills in Karachi, he said.
He discussed macroeconomic indicators, NBP's restructuring, its performance, future strategy and world situation from the banking point of view.