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This report will help to judge the current situation of Pakistani Banking Sector up till 2013 and forecasting for the future perspective.
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Commercial Banking in Pakistan
Presenters:
Muhammad Zeeshan Azam
Fazeel Ahmed
Defining Banks in Terms of Assets
According to Pakistani Context, Banks have been divided into4 categories depends upon the assets:
1. Large Banks: total assets exceeding Rs 500 Bln
2. Medium Size Banks: total assets between Rs100 Bln –Rs500 Bln
3. Small Banks: Total Assets less than Rs100 Bln
4. Islamic Banks: Any bank possessing above assets (eithersmall, medium or large) using Islamic Operations
Number of Banks and BranchesLarge Banks Short Name
Number of Branches (2013)
Habib Bank Limited HBL 1546
National Bank of Pakistan
NBP 1342
United Bank Limited
UBL 1283
MCB Bank Limited MCB 1208
Allied Bank Limited ABL 948
Bank Alfalah Limited
BAF 423
Total 6750
Product B
• Feature 1
• Feature 2
• Feature 3
Medium Banks Short NameNumber of Branches (2013)
Bank Al-Habib BAH 320
Standard Chartered Bank SCB 116
Askari Bank Limited Askari 281
Bank of Punjab BOP 334
Faysal Bank Limited Faysal 269
Habib Metropolitan Bank HMB 174
Meezan Bank Limited Meezan 351
NIB Bank Limited NIB 179
Soneri Bank Limited Soneri 239
Summit Bank Summit !87
JS Bank Limted JS 211
Bank of Khayeber BOK 100
Small Banks Short Name Number of Branches (2013)
Sindh Bank Sindh 200
Silk bank Limited Silk 88
Citibank Citi 3
Bank Islami Pakistan Limited
Islami 201
Al-Baraka Bank Limited Albaraka 110
Dubai Islamic Bank Limited DIB 125
HSBC Bank HSBC 10
Barclays Bank Barclays 7
Burj Bank Burj 75
Samba Bank Limited SAMBA 28
Deutsche Bank Limited DB 3
Industrial & Commercial Bank of China
ICBC 2
Bank of Tokyo BOT 1
Large Banks Analysis
The Comparison of Banks at Different Levels
0
5000
10000
15000
20000
25000
30000
35000
40000
HBL NBP UBL MCB ABL BAF
Profit Before Taxation
PBT 2013 PBT 2012
Non Performing Loans
Large Banks:
• NBP has not improved its position. In 2012 NBP nonperforming loan ratio was 12.6% now in 2013 its ratio has increased to 16.3 %
• MCB has improve its ratio from 9.7% in 2012 to 8.7 % to 2013.
• BAF,ABL and UBL have improve their nonperforming loans to great extent.
• HBL has also shown great improvement in recovering non performing loan there non performing loan has decrease to 9.2 % in 2013 from 10.9% in 2012 .
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
HBL NBP UBL MCB ABL BAF
Total Assets of Banks
0.00% 20.00% 40.00% 60.00% 80.00% 100.00%
HBL
NBP
UBL
MCB
ABL
BAF
CASA Comparison2012 2013
Medium Banks Analysis
-10,000
-5,000
0
5,000
10,000
15,000
20,000
BAH SCB Askari Faysal BOP
Profit Before Taxation
PBT 2013 PBT 2012
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
Profit before TaxationPBT 2013 PBT 2012
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
BAH SCB ASKARI FAYSAL BOP
Assets Comparison
Assets 2013 Assets 2012
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
HMB NIB SONERI SUMMIT JS BOK
Total Assets2013 2012
0.00% 20.00% 40.00% 60.00% 80.00% 100.00%
BAH
SCB
Askari
Faysal
BOP
HMB
CASA Comparison2012 2013
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
HMB
NIB
Soneri
Summit
JS
BOK
CASA Comparison
2012 2013
Non Performing Loans
• SCB performed very well
• They reduced their non performing loans to 14.8% in 2013from 16.2 % in 2012 .
• Summit banks also reduce their non performing loans to28.6% in 2013 from 16.2 % in 2012.
• JS and BOK have also reduce their non performing loans, onthe other hand Askari bank and BOP do not perform wellin recovering loan their non performing loan has increaseas compare to last year.
Small Banks Analysis
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Profit Before Taxation
PBT 2013 PBT 2012
-400
-200
0
200
400
600
Samba DB FWB BOT
Profit Before Taxation
2013 2012
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Total assets Comparison
2013 2012
0
10,000
20,000
30,000
40,000
50,000
SAMBA DB FWB BOT
Total Asset Comparison2013 2012
0.00% 20.00% 40.00% 60.00% 80.00% 100.00%
Silk
Sindh
ICBC
CITI
Barclays
HSBC
CASA Comparison
2012 2013
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
Samba
DB
FWB
BOT
CASA Comparison
2012 2013
Non Performing Loans• The non performing loan ratio is not very high if we
compare it with medium size and large size banks .
• There is great improvement as compared with previous year.
• Silk bank non performing loans in 2012 was 20.0% and in 2013 its nonperforming loans is 16 % .
• Al Baraka shown great improvement, their non performing ratio in 2012 is 19.3% and in 2013 is 13.2 %.
• Citi bank also improve its ratio it non performing loans in 2012 is 25.4% and in 2013 is 2.8% .
Islamic Banks Analysis
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Meezan AlBaraka IslamicBanks
DIB Burj
Profit Before TaxationPBT 2013 PBT 2012
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000 Total Assets Comparison
2013 2012
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
Meezan
AlBaraka
Islamic Banks
DIB
Burj
CASA Comparison
2012 2013
Changes occurred in Commercial Banks
• The banks that were losing money due to inefficiencies, waste andlimited product range have become highly profitable business.
• The quality of new assets has improved as tough measures are takento evaluate new loans
• Credit Information Bureau reports provide updated information tothe banks about the credit history and track record of the borrowers
• Banking Technology that was almost non-existent in Pakistan until afew years ago
• Average spread of large banks in 2013 was 5.5% as compared to 7% in 2012.
• Average spread of medium sized banks in 2013 was 4.3% as compared to 5.2% in 2012.
• Average spread of small banks in 2013 was 4.1% as compared to 5.5% in 2012.
• Average spread of Islamic banks in 2013 was 6.4% as compared to 7.6% in 2012.
Spread Rates EPS
Large Banks 2013 2012 2013 2012
HBL 4.7 6.3 17.2 17
NBP 6 7 2.5 7.3
UBL 5.3 6.7 15.8 15.7
MCB 6.3 8 21.6 20.6
ABL 5.4 7.2 14.3 11.4
BAF 5.2 6.2 3.5 3.4
Medium Banks
BAH 3.5 4.5 5.1 5.4
SCB 8.2 9.1 2.7 1.5
ASKARI 4.1 5.5 -6.2 1.5
BOP 2.2 1.6 1.8 1.4
FAYSAL 6.1 6.7 2.3 2.8HMB 4.1 4.9 4 3.5
Small Banks 2013 2012 2013 2012
Sindh 6.8 7.7 -0.4 -0.1
Silk 4.4 6.4 0.7 0.9
Citibank 4.6 7--- ---
HSBC 3.6 5--- ---
SAMBA 3.1 5.1--- ---
ICBC -1 5.8--- ---
Islamic Banks
Meezan 4 3.5 3.6 5.2
AlBaraka -0.1 -0.7 3.5 2.5
Islami 0.4 0.6 5.4 6.6
DIB 0.2 0.5 10.4 12.7
Burj -1.5 0.1 8.9 11.1
0
5
10
15
20
25
30
35
40
Large Banks Medium Banks Small Banks Islamic Banks
Loans & Advances Market Share
2013 2012
Concluding RemarksLARGE BANKS• HBL performed very well as compared to other banks .
• PBT has increased, non performing loans has reduced, CASA ratiohas improved
• MCB is also performed very well they increased their CASA ratio, Ithas highest CASA ratio in 2013. MCB has highest EPS in 2013.
• NBP performed very poor in 2013, their PBT is very low and their EPSis very low, their non performing loans has increased .
• UBL , ABL and BAF have good performances as compared them withtheir past year performance .
MEDIUM BANKS
• New entrants performed very well like NIB,BOK,HMB, and BAH
• SCB performed very well as compared, their CASA ratio is the highest in all the medium size banks. They reduced their operating cost and performed very well in CY2013.
• Askari bank , Summit bank , Soneri and JS bank had high operating cost
• Meezan bank performed very well in medium size banks
• They maintain their assets and has good EPS as compared it with other banks.
• ISLAMIC BANKS
• Islamic banks performed very well in CY 2013
• Their CASA ratio has improved, their non performing loans as reduced and their assets has increased .
• Islamic banking is the new concept in banking and people are showing great interest toward them.
• Meezan bank performed very well if we compare it with other islamic banks.
• Banking industry faces a high tax rate whichaffects its profitability and attractivenessfor new entrants.
• Within the banking system, governmentdischarged Rs.10.5 billion to SBP against aborrowing of Rs. 416.8 billion in the sameperiod last year.
Latest Updates• On 20th October 2014, State Bank of Pakistan gave the
confirmation report on Merging of HSBC Bank into MeezanBank ltd. Therefore, Meezan bank also possessed all thebranch all business of HSBC Pakistan will automatically turnbusiness of Meezan Bank.es that HSBC had before.
• Like HSBC, Europe-based Barclays Bank is also withdrawal a Pakistan marketplace for good.
• Recently, Habib Bank announced that it was negotiating with Barclays Bank for a merger of a Pakistan operations.