COMPARATIVE STUDY OF HOUSE LOANS PROVIDED BY COMMERCIAL BANKS IN

ISLAMABAD

MORTGAGE- A ROAD TO DEVELOPMENT

Between 1997 and 2006, the price of the typical American house increased by 124%

The USA home ownership rate increased up to 69.2% in mid 2008.

Household debt grew to $14.5 trillion in midyear 2008, 134% of disposable personal income.

MORTGAGE- OR A DEAD END

If mortgage is not handled properly it become a dead end

For example in America: A loss of 1.3Trillion Dollars More than 100 banks files bankruptcy This takes the whole world into recession ARM rates are used

GDP of Pakistan is 2.4%

Per capita income is 1042 $

Inflation is 19.3%

Foreign Reserves become 11.3 billion $

Source: Economic Survey of Pakistan

ECONOMY OF PAKISTAN-OVERVIEW

Present Housing Stock Urban Rural Pacca Semi-Pacca Kutcha

19.3 Million32.3%

67.7%

21.0%

40.0%

39.0%

HOUSING SECTOR IN PAKISTAN

Household sizeOccupancyHousing Shortfall Annual RequirementAnnual ProductionRecurring Annual

Shortfall

6.6 Persons per house

3.3 Persons per room

4.3 Million

570,000

300,000

270,000

Source: National Housing Authority, Ministry of Housing & Works

CONT…

Municipal Area Rural AreaTotal Area

440.3 Sq.km

465.7 Sq.km

906.0 Sq.km

Source: CDA, Islamabad

AREA OF ISLAMABAD

Existing Housing units in Sectors

Required Housing DemandExisting ‘Shortage Additional Demand per year

75,000 units

125,000 units

50,000 units

4,000 units

Source: CDA, Islamabad

HOUSING SECTOR IN ISLAMABAD

Consumer Financing

CONSUMER FINANCING

HOME LOANS

PERSONAL LOANS

AUTO LOANS

CREDIT CARDS

Total Financing in housing finance in FY 2008-09 is Rs. 18 Billion

Share in Pie is 16.39%

Source: Deputy Governor State Bank of Pakistan Source: Economic Survey of Pakistan

CONSUMER FINANCING IN PAKISTAN

TOTAL CONSUMER FINANCING

24-Jun-09 31-Jul-09

28-Jun-09 5-Jul-09 12-Jul-09 19-Jul-09 26-Jul-09

24-Jun-09 - 5-Jul-09Bank Identification & Survey

5-Jul-09 - 12-Jul-09Documentation

12-Jul-09 - 19-Jul-09Analysis of data

19-Jul-09 - 26-Jul-09Comparative Study 26-Jul-09 - 31-Jul-09

Project Report Submission

PROJECT TIMELINE

Total banks selected = 34

Total Banks visited = 34

Banks provide services = 20

Banks not provide services = 14

IDENTIFICATION OF BANKS

Public banks

Private banks

Islamic banks

Foreign banks

CATAGORIZATION OF BANKS

Data collected from banks i.e. Brochures

Data collected from internet

Takes one week to complete

DOCUMENTATION

Variable definedMark-Up RatesFinancing LimitProcessing feeTenureAge limitBTF

ANALYSIS OF DATA

COMPARATIVE STUDY

MARK UP RATES

16.7215.22

Bank

15.2217

14.2214.2217.2215.22

15.4716.2217.2215.2215.2216.22

15.7215.22

Mark-up For Salaried

person(%)

Mark-up For Businessman(%)

1616.2219.2217.5

15.2215.22

14.2216

14.2214.2217.2215.22

15.4716.2217.2215.2215.2215.22

FAYSAL BANKASKARI BANKUBLHBFC

1616.2219.22

1715.2215.22

DUBAI ISLAMICMEEZANBANK ALFALAHBANK ALHABIBSONERI BANKKASB BANK

DAWOOD ISLAMIC

NBPBOKBOPSTD CHTDAL-BARAKABARCLAYSRBSBANK ISLAMIEMIRATES GLOBAL

NBPBOK

BOP

STD CHTD

AL-BARAKA

BARCLAYS

RBS

BANK ISLA

MI

EMIR

ATES GLO

BAL

DAWOOD IS

LAM

IC

DUBAI ISLA

MIC

MEEZAN

BANK ALF

ALAH

BANK ALH

ABIB

SONERI BANK

KASB BANK

FAYSAL BANK

ASKARI BANK

UBL

HBFC0

5

10

15

20

25

MARK-UP RATES

SALARIED BUSINESSMAN

GRAPH

PROCESSIG FEE

UBL 5,000

PROCESSING FEE

FB 5,300ACB 5,850

SBL 5,000KASB 5,000

BALFH 15,000PRIVATE BANKS

BALH 3,500

DIBPL 10,000MB 5,000

EGIBL 5,000DIBL 5,000

RBS 5,000ISLAMIC BANKS

BI 5,000

ABIB 5,000BARC 5,000

HBFC 10,000FOREIGN BANKS

SCB 10,000

BOK 10,000BOP 2,950

PUBLIC BANKS

NBP 6,000

GRAPH

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

PROCESSING FEE

Processing Fee

MAXIMUM FINANCING LIMIT

NBP 35,000,000BOK 10,000,000BOP 10,000,000HBFC 7,500,000

SCB 10,000,000AIB 20,000,000BCB 50,000,000RBS 50,000,000

BIP 10,000,000EGIBL 50,000,000DIBL 20,000,000DIBPL 50,000,000MBL 10,000,000BAL 10,000,000

BAH 10,000,000SNR 10,000,000KASB 20,000,000FABL 1,000,000ASK 30,000,000UBL 30,000,000

PUBLIC BANKS

FOREIGN BANKS

ISLAMIC BANKS

PRIVATE BANKS

MAXIMUM FINANCING LIMIT

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

MAXIMUM FINANCING LIMIT

MAXIMUM FINANCING LIMIT

GRAPH

MINIMUM FINANCING TENURE

NBP 3BOK 2BOP 3HBFC 3

SCB 1AIB 3BCB 3RBS 3

BIP 2EGIBL 3DIBL 3DIBPL 3MBL 3BAL 3

BAH 2SNR 2KASB 3FABL 3ASK 3UBL 3

FOREIGN BANKS

ISLAMIC BANKS

PRIVATE BANKS

PUBLIC BANKS

MINIMUM FINANCING TENURE

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL0

0.5

1

1.5

2

2.5

3

3.5

MINIMUM FINANCING TENURE

Minimum Financing Tenure

GRAPH

MAXIMUM FINANCING TENURE

NBP 20BOK 10BOP 20HBFC 20

SCB 20AIB 20BCB 20RBS 20

BIP 20EGIBL 20DIBL 20DIBPL 20MBL 20BAL 20

BAH 20SNR 20KASB 20FABL 20ASK 20UBL 20

MAXIMUM FINANCING TENURE

FOREIGN BANKS

ISLAMIC BANKS

PRIVATE BANKS

PUBLIC BANKS

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL0

5

10

15

20

25

MAXIMUM FINANCING TENURE

Maximum Financing Tenure

GRAPH

MINIMUM AGE LIMIT

NBP 21BOK 18BOP 25HBFC 18

SCB 25AIB 25BCB 23RBS 25

BIP 25EGIBL 22DIBL 24DIBPL 25MBL 25BAL 25

BAH 23SNR 25KASB 21FABL 25ASK 21UBL 23

MINIMUM AGE LIMIT REQUIREMENTS

PUBLIC BANKS

FOREIGN BANKS

ISLAMIC BANKS

PRIVATE BANKS

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL0

5

10

15

20

25

30

21

18

25

18

25 25

23

25 25

22

2425 25 25

23

25

21

25

21

23

MINIMUM AGE LIMIT

MINIMUM AGE LIMIT

GRAPH

MAXIMUM AGE LIMIT

NBP 65BOK 55BOP 57HBFC 60

SCB 65AIB 60BCB 60RBS 65

BIP 65EGIBL 60DIBL 65DIBPL 65MBL 65BAL 65

BAH 60SNR 60KASB 60FABL 60ASK 65UBL 65

PUBLIC BANKS

FOREIGN BANKS

ISLAMIC BANKS

PRIVATE BANKS

MAXIMUM AGE LIMIT REQUIREMENTS

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL50

52

54

56

58

60

62

64

6665

55

57

60

65

60 60

65 65

60

65 65 65 65

60 60 60 60

65 65

MAXIMUM AGE LIMIT

MAXIMUM AGE LIMIT

GRAPH

BTF FACILITY

PUBLIC BANKS

NBP 1

BOK 0

BOP 0

HBFC 1

FOREIGN BANKS

SCB 0

AIB 1

BCB 1

RBS 1

ISLAMIC BANKS

BIP 1

EGIBL 1

DIBL 1

DIBPL 1

PRIVATE BANKS

BAH 0

SNR 1

KASB 1

FABL 0

NBP BOK BOP HBFC SCB AIB BCB RBS BIP EGIBL DIBL DIBPL MBL BAL BAH SNR KASB FABL ASK UBL

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

BTF

BTF

GRAPH

RESULT OF COMPARATIVE STUDY

The Royal Bank of ScotlandDubai Islamic Bank Private Limited

BEST SUITED BANKS

Mark-Up Rate: KIBOR + 3.25%Loan Range: PKR 0.5 million to PKR 50

millionLoan Tenure: 3 to 20 yearsQualifying Age: 25 to 65 years upon loan

maturityBTF Facility is also available

The Royal Bank of Scotland

Mark-Up Rate: KIBOR + 3%Loan Range: PKR 1 million to PKR 50

millionLoan Tenure: 3 to 20 yearsQualifying Age: 25 to 65 years upon loan

maturityBTF Facility is also available

Dubai Islamic Bank Private Limited

COMPARISON BETWEEN PAKISTAN & INDIA

MARK-UP RATES

PROCESSING TIME

TENURE

BTF FACILITY

AGE LIMIT