Commercial Banking
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This document analyzes the commercial banking sector in Pakistan by categorizing banks based on assets and examining their performance metrics like profits, non-performing loans, assets, and CASA ratios. Large banks like HBL and MCB performed well with increased profits and improved CASA ratios and asset quality. NBP struggled with low profits and increased bad loans. Medium banks like SCB and new entrants performed well, while Askari and Summit Bank had high costs. Islamic banks improved profits and ratios compared to prior years. The banking industry faces high taxes affecting profitability and attracting new entrants. Recent updates include Meezan Bank acquiring HSBC Pakistan and potential Habib Bank acquisition of Barclays Pakistan operations.
Commercial Banking
- 1. Commercial Banking in Pakistan Presenters: Muhammad Zeeshan Azam Fazeel Ahmed
- 2. Defining Banks in Terms of Assets According to Pakistani Context, Banks have been divided into 4 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 (either small, medium or large) using Islamic Operations
- 3. Number of Banks and Branches Large 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
- 4. Product B Feature 1 Feature 2 Feature 3 Medium Banks Short Name Number 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
- 5. 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
- 7. 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
- 8. 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 .
- 9. 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
- 10. 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% HBL NBP UBL MCB ABL BAF CASA Comparison 2012 2013
- 12. -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
- 13. -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 Profit before Taxation PBT 2013 PBT 2012
- 14. 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
- 15. 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 HMB NIB SONERI SUMMIT JS BOK Total Assets 2013 2012
- 16. 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% BAH SCB Askari Faysal BOP HMB CASA Comparison 2012 2013
- 17. 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
- 18. Non Performing Loans SCB performed very well They reduced their non performing loans to 14.8% in 2013 from 16.2 % in 2012 . Summit banks also reduce their non performing loans to 28.6% in 2013 from 16.2 % in 2012. JS and BOK have also reduce their non performing loans, on the other hand Askari bank and BOP do not perform well in recovering loan their non performing loan has increase as compare to last year.
- 20. -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
- 21. -400 -200 0 200 400 600 Samba DB FWB BOT Profit Before Taxation 2013 2012
- 23. 0 10,000 20,000 30,000 40,000 50,000 SAMBA DB FWB BOT Total Asset Comparison 2013 2012
- 24. 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% Silk Sindh ICBC CITI Barclays HSBC CASA Comparison 2012 2013
- 25. 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Samba DB FWB BOT CASA Comparison 2012 2013
- 26. 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% .
- 28. -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Meezan AlBaraka Islamic Banks DIB Burj Profit Before Taxation PBT 2013 PBT 2012
- 29. 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Total Assets Comparison 2013 2012
- 30. 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
- 31. Changes occurred in Commercial Banks The banks that were losing money due to inefficiencies, waste and limited product range have become highly profitable business. The quality of new assets has improved as tough measures are taken to evaluate new loans Credit Information Bureau reports provide updated information to the banks about the credit history and track record of the borrowers Banking Technology that was almost non-existent in Pakistan until a few years ago
- 32. 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.
- 33. 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 2.8 HMB 4.1 4.9 4 3.5
- 34. 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
- 35. 0 5 10 15 20 25 30 35 40 Large Banks Medium Banks Small Banks Islamic Banks Loans & Advances Market Share 2013 2012
- 37. Concluding Remarks LARGE BANKS HBL performed very well as compared to other banks . PBT has increased, non performing loans has reduced, CASA ratio has improved MCB is also performed very well they increased their CASA ratio, It has highest CASA ratio in 2013. MCB has highest EPS in 2013. NBP performed very poor in 2013, their PBT is very low and their EPS is very low, their non performing loans has increased . UBL , ABL and BAF have good performances as compared them with their past year performance .
- 38. 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.
- 39. 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.
- 40. Banking industry faces a high tax rate which affects its profitability and attractiveness for new entrants. Within the banking system, government discharged Rs.10.5 billion to SBP against a borrowing of Rs. 416.8 billion in the same period last year.
- 41. Latest Updates On 20th October 2014, State Bank of Pakistan gave the confirmation report on Merging of HSBC Bank into Meezan Bank ltd. Therefore, Meezan bank also possessed all the branch all business of HSBC Pakistan will automatically turn business 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.