Day: October 27, 2021

Banks credit to the housing and construction sector, mainly builders and developers of housing societies, have surged to Rs. 305 billion at the end of September 2021, which was Rs. 166 billion at the end of September last year, showing an increase of Rs. 139 billion and year-on-year growth of 84%.

In July 2020, the State Bank of Pakistan advised commercial banks to increase their lending for housing and construction sectors to at least 5 percent of their private domestic sector advances by December 2021. To assist in this, the State Bank advised quarterly targets to each bank after individual consultation, leading to concerted effort. For the quarter ending September 30, 2021, banks have achieved 94 percent of their assigned targets on a consolidated basis.

During July-September 2021, banks increased their credit to the housing and construction sector by Rs. 48 billion from Rs. 257 billion as of June 30, 2021. An increase in credit to the housing and construction sector reflects that banks have realigned their internal policy dimension/strategic focus towards the development of housing and construction. The banks have, in recent months, revamped their systems and procedures, upgraded and streamlined technological platforms, and motivated their banking staff through incentives and training.

The banks have also established a joint call center to address queries of the general public regarding Mera Pakistan Mera Ghar (MPMG) which was recently inaugurated by the Governor SBP. The general public can reach the call center at 03377786786. This call center will help resolve complaints and assist common persons who would like to borrow under MPMG but face difficulties in completing the requirements of banks.

Earlier, State Bank launched a user-friendly online complaint resolution mechanism in January 2021. The complaint resolution mechanism comprises an IT-based portal supported by a comprehensive network of State Bank and commercial bank staff to take care of problems faced by applicants and resolves complaints within a predefined timeline with a proper escalation mechanism.

Some of the other steps taken by SBP in collaboration with NAPHDA, other government agencies, banks, and stakeholders include a simplified loan application, standard facility offer letter, amendment in the prudential framework, development of standard risk assessment criteria for builders/developers, development of income proxy model and streamlined financing documents.

Speedy Approvals of Financing Under Low-Cost Housing Scheme

The low-cost housing scheme MPMG has continued to attract the interest of a number of citizens as the amount against the applications surged to over Rs. 200 billion, however, the approval of financing stood less than 50 percent whereas the disbursement of stood less than 10 percent so far.

According to the data, the banks have approved an amount of Rs. 78 billion. On the other hand, these companies disbursed merely Rs. 18 billion. Governor SBP, Dr. Reza Baqir, stressed the need to accelerate the pace of approvals by banks to match the requests for financing to ensure that people are not discouraged by the processing time. He expressed the hope that with the combined efforts of all stakeholders, the dream of Pakistanis to have their own homes can become a reality.

While appreciating the efforts to date, Reza Baqir also asked stakeholders to increase the outreach of the Government’s Markup Subsidy Scheme for Housing Finance commonly known as Mera Pakistan MeraGhar to the wider public. He said that when the journey of MPMG started last year, low-cost housing finance was almost non-existent as commercial banks rarely ventured into this area fearing its inherent risks.

However, the strong commitment of the government especially NAPHDA, SBP, banks, and other stakeholders, to promote housing and construction activities in the country, is beginning to result in a considerable increase in finance for housing and construction.

Source: Pro Pakistani

The negotiations between Pakistan and Russia on building the North-South Gas Pipeline (now called Pakistan Stream Gas Pipeline – PSGP) are underway as per the schedule.

The two sides had signed an inter-governmental agreement in 2015. The agreement envisages the laying of a 1,100 km long pipeline to carry 1.6bcf/d gas from Karachi to Lahore.

Teams from the two countries are currently holding the first session of negotiations on a ‘Shareholders Agreement’ of PSGP.

The Pakistani team led by Dr. Arshad Mehmood, Secretary Petroleum Division, comprises Syed Zikria Ali Shah, Managing Director of Inter-State Gas Systems, and other officials of the Petroleum Division, Law Division, Foreign Office, and Finance Division.

Vladimir Shcherbatykh, General Director of PakStream Ltd, is heading the Russian side with other officials including financial and technical experts from the Russian government and allied entities.

The PSGP is a strategic project, which has made more progress in the last four months than the preceding five years. As a testament, the Head of Terms (HOT) Agreement was signed in July and Technical parameters were finalized in August this year. Both parties have made substantive progress on the finalization of the Shareholders Agreement in a collaborative manner. It is an important document for which multiple negotiation sessions are planned.

The Russian side has appreciated the progress made, showing confidence in the negotiations as they are going as per the expectations of both sides.

Source: Pro Pakistani

National Bank of Pakistan (NBP) has reported a profit after tax of Rs 24.1 billion for the nine-month period ending September 30, 2021, as against a profit after tax of Rs. 26.1 billion in the same period as last year.

The earning per share of the bank stood at Rs. 11.35 per share, on total revenue of Rs 99.5 billion as against Rs. 12.28 per share, on total revenues of Rs. 107.6 billion for the corresponding nine-month period of 2020. This impact was seen after the substantial additional provisions of about Rs. 12.2 billion taken in 2021.

In line with the industry-wide margin compressions, revenues of the bank decreased 7.5% to close at Rs. 99.5 billion (Sep’20: Rs 107.6 billion), primarily reflecting the impact of the drop in the policy rate and normalization of yield on investment.

The bank recorded a net interest income of Rs. 72.4 billion, driven by an Rs. 240 billion growth in the average earning portfolio. While gross mark-up/interest income of the bank closed at Rs. 166.5 billion (19.2% down YoY), the interest/mark-up expense also dropped significantly by 25.4% to Rs. 94.1 billion. Despite the subdued trade activity during most of the period under review, non-mark-up/non-interest earning of the bank remained high at Rs. 27.1 billion.

Despite inflationary pressures and higher operating costs as the Bank continues uninterrupted delivery of services during the pandemic contributing to Pakistan’s economic growth and development, administrative expenses remained well controlled and recorded a marginal increase of 4.5% YoY to close at Rs. 47.0 billion. This translates into a cost-to-income ratio of 47.3%, slightly up from 41.8% in 9M’20. During the period, NPLs of the bank increased by 17.7% to close at Rs. 201.7 billion (Dec’20: Rs. 171.3 billion). To make its balance sheet more resilient in the prevailing circumstances, the Bank created a provision charge of Rs. 12.2 billion during the period.

On the balance sheet side, NBP has one of the industry’s largest balance sheets which further increased by 27.1% to Rs. 3.8 trillion, in the nine months of 2021 from Rs. 3.0 trillion level at the beginning of 2021. The bank’s Balance Sheet has grown on the back of stable deposit base expansion, leveraged with money market borrowings. Gross loans and advances of the Bank amounted to Rs. 1,207.7 billion depicting a 4.1% increase from the year-end 2020 levels.

The major share of the bank’s total funding comes from core customer deposits that contribute 87.2% (Rs. 2,224.6 billion) of the bank’s total deposits that stood at Rs. 2,551.6 billion. Compared to Dec 31, 2020 level, customer deposits have increased by 10.1% or Rs. 204.0 billion.

NBP’s Islamic Banking is operating a network of over 200 dedicated branches throughout the country. Islamic Banking continues to focus on Commercial and SME businesses by expanding trade hubs to provide ease of service to these segments. The bank has made considerable progress on its strategy across its consumer and institutional businesses and for playing its systemically important role in the economy while maintaining a strong and resilient balance sheet to deliver performance for shareholders.

The management is committed to modernizing the Bank to achieve excellence in risk and control environment, business processes, and service quality to clients. The Bank’s business strategy will increase its focus on financing and supporting underserved sectors including SME, Microfinance, Agriculture Finance, and the PM’s Low-Cost Housing initiative on a priority basis.

Source: Pro Pakistani