Day: November 2, 2021

Punjab Chief Minister Sardar Usman Buzdar says the PTI government has allocated billions of rupees for development projects of Lahore.

In a statement on Tuesday, he said mega infrastructure projects have been started in the city.

Usman Buzdar said completion of Shahkaam Chowk, Gulab Devi Hospital Underpass and Sheeran Wala Gate Overhead projects will provide ample transportation facilities to citizens of Lahore.

Source: Radio Pakistan

State Bank of Pakistan earned a profit of Rs. 760.859 billion in FY21 as compared to a profit of Rs. 1.1634 trillion in FY20, registering a decline of 34 percent year-on-year, according to the annual performance report.

The decline in profit is primarily attributed to lower income from lending to the government. Pakistan Investment Bonds (PIBs) worth Rs. 569 billion matured during the year, and no fresh lending was made by the bank to the federal government, resulting in lower income under this head. Moreover, a decrease in the average interest rate during FY21 also impacted adversely on income from lending to government.

Income from reverse repo transactions and foreign currency deposits also witnessed a decline while charges on account of fair value adjustment on COVID-19 loans significantly increased during the year. The decline in income from these major income/expense streams is partly offset by a decrease in interest/mark-up expense and operating expenses.

SBP group also earned a higher net exchange gain during FY21 compared to the previous year due to appreciation of PKR against other currencies, especially USD, during the year.

Interest Income

The interest/markup income decreased by Rs. 453.033 billion to Rs. 755.588 billion, registering a decrease of 37 percent. For SBP, lending to the government of Pakistan (GoP) remained the major source of income during the year, which dropped by 39 percent due to the maturity of PIBs worth Rs. 569 billion and no further lending to the GoP during the year.

Income under this head also declined due to a decrease in the average interest rate on PIBs during the year. The income earned on lending to commercial banks through OMO injections decreased by 30 percent due to a decline in average interest rate despite larger volumes of monetary injections during the year.

Exchange Gains

The bank earned a net exchange gain of Rs. 135.328 billion during FY21 compared to an exchange gain of Rs. 66.402 billion during FY20. There is a net FCY liability position (including off-balance sheet commitments) that resulted in net exchange gain as PKR appreciated against USD, SDR, and other currencies during the period.

Exchange Gain

The exchange gains/ (losses) arise on FCY assets and liabilities of the bank. A major part of the foreign currency assets of the bank is USD denominated whereas the foreign currency liability exposure is mainly SDR and USD denominated. Accordingly, the movement in the PKR/SDR and PKR/USD exchange rates directly affects the exchange rate account. The bank earned a net exchange gain of Rs. 135.328 billion during FY21 compared to an exchange gain of Rs. 66.402 billion during FY20.

There is a net FCY liability position (including off-balance sheet commitments) that resulted in net exchange gain as PKR appreciated against USD, SDR, and other currencies during the period.

Other Operating Income

Other operating income includes penalties levied on banks/financial institutions, licenses and e-CIB fees, gains/ (losses) on sale, and re-measurement of investments, and other income. Income under this head decreased to Rs. 3.672 billion in FY21 from Rs. 8.604 billion in last year.

The decrease is primarily due to a decline in income on penalties levied on banks and financial institutions, licenses fee, e-CIB fees, which is partly offset by an increase in gain on disposal of foreign investments classified as “fair value through profit or loss.”

Operating Expenditure

The total expenditure during the year was Rs. 54.276 billion as against Rs. 59.089 billion in FY20. The decrease is due to a 17 percent decline in general administrative and other expenses and a 13 percent decrease in agency commission.

General Administrative and Other Expenses

The general administrative expenses include employees’ salaries and other benefits, retirement benefits, fund managers and custodians’ expenses, training expenses, legal and professional expenses, depreciation, repair, and maintenance, etc.

The overall general and administrative expenses decreased to Rs. 29.320 billion in FY21 from Rs. 35.168 billion in FY20, thus registering a decrease of Rs. 5.848 billion. A major decrease was witnessed in retirement benefits, salaries and other benefits, and legal and professional expenses during the period. A summary of the general, administrative, and other expenses.

Balance Sheet Summary

The total assets stood at Rs. 13.603 trillion as of June 30, 2021, as compared to Rs. 12.273 trillion on June 30, 2020, registering an increase of Rs. 1.330 trillion primarily due to an increase in securities purchased under agreement to resell.

The increase in total assets can also be attributed to the increase in foreign currency accounts and investments, loans, and advances to banks and financial institutions in order to promote the economic activities in the priority sectors and increase in SDRs of IMF. The total liabilities of the bank stood at Rs. 12.446 trillion as of June 30, 2021, as compared to Rs. 11.219 trillion as of June 30, 2020, registering an increase of Rs. 1.227 trillion. This rise was primarily led by an increase in currency in circulation.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) has extended the deadline for digital payments by the corporate sector stipulated in Section 21 (1a) of Income Tax Ordinance-2001 up to 30th November 2021.

FBR has exercised this power conferred upon it under Section 214A of the Income Tax Ordinance, 2001 after receipt of various representations filed by the taxpayers.

The date extension has been announced in view of demand made by the corporate sector to explain or define “digital mode”, so as to make clear what kind of banking transactions are covered under it. It is to note that the Income Tax Ordinance, 2001 does not contain any definition of the digital mode.

In principle, FBR notified a few weeks ago that under the Tax Laws (Third Amendment) Ordinance, 2021 that any expenditure in excess of Rs. 0.25 million by the corporate sector will be inadmissible for tax deduction purposes if not paid through digital mode.

The FBR outlined that through this amendment, payments made by a company under a single head of account exceeding Rs. 250,000 other than by digital means from a business bank account of a taxpayer notified to the Commissioner under Section 114A of the Ordinance shall not be admissible for deductions, with a few exceptions.

Source: Pro Pakistani

The State Bank of Pakistan (SBP) has rejected the news reports, circulating in various sections of media, of cybersecurity attacks on banks, including remarks attributed to Chief Spokesman, Abid Qamar. It was claimed in the reports that nine banks suffered cyberattacks and that the money was withdrawn and data was stolen.

The SBP has clarified that no bank, other than the National Bank of Pakistan (NBP), has faced any cyberattack, nor has any financial loss or data breach been observed. The central bank affirmed that it was closely monitoring the situation and would share any update or information about the incident through its official channels.

Last week, hackers reportedly targeted a section of the computer systems at NBP and caused disruption in payments for thousands of public sector employees.

The cyberattack disrupted NPB services throughout the country, prompting fears that the payment of salaries and pensions to public sector employees would be delayed. It was claimed that the NBP services to its customers were disrupted, and the bank was working with SBP to address the breach.

Source: Pro Pakistani

The National Bank of Pakistan (NBP) has reported a continuing successful operational recovery from the cyberattack on its systems that occurred on October 29.

According to details, NBP has confirmed that over 1,000 branches of the bank operated on Monday and delivered regular banking services by processing 800,000 transactions of over Rs. 286 billion. It said all ATMs were available for withdrawals by NBP clients with transactions of over Rs. 5 billion made by more than 200,000 clients.

This has been a significant achievement by the NBP team as the first day of the month is critical given the disbursement of salaries and pensions.

The NBP has expressed confidence that it will return to fully normalized operations over the rest of this week. The bank helpline (111-627-627) is available 24/7 to assist resolution of customer queries.

Source: Pro Pakistani

In the first four months (July-Oct) of FY22, Pakistan’s import expenditure more than doubled primarily due to investment-related imports. Exports also grew but were unable to contain the trade deficit. Consequently, the trade deficit also more than doubled during the same period of FY22.

The trade deficit more than doubled in the July-October period of FY2022, posting a rise of 104 percent to $15.525 billion against $7.617 billion for the same period in the last fiscal year. Similarly, in October 2021, the trade deficit swelled to $3.775 billion, a 109.4 percent increase compared to the same month in FY2021 where the deficit stood at $1.803 billion.

According to Commerce Ministry, in these four months (July-Oct) of the current financial year, imports grew by 64.5 percent to $24.994 billion as opposed to $15.193 billion for the same period last year. A similar trend was observed in Oct-21 as imports posted 60 percent growth ($ 6.246 billion) compared to the Oct-20 import figure of $ 3.907 billion.

One positive aspect of the growing trend in imports is that 40 percent of the growth is due to an increase in investment-related imports. Such imports reflect growing business activity in the country.

In the remaining 60 percent, petroleum, coal, and gas contributed 34% in import growth, while vaccines, food, consumer goods, and other imports contributed 11%, 8%, 2%, and 5% in import growth, respectively.

The net difference in imports was $9.801 billion between July-Oct FY22 and July-Oct FY21. A major chunk of $1.068 billion went in vaccine imports; $239 million in consumer goods, $823 million in food; $1.620 billion in capital goods; while $ 2.209 billion in raw material imports. Further, import receipts for petroleum, coal, and gas stood at $3.364 billion and miscellaneous imports stood at $478 million.

Another positive development that the Commerce Ministry reported is a record increase in exports. Though export growth was unable to contain the trade deficit, exports grew by 17.5% to $2.471 billion in October FY22, a record compared to previous years’ figures.

In the July-Oct period, exports grew to $9.468 billion compared to $7.576 billion in the same period of last financial year, posting a growth of 25%. According to analysts, if this trend continues, the government will cross the projected $28 billion export target for FY2022.

Source: Pro Pakistani

In pursuit of meeting IMF’s requirement, the government is struggling to privatize two RLNG-based power plants due to pandemic and accumulation of circular debt of Rs. 145 billion.

The Cabinet Committee on Privatization cleared two re-gasified liquefied natural gas-based power plants for a 100 percent sell-off in the coming two years. These are 1,233 megawatts Balloki power plant and 1,230 megawatts Haveli Bahadur Shah power plant. However, the privatization process lost its steam due to the pandemic. In the meantime, both power plants started accumulating circular debt, rising to Rs. 145 billion. The power plants had a circular debt of only Rs. 10 billion before March 2020.

“Now the government wants re-financing of debt of two RLNG plants but the commercial banks are reluctant to refinance the debt mainly because of accumulation of circular debt rising to Rs145 billion,” said representatives of banking sectors to a local news outlet.

In the last review with IMF, Pakistan has explained to the international money lender that economic uncertainty and the pandemic slowed down the country’s privatization drive. The government now aims to privatize the two power plants by the end of February in the current financial year. The government also informed IMF about initiating the privatization process of Pakistan Steel Mill (PSM) and Heavy Electrical Complex (HEC) as well.

To facilitate the sell-offs of these State-owned Enterprises (SOEs), the country is improving the transparency of the enterprises through special audits and publishing audit reports.

Source: Pro Pakistani