An exclusive interview with Mr Arshad Majeed — Group Head Consumer Finance, Meezan Bank
Arshad Majeed has been part of Meezan Bank before its inception (when Meezan Bank was Al Meezan Investment Bank) and has played an instrumental role in growing Meezan Bank by developing the Operations function. In his current role he is serving as a Group Head Consumer Finance. Majeed’s banking career stretches over 30 years during which he has held various senior positions in local as well as foreign banks such as Deutsche Bank AG, The Chase Manhattan Bank, Muslim Commercial Bank and Mashreq Bank, both in Pakistan and abroad. His last assignment before joining Meezan Bank was with Mashreq Bank Head Office, Dubai as a Senior Methods Analyst for Operating Policies and Procedures for Local and Overseas Branch Operations and Internal Quality Audit for Head Office Operations, Dubai. As far as Majeed’s educational is concerned, he perused his MBA and Graduation Degrees in Advanced Mathematics and Law from Karachi University. He is also a certified Internal Quality Auditor from Bureau Veritas Quality International (BVQI), London. Majeed is also a member of various senior-level internal committees of Meezan Bank
Following are excerpts from an exclusive interview with Arshad Majeed.
PAGE: What is the overall size of consumer finance portfolio of Meezan Bank?
Arshad Majeed: In comparison with the year 2015, we have managed to achieve the growth of 140% in just two years, which is phenomenal.
PAGE: How do you see the potential of consumer finance in Pakistan?
Arshad Majeed: I see huge untapped potential of consumer finance in Pakistan as there are millions of consumers who are at a distance from banking due to various reasons. We believe that being the pioneer of Islamic banking in the country, Meezan Bank can offer excellent banking services, including consumer finance facilities to the people of the country. The banking industry is once again gearing up for consumer finance as this business has excellent potential in the country keeping in view the current market conditions and economic scenario.
PAGE: Which are the major components of consumer finance? Housing finance or auto finance?
Arshad Majeed: The major component is of course car finance. Housing finance is the 2nd largest selling product at the Bank. The year 2017 proved to be very progressive for the Bank’s housing finance business as we managed to disburse the highest-ever amount in a single year, thus creating an enabling environment for housing finance in Pakistan. With a vision to establish and promote Islamic banking, Meezan Bank stands prominent amongst the leading Islamic housing finance providers in the country. In addition, we also have commercial vehicle and consumer durable products with a healthy portfolio size.
PAGE: Which segment of the society is the major beneficiary of housing finance?
Arshad Majeed: Mortgage sector offers enormous potential of investment and growth. Our bank is focusing in this area and exploring news avenues to promote mortgage financing. The major beneficiary of housing finance is the salaried class, which includes chartered accountants, engineers, doctors & other good position holders in the market. However, we cannot ignore businessman segment in housing finance as they use to purchase high net worth properties. The housing product is very suitable for the individuals living on rent. Our model is based on Diminishing Musharakah, whereby customer pays rent to the bank for the utilization of bank’s share and simultaneously keeps purchasing bank’s share in property to become its sole owner in due course of time.
PAGE: It is believed that Meezan has the biggest share in auto finance, what are the reasons?
Arshad Majeed: Excellent customer services and quick delivery of vehicles are the main reasons. Also the name of Meezan Bank is established in the market and our branch network is performing well in booking auto financing cases. Another major reason for this increase is high demand because of new models of Toyota Corolla, Honda City, Civic and addition of BRV in Honda product line. The reduction in finance cost due to lower policy rate of SBP further incentivized customers to avail car finance. The bank’s auto finance business, 16-years after its launch has a significant portfolio size with thousands of active contracts that comprises of new, used and imported vehicles. The auto finance portfolio grew by healthy 45.6% in comparison with year 2016. In addition we have initiated several schemes and strategic alliances with vendors.
PAGE: Which four cities enjoy the largest share of Meezan’s total consumer finance portfolio?
Arshad Majeed: The four major cities having the largest portfolio of consumer finance are Karachi, Lahore, Islamabad/Rawalpindi and Faisalabad. Besides, the major cities our presence can be seen in many other areas where other banks are reluctant for example recently we started car financing in Quetta. In housing finance, we also plan to enhance our outreach to other cities where potential and demand is high.
PAGE: Can the large size of consumer portfolio be linked with extensive reach of Meezan?
Arshad Majeed: At present Meezan Bank is termed the largest full service Islamic bank of Pakistan. It has the strongest outreach. Currently we have 571 branches nationwide and we are taking advantage of Meezan Bank’s wide spread branch network for consumer business. The other point is that deployment of technology gives Meezan Bank omnipresent status. Offering all the solutions under one roof made the bank a preferred choice.
PAGE: What is the ratio of NPL in Meezan Bank’s consumer finance?
Arshad Majeed: Our ratio of NPL in consumer finance, we believe, is the lowest in the market due to our highly strict due diligence and complete compliance with our policies and procedures. We can safely say that the key to our success is the quality of our credit and we never compromise on it.