Apr 09 -
Foreign banks show mixed performance
The performance of foreign banks indicated a mixed trend
during 2000, in a period marked by cautious lending, focus on retail banking and
local currency deposit mobilization.
Of the 15 foreign banks including one incorporated in
Pakistan with major Arab stakes, whose balancesheets have been made public, four
posted losses and 11 recorded after-tax profits. In 1999, the comparable number
of loss-making foreign banks was five.
The non-performing loans (NPL) of these 15 banks amounted to
Rs5.4 billion at the closing of 2000. The major amounts of NPL were shared by
Faysal (Rs1,472 million), Citibank (Rs1,006 million) Standard Chartered
Grindlays (Rs810 million) and Standard Chartered (Rs485 million).
Three banks, ABN-AMRO, Habib Bank AG Zurich and IFIC,
improved their after-tax profits and an equal number succeeded in converting
losses of 1999 into profits in the year under review. These are Citibank, Faysal
Bank and American Express. Faysal is incorporated in Pakistan with major foreign
The profits of five leading European and Arab banks plummeted
in 2000 when compared to 1999. These were: Standard Chartered, Standard
Chartered Grindlays, Credit Agricole Indo-Suez, Mashreq and Emirates. Deutsche
and Hongkong Shanghai went into red. In 1999, they made profits. Bank of Oman
reported losses for the second year whereas Societe Generale was able to reduce
With the closing down of the operations of the Bank of
America and Trust Bank, foreign bank branches were reduced by seven. Since
foreign banks cater to first-tier borrowers, multinationals and reputable
domestic corporates, their branch network is not of much importance for lending
purposes. A large branch network, however, helps attract deposits which
increases liquidity for funding corporate sector. Nationalized commercial banks
have been able to attract multinationals, because of much bigger resources
mobilized through large branch network.
Yield on T-bills lowered
The State Bank on Tuesday sucked in Rs18.5 billion excess
liquidity from a highly liquid inter-bank money market through the sale of
treasury bills of a face value of Rs19.45 billion.
In doing so, it kept weighted average yield on one-year T
bills unchanged at the previous level, though it slightly slashed the yield on
three-month and six-month bills. Bankers said they saw it as a signal that the
monetary policy may remain tight in the medium term. But, a temporary ease-off
could not be ruled out, they said.
The SBP said it sold Rs12.8 billion through sale of
three-month bills at a weighted average of 11.08 per cent. It said it also sold
Rs1.6 billion six-month T bills and Rs5.05 billion one- year bills at 11.53 and
11.95 per cent. Whereas weighted average yield on one-year bills shows no change
over the previous cutoff. The yield on three-month and six-month bills are
slightly lower than their mid-March cut-offs at 11.27 and 11.60 per cent
Rupee falls further
The rupee lost 25 paisa more to a US dollar in inter-bank
market on Tuesday to close at 61.50/61.55 for spot buying and selling against
the previous close of 61.25/61.30. But bankers said the rupee hit a new low of
61.65 to a dollar earlier in the day due to heavy debt payments by public sector
agencies and private companies.
On Monday the rupee had hit an intra-day low of 61.40 to a US
In the open currency market the rupee lost 10 paisa to close
at 64.10/64.15 to a dollar against the previous close of 64.00/ 64.05 for spot
buying and selling.
SBP borrows $215m
The State Bank borrowed about $215 million from banks last
month through more than one-year swap for rupee. That is the banks lent dollars
to SBP for one year and in return got the rupee equivalent of the amount they
had lent: in some cases banks even got treasury bills from SBP instead of
Senior bankers said the $215 million swap helped SBP meet two
key quarter-end IMF targets without creating a liquidity crisis in inter-bank
$1.046bn held by banks
Pakistan's liquid foreign exchange reserves stood at $2.106
billion on April 2, according to a press release issued by the State Bank.
The reserves included $1.060 billion held by the State Bank
and $1.046 billion held by banks. "This level of reserves is higher than
reported earlier because the foreign currency deposits held by the banks outside
SBP were not disclosed before," says the release.
Shaukat calls for IMF waivers
Pakistan has requested the International Monetary Fund (IMF)
to give four waivers on revenue generation and other such issues in order to
complete the first review under the Stand-By Arrangement approved by the Fund's
In a letter to the IMF, Finance Minister Shaukat Aziz said
that a waiver be given on the performance criterion on the revenue of the
Central Board of Revenue (CBR) at end-December 2000, a waiver of the structural
performance criterion related to petroleum price adjustment on December 15,
2000, and modifications of the performance criteria on the CBR revenue and the
net domestic assets (NDA) of the State Bank of Pakistan (SBP) for end-March
WB offers $100m for drought victims
The World Bank will provide $100 million emergency assistance
to Pakistan to mitigate the effects of drought in the country.
Senior Vice-President and Chief Economist of the World Bank,
Nicholas Stern, who called on Chief Executive Gen Pervez Musharraf on Saturday,
assured him that the World Bank would offer $100 million to help remove the
sufferings of the people that came in the wake of prolonged drought situation.
Informed sources said that the chief executive was told that
the amount of emergency assistance for drought could be more than $100 million
as various details were still being worked out.