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Foreign operations to start soon

An interview with Kalim-ur-Rehman, President and Chief Executive of Askari Commercial Bank

May 21 - Jun 03, 2001

ASKARI Commercial Bank (ACB) is all set to start its foreign operations and joint ventures so as to expand its activities outside Pakistan.

"We are considering foreign operations but it is not easy to get a license from the central banks of the foreign countries as we are relatively a new bank by international standards," said the President and Chief Executive of Askari Commercial Bank, Kalim-ur-Rehman in an interview.

"One of the first areas that we would like to cover is the Gulf region, especially the UAE, Muscat and Oman," he added.

Kalim talked about various aspects of the banks with special reference to making it a unique and a bank of an international standard.

He said ACB was one of the largest and most profitable of the new private sector banks. 'We have diversified into the corporate and retail markets as well," Kalim said adding that the large domestic banks differed on accounts of their large overheads and substantial non-performing loans despite significant improvements over past years.

"We certainly have the advantage of being smaller and hence more efficient," informed Kalim. "We also enjoy a distinct advantage in terms of technology in which we are far ahead," he added.

Kalim said that the bank had worked hard to reach its present status despite the depressed economic conditions. "The last two years have been particularly difficult for banks due to the shrinking margins—both in loaning operations and foreign exchange transactions," he said adding that ACB had expanded its credit portfolio by over 80 per cent during the last two years thus sustaining the profits.

Kalim said that the bank's total assets exceeded Rs37 billion and there were plans to continue expanding.

He said competition was tougher but it will be a few years before the existing nationalised banks are able to effectively implement their new strategies as private banks.

Presently, the bank had 29 branches in Pakistan and planned to open two more by April this year. "We are working on opening at least another 10 branches by 2002. Closure of loss causing and insolvent branches by other banks has effected ACB," he said.

Kalim ruled the possibility of the Army Welfare Trust — the major sponsor of ACB — from disinvesting in the bank saying that this is the most successful and profitable venture. He said, however, collaboration with a foreign bank can always be considered provided it is mutually beneficial.

About the latest audited financial results of the bank, he said we have shown good growth during 2000. As compared to 1999, our deposits grew by 25 per cent to reach to Rs30.4 billion, the loans and advances increased by 37 per cent to touch Rs17.9 billion, our total balance sheet registered a growth of 20 per cent to reach Rs37 billion, the imports business handled by us grew by 50 per cent to reach Rs26.2 billion and the export business increased by 37 per cent to Rs30.6 billion.

However, despite the very substantial increases in our business volume, the after tax profits grew by only 12 per cent mainly because of the shrinking margins due to the highly competitive environment.

The domestic banking industry has a great opportunity to step into the shoes of the foreign banks who are reducing their operations in Pakistan, and thereby improve the volume and type of business they have been handling so far.

Commenting on the performance of the bank and the challenges from its competitors like Habib and United Banks, he said "in terms of capital adequacy, return on assets, quality of assets customer services, and the use of modern technology, we are way ahead of the much larger players like Habib and United Banks. Their size certainly matter as their larger branch network enables them to reach all segments of the population.

Kalim-ur-Rehman
Chief Executive, Askari
Commercial Batik