Making public of 5 per cent shares of the National
Bank recently proved a great success
By AMANULLAH BASHAR
Mar 11 - 17, 2002
Saleem Altaf, Minister for Privatization has said
that the government is determined to privatize its shares in the banking
sector with a view to broaden the base of ownership, bring depth to the
capital market and to make this sector more efficient through healthy
Talking to PAGE, after an international
meeting on investment, the minister said that making public of 5 per
cent shares of the National Bank recently proved a great success besides
indicating the market depth for privatization of more government shares
in the banking sector.
He said that under the privatization programme, after
enlistment of NBP shares, 5 per cent shares of HBL would soon be offered
to the public through stock market followed by United Bank, Allied Bank,
and Bank AlFalah shares this year. Although no time frame has been
decided to make HBL shares public yet tentatively the process is likely
to be completed by September this year.
According to financial experts, one of the desirable
impacts of privatization of government shares in the banking sector may
open its accounts for public proving a goading effect for better
results. So far the accounts of the government owned banks were not open
to public and whatever the results achieved in this sector were beyond
the eyes of the critics. The privatization of banking sector would also
enlarge the options for the investors as well as bring depth in the
market through capitalization and ensure the transparency in results.
Meanwhile, the Cabinet Committee on Privatization has
approved the listing an Initial Public Offering (IPO) of 5 per cent
shares of the government in Habib Bank Limited (HBL). Keeping in view
the response of the public to NBP shares, there are strong indications
that HBL shares may prove a crowd-puller factor as far as applications
for subscription are concerned.
In case of receiving more application, provision is
already there for a further off-load of 5 per cent shares under
"green shoe option".
The exercise is expected to strengthen the stock
exchange, broaden the ownership base and provide benefit to small
investors. Besides HBL shares, 9 per cent shares of the Muslim
Commercial Bank will also be sold through Central Depository Company.
The National Bank issue was 5.5 times oversubscribed
against an issue size of 5 per cent for Rs86.5 million, 27,546
applications had been received for 102 million shares amounting to
Rs1.04 billion. Off loading of 5 per cent shares of the HBL will add to
the capitalization of the market and that it was good to benefit the
people of Pakistan.
The financial results for the year ended December 31,
2001 showed that HBL posted pre-tax profit of Rs2.2 billion reflecting
129 per cent growth over the net earnings of rupees one billion during
the previous year.
Zakir Mehmood, President HBL in his recent briefing
about financial results of the bank said that the bank's board had been
able to unveil the results within eight weeks of the close of the year,
inspite of having large network of 1,470 branches in Pakistan and
overseas operations at 55 locations in 25 countries.
The bank had posted an impressive rise in profits
after the additional provision of Rs2.6 billion against long standing
non-performing loans, the provisions last year were Rs1.2 billion.
HBL was said to have pulled shutters on 250 branches
during 2001 and retrenched around 3500 employees, the staff now on roll
numbered 19,275 compared with 22,760 a year ago.
Zakir said that improved profitability was the
blessing of "multi-faceted" restructuring in all sectors of
its operations including retail banking, corporate and investment and
Net revenue increased by 15 per cent or Rs2.2 billion
to Rs16.8 billion for the year 2001. Customer deposits grew by Rs19.3
billion or 7.6 per cent to Rs273 billion and administrative expenses
decreased to Rs11.9 billion from Rs12.2 billion the previous year.
Gross loans of the Bank stood about flat at Rs199
billion against Rs204 billion at end of 2000, the reduction representing
cash recoveries of Rs3.5 billion on non-performing loans and repayment
of Rs2.4 billion of subsidized staff loans. The Bank's non-performing
loans now stood at Rs57 billion and through the policy of negotiations
and persuasion sizable recovery had been made during 2001.
The profitability would be sustained through
upgrading of technology including additional ATMs, improvement of
branches and online banking. The bank would launch online banking in
about four weeks time in major cities. The new products include car
financing and "fast transfer" remittance schemes.
In August 2000 when the discount rates had risen from
10 to 14 per cent, the bank had not increased its lending rates so it
was maintaining its rates now when the discount rate has been reduced.
The HBL president said that dollar deposits at HBL stood $500 million,
which included both the old frozen deposits and, those in new accounts.