INTERVIEW WITH HAMESH KHAN, PRESIDENT BANK OF PUNJAB

BoP moving to register record year of profitability

From KHALID BUTT, Lahore
Feb 27 - Mar 05, 2006

The Bank of Punjab (BoP) is moving to register highest and record year of profitability, which is mainly attributable to the dynamic policies of liberalization and deregulation initiated by the present team of economic managers.

The bank has introduced Online Banking throughout the country. The BoP is also achieving another milestone by launching the Debit Card facility in the next couple of weeks.

President Bank of Punjab Hamesh Khan disclosed this in an interview with PAGE

He said that the BoP had already completed the networking of its branches and introduced Online Banking which would be kicked off formally in the coming few days.

He further said that the bank is introducing Debit Card facility for its customers which would be a new addition to the BoP products and facilitation drive.

Mr Khan said that only a few banks in Pakistan were providing a comprehensive Online Banking facility and he vowed that the BoP would be the leader in providing a true Online Banking.

He said that the Online Banking would enable the BoP account-holders to view the latest position of their accounts, transactions history and have access to other information relating to their accounts and innovation in the banking facilitation.

He proudly said that his bank had exceeded the paid-up capital limit, set for December 31, 2005, as the limit surged to 2.30 billion rupees against the SBP's requirement of two billion rupees.

President BoP said that his bank would comfortably achieve the next milestone of raising paid-up capital limit to three billion rupees by December 2006.

He pointed out that the capital limit of the bank was being gradually increased to ensure stability and consolidation in the country's banking sector.

Mr Khan further said that the Bank of Punjab would also achieve another breakthrough of raising its balance-sheet footing to Rs 100 billion.

He said that in next couple of weeks the audited accounts of the bank for the year 2005 would be available to confirm major credentials of the BoP on the banking front.

To a question Hamesh Khan said that the BoP would set up 25 more Auto Cash Telling Machines, expanding the network of ATMs to 50. "We will continue to expand the chain of ATMs throughout the country to offer 24-hour cash withdrawal facility to the bank customers," he added.

He further said that the year 2006 would be another year of robust growth for the banking sector in Pakistan.

He, however, believed that financial and capital markets in Pakistan were heading towards their true potential wherein various investment products for different types of investors would be offered.

PAGE: The State Bank's latest monetary policy statement gave rise to controversies, how do you see it?

HAMESH KHAN: The primary motive of the tight monetary policy was to bring inflation rate further down at a targeted level and the State Bank's step to continue with the tight monetary policy is to overcome inflation, which made it able to do so. In medium term I think, it should contain this policy.

PAGE: The Bank of Punjab is going online, how do you foresee growth of the bank?

HK: The power definitely lies with the customer. The online banking allows the customer to shop around and look for the best offer of products and services available. The online system allows customers convenience and control over their finances.

Customer loyalty to a particular bank cannot be guaranteed anymore. However, the online banking will allow the banks to track the movement of their customers and target tailored products for their customers and this could in fact increase loyalty.

The BoP has been investing in technology (front end & back office) and completed in computerising all the 266 branches with 100 percent networking of branches on real time basis, besides opening 15 ATMs & several more to come on line this year (M-Net), MIS System thoroughly upgraded, and has provided training to the existing staff to compete with the changing environment & update them with the market.

PAGE: What is the future planning of BoP?

HK: The Bank of Punjab has exceeded the paid up capital limit, set for December 31, 2005, as the limit surged to 2.30 billion rupees against the SBP's requirement of two billion rupees and the bank would comfortably achieve the next milestone of raising paid-up capital limit to three billion rupees by December 2006.

Mr Khan said that the Bank of Punjab would also achieve another breakthrough of raising its balance sheet footing to Rs 100 billion.

The audited accounts of the bank for the year 2005 would be available to confirm major credentials of the BoP on the banking front in the next couple of weeks.

The increase in the capital limit of banks would stabilize the financial sector in the years to come. In the past, a small foreign bank, whose capital was only Rs 500 million, disbanded its operations in Pakistan due to a fraud that caused Rs 250 million loss to the bank.

Strong financial position of the domestic banks is vital to strengthen the financial institutions and the banks lending to private sector is expected to substantially increase in this financial year.

The Bank of Punjab is planning to expand the network of branches to 300 by the year 2007. BoP is working as a scheduled commercial bank with its network of 266 branches at all major business centres in the country at almost all tehsil level and the number of branches is being expanded to 300. The present branch network will be enhanced while operating online.

HK: The bank has readily met the upcoming challenge of raising the minimum capital to Rs 6 billion by the year 2009. By December 2005, the BoP had achieved the target of raising its capital adequacy limit to Rs 2 billion as prescribed by the central bank. At present the capital limit of the BoP is Rs 1.88 billion and that will cross Rs 6 billion mark by December this year.

PAGE: Do you think that the measures to increase capital adequacy are appropriate?

KH: Yes, they are. All banks, including those in Pakistan, are today confronted with a wider spectrum of risks than before, giving much greater range of products and services as well the requirements necessitated by new international regulatory and accounting standards. Larger levels of capital will therefore be required for going forward to cushion against such risks. In addition, size will also become a vital issue. Small banks will feel the heat and mergers are therefore quite likely.

PAGE: How do you count the historic achievements your bank has achieved so far?

HK: The business situation has changed in Pakistan and the financial sector has to take the businessmen into confidence before making any new policy, as unilateral policies had not worked.

The Bank of Punjab (BoP) had registered an increase of about 130 per cent. The bank's EPS (earning per share) improved by hefty 148 per cent. Advances also grew by 130 per.

In short, I can easily say that the bank has been showing 100 per cent growth in every sphere of banking for the third year running.

The BoP is continuing to invest in new business activities. The benefits from cost efficiencies across the enlarged business portfolio have started to accrue. The share of fee based income in total revenues is gradually increasing. The financials for the forthcoming period amply display this diversification of core revenue streams.

The Bank of Punjab continues leveraging innovative business models that add value for it stakeholders. There are two more areas, where the bank is planning to focus upon - building quality human resources and a thorough review of major work processes - aimed at rationalizing support systems, internal controls and automation.