Research Analyst
June 1 - 7, 2009


Standard Chartered Bank (Pakistan) Limited (SCBPL) was incorporated in Pakistan on July 19, 2006 and it became the first international bank that was established in Pakistan. Standard Chartered acquired the controlling stake (95.37%) in Union Bank, a private bank of Pakistan, through a transaction of US$487 million.

Now SCBPL's business activities constitute consumer banking, corporate and institutional banking (wholesale banking) and global markets. Standard Chartered Bank (Pak) Ltd is a subsidiary of Standard Chartered Plc, which is incorporated in England. Standard Chartered has a long presence in Pakistan. On 31 Dec 2008 the bank had 162 branches in Pakistan and by 31 March 2009 the branch network comprised 174 branches. Standard Chartered is the 6th largest bank in Pakistan in terms of market share of assets. As on December 2008, the bank's asset base stood at Rs 264.617 billion. According to PACRA, SCBPL's long term and short term ratings are "AAA" and "A1+", showing that the bank has low credit risk and a strong ability to meet its financial commitments.


SCBPL has continued to have growth in revenue in the wholesale banking. However, the slow down in economic growth in the country affected the performance of this segment of the bank. The overall revenue of the bank was marginally higher than the corresponding quarter in 2008. Non performing consumer loans continue to be the key issue in the current economic scenario with interest rate hikes and economic slowdown constantly deteriorating the repayment capacity of individual borrowers and consequently catalyzing consumer loan losses. Application of SCB group policies for general provision against consumer loans has also resulted in significantly higher provisions as at 31 March 2009.

INDICATORS 31 MAR 2009 31 DEC 2008
Paid-up capital 38,716 38,716
Equity 44,045 44,010
Deposits 186,234 174,552
Advances 123,991 125,601
Investments 59,989 29,587
Revenue 5,672 5,650
Profit before tax 52 1,249
Profit after tax 34 818
EPS (Rs) 0.01 0.21
Source: SCBPL

Despite, double digit inflation and significant investment in technology, branch network, infrastructure and non mark-up expense increased only by 9% to PKR 3.28 billion compared to last corresponding period PKR 3.02 billion. This increase is attributed primarily to the exchange variance on the amount payable to the head office under a Service Level Agreement (SLA). The Profit after tax reduced to PKR 34 million as compared to PKR 818 million in the last corresponding period.

The bank recorded earnings of PKR 0.01 per share in the current period which translates into an annualized EPS of PKR 0.04 per share. Despite the economic slow down the bank's deposits grew by 7% approximately to Rs 186.23 billion from Rs 174.55 billion. The total assets of the bank also increased from PKR 265 billion as at Dec 31, 2008 to PKR 278 billion as at March 31, 2009 showing an increase of 5 % mainly in wholesale.

4 9.51 9.6 8.95 9.02
5 9.02 9.39 9 9.04
6 9.04 9.49 9 9.28
7 9.28 9.4 9.03 9.1
8 9.1 9.24 9.03 9.14
11 9.14 10.14 8.9 9.51
12 9.51 9.98 9.5 9.73
13 9.73 10.6 9.66 9.68
14 9.68 9.75 9.55 9.58
15 9.58 9.83 9.53 9.6
18 9.6 9.83 9.51 9.58
19 9.58 9.55 9.4 9.43
20 9.43 9.34 9.03 9.25
21 9.25 9 8.5 8.76
22 8.76 9.1 8.79 8.98
25 8.98 9.35 9 9.05
26 9.05 9.05 8.7 8.95
27 8.95 9.4 8.9 9
28 8.99 9.27 8.89 9.11
Source: KSE


On the back of Islamic banking demand, a number of banks all over the world have started offering products and services that are in compliance with Shariah. Standard Chartered, with an aim to meet the unique needs of its customer, has setup an Islamic Banking Division. The bank is now offering tailor-made Shariah compliant products to its customers.


Consumer financing has expanded in Pakistan at an unprecedented growth rate over the last seven years. The banks have intensively capitalized on the demand of consumer financing and earned record profits within the space provided by the credit policy of SBP. However, currently the high interest rate spread is damaging the competitiveness in economy in general, and in the financial sector in particular. Further, the huge profit margins of banks at the cost of depositors' savings cannot be justified on any ground whatsoever. The SBP should exercise its powers to determine reasonable rate of returns for the banks as well as the depositors. As a matter of priority, interest rate spread should be reduced, at least, to the level of average spread in the South Asian region.


Currently, the growth in the banking sector of Pakistan has slowed down after the robust growth experienced during the past four years. The average banking spread declined to 7.07% during Jan-Jul 08 as compared to 7.36% recorded in the corresponding period of Jan-Jul 07. SCBPL, in order to survive, needs to be cost-effective and come up with unique products to cater to the needs of customers. One favorable point is that SCBPL generates considerable income from its global market business and offers various cash and interest risk management products to customers. The bank has continued to have growth in revenue in the wholesale banking. However, the slowdown in economic growth in the country is directly affecting the performance of the bank.