Category: Business

The Pakistani rupee fell third day in a row against the US Dollar after opening trade at 278 in the interbank market.

It was largely stable against the greenback but crashed against other major currencies today.

The interbank rate stayed at 278.5 most of the day before closing at the same level. Open market rates across multiple currency counters were in the 278 level today.

The PKR depreciated by 0.01 percent to close at 278.39 after losing two paisas against the dollar today.

On a fiscal year-to-date basis, the rupee has so far appreciated by 2.68 percent.

Overall, the rupee is down nearly Rs. 51.49 since January 2023. Since April 2022, it is down Rs. 95.49 against the greenback. As per the exchange rate movements seen today, the PKR lost two paisas today.

The PKR was red against all of the other major currencies in the interbank market today. It halted losses against the UAE Dirham (AED) but lost one paisa against the Saudi Riyal (SAR), 37 paisas against the Canadian Dollar (CAD), 41 paisas against
the Euro (EUR), and Rs. 2.65 against the Australian Dollar (AUD).

It lost Rs. 2.02 against the British Pound (GBP) in today’s interbank currency market.

Source: Pro Pakistani

The government has requested the World Bank for restructuring of Higher Education Development in Pakistan (HEDP) project of worth $400 million for third time to allow for the completion of critical IT and IT-related activities and the full achievement of Performance Based Condition (PBCs).

Official documents revealed that the project is in its fifth year of implementation and its objective is to support research excellence in strategic sectors of the economy, improve teaching and learning and strengthen governance, in the higher education sector.

The government requested an extension with the revised closing date of June 30, 2025. This extension will help HEC achieve a strengthened digital learning infrastructure contributing to a more resilient higher education system in Pakistan.

The overall project implementation progress is rated moderately satisfactory. Of the 13 intermediate results indicators, 02 have already been met, 09 are likely to be met, and 02 are unlikely to be met. The project has made imp
lementation significant progress. The disbursement from IDA Credit as of February 29, 2024, is $278.30 million, including $258.19 million against PBCs and $20 million for the Investment Project Financing (IPF) component.

Despite the overall reasonable implementation progress, the IT-related procurements under Component 3 had been taking longer than anticipated because of: (i) delayed hiring of IT staff and initiation of IT-related activities, (ii) approvals and completion cycle of several procurements taking longer than anticipated and, (iii) need for revision of the procurement strategy to address capacity challenges of the local IT market. Procurements valuing $50.5 million are under implementation or have been advertised, and another $14.5 million are in the pipeline.

The restructuring also entails changes in four PBCs, whereby (a) PBC 1 Year 4 (iii) target to be shifted to year 6 due to the delay in the completion of the Sustainable Development Goal (SDG) dashboard; (b) PBC 1 year 5 (iii) target to be d
ropped as development of the portal and allied procurement took longer than anticipated; (c) PBC 11 year 3 (i) target to be shifted to Year 5 as the draft Open and Distance Learning Policy (ODLP) is expected to be approved by February 2024, and subsequently implemented; (d) revise the wording of PBC 5 to apply to both Affiliated Colleges and Affiliating Universities, including retroactive revision of the target for PBC 5 year 3 (iii) and; (e) PBC 11 year 5 (i) target to be shifted to year 6 as with the ODLP approved in year 5, HEC will implement the framework for one year and will hold stakeholder consultations for feedback collection. The dropped PBC 1 Year 5 (iii) target and PBC 11 Year 4 target do not constitute a risk to achieving the PDO.

The project has been restructured twice. The first restructuring was approved on June 14, 2021, to respond to the COVID-19 pandemic impacts and involved: (a) introduction of Component 6 to support continued learning for all in case of unpredicted crises and university
lockdowns and provision of special funds to universities to increase their financial autonomy, (b) reallocation of funds between Components to better address ongoing needs, and (c) revision of the Results Framework to reflect the changes in activities.

The second project restructuring was approved on June 15, 2023, to repurpose the unutilized funds from lapsed targets under PBC 1 and PBC 2 toward: (i) a new round of Rapid Technology Transfer Grants (RTTGs) focused on topics related to emergency response, climate change, extreme weather event preparedness and import replacement research (PBC 1, Component 1); (ii) a new target to track RTTG outcomes (PBC 2, Component 1); and (iii) an increased target for universities participating in the framework for improvement in financial autonomy (PBC 10, Component 6).

Source: Pro Pakistani

Standard Chartered Bank (Pakistan) Limited (PSX: SCBPL) has attributed the recent ‘unusual movement’ in its share price to the bank’s strong financial performance in the calendar year ending December 31, 2023 (CY23).

‘We understand that the positive trend in the price of the shares of SCBPL was triggered with the announcement of financial results on 23 February 2024 as investors reacted favorably to the strong financial performance of the Bank in the backdrop of an overall bullish trend in the stock market,’ the bank explained to the main bourse on Wednesday.

The bank recalled that it had announced its annual financial results for CY23 which showcased unprecedented financial performance for the period and posted the highest-ever Profit Before Tax of Rs. 89.2 billion enabled SCBPL to declare its best dividend since its incorporation.

The combined dividend announced by the bank for 2023 stood at 90 percent i.e. Rs. 9 per share.

The bank said, ‘We would also like to furnish that the Bank is not aware of any
other development/information that may be relevant to the unusual movement in the price of the shares of the Bank’.

The Bank remains fully committed to meticulous compliance with all the regulatory provisions and will continue to ensure immediate dissemination of any price-sensitive information to PSX, the filing added.

SCBPL’s response comes after PSX earlier this week demanded the bank alongside three other listed firms to explain the reason behind the unusual movement in their share prices.

At the time of filing, the bank’s scrip at the bourse was Rs. 55.1, up 2.89 percent or Rs. 1.55 with a turnover of 47,500 shares on Wednesday.

Source: Pro Pakistani

Non-performing loans (NPLs) disbursed by the banking industry surged by more than Rs. 70 billion in 2023, the latest data by the State Bank of Pakistan (SBP) showed.

In 2023, bad loans by the sector surged to Rs. 1.009 trillion, up by Rs. 71.3 billion compared to Rs. 938 billion in the same period last year.

Commercial banks dominated the space with most bad loans released to defaulters during the previous calendar year. Data showed NPLs by commercial banks increased by 8 percent to Rs. 956 billion compared to Rs. 883 billion in 2022.

Local private banks came in second with bad loans of Rs. 634 billion, up 16.5 percent compared to Rs. 545 billion in the same period last year. Meanwhile, public sector banks disbursed Rs. 320 billion in bad loans, which have decreased slightly from Rs. 336 billion reported in 2022.

Foreign banking operations in Pakistan played it safe in 2023, having disbursed just Rs. 633 million in bad loans, down by 66 percent compared to Rs. 1.86 billion in the previous year.

Developm
ent Finance Institutions (DFIs) attributed Rs. 15 billion to bad loans in 2023, Rs. 510 million more than in 2022.

SBP data showed cash recovery against non-performing loans clocked in at Rs. 33 billion for the quarter that ended on December 31, 2023, roughly the same compared to recoveries in the same period last year.

In light of this, Pakistan’s hopes for a rapid economic recovery remain futile as banks struggle with bad debt. While controllable, this surge is limiting their capacity to extend loans and support economic growth at current lending rates.

SBP’s steep interest rate, which has remained at 22 percent since June 2023, worsens the problem as it undermines borrowers’ ability to repay loans. As a result, loan repayment concerns loom large.

Source: Pro Pakistani

The country borrowed just $6.899 billion from multiple financing sources during the first nine months (July-March) of the current fiscal year 2023-24 compared to $7.764 billion borrowed during the same period of 2022-23, representing 39 percent of the annual budget target

Borrowing options were evidently scarce due to unfavorable credit ratings and challenging conditions in the global financial markets despite support provided by the International Monetary Fund (IMF).

According to the Economic Affairs Division (EAD) data, the country received $218.53 million in March 2024 compared to $358.71 million in March 2023.

There is no mention of the $1 billion disbursed by the UAE. If the IMF and the UAE inflows are added, the total inflows could reach $9.799 billion during the first nine months of the current fiscal year.

The government has budgeted $2.4 billion from the International Monetary Fund (IMF) for the current fiscal year 2023-24 and received $1.9 billion of the $3 billion Stand-By Arrangement (SBA), h
owever, the EAD data does not reflect it.

The $6.899 billion included $2 billion received from Saudi Arabia under the head of time deposit during July 2023. The data further showed that the government had budgeted estimates of $4.5 billion from the foreign commercial banks for the current fiscal year 2023-24, however, no money was received under this head during the first nine months of the current fiscal year.

The government had budgeted $1.5 billion for the issuance of bonds, however, the country has yet to issue the bonds, hence no amount has been received so far.

The government had budgeted $17.619 billion from multiple financing sources for the current fiscal year including $17.384 billion in loans and $234.60 million in grants.

The country received $781.48 million under the head of the ‘Naya Pakistan Certificate’ during the first nine months of the current fiscal year 2023-24.

The country received $2.738 billion from multilaterals and $870.22 million from bilateral during July-March 2023-24. The no
n-project aid was $4.724 billion including $3.580 billion for budgetary support and project aid was $2.174 billion.

China disbursed $508.34 million under the head guarantee for the JF-17 B project funded by China National Aero-technology Import and Export Corporation (CATIC). China further disbursed 67.39 million in July-March against the government budget of $18.54 million for the current fiscal year.

The Asian Development Bank (ADB) disbursed $665.52 million during the period under review compared to the budgeted $2.086 billion for the fiscal year 2023-24.

Saudi Arabia disbursed $595.18 million against the budgeted $600 million under the head of oil facility during July-March 2023-24. Saudi Arabia disbursed another $62.03 million in the current fiscal year so far.

The USA disbursed $36.01 million in the first nine months against the budgeted $21.60 million for the fiscal year. Korea disbursed $24.81 million and France $39.89 million during the current fiscal year.

The IDA disbursed $1.292 million in Ju
ly-March against the budgeted $1.489 billion for the current fiscal year and IBRD $163.15 million against the budgeted $840.36 million. The IsDB (Short-term) disbursed $200 million in July-March against the budgeted $500 million for the current fiscal year and AIIB disbursed $300.04 million, while IFAD disbursed $26.29 million against the budgeted $42.68 million for the current fiscal year.

Source: Pro Pakistani

MCB Bank Limited (PSX: MCB) has approved the Scheme of Compromises, Arrangements and Reconstruction for converting 39 branches into Islamic banking entities, the bank informed the main bourse on Wednesday.

According to stock filing, the scheme has essentially greenlit demerging the existing business, assets, liabilities, and operations of 39 branches of the bank for conversion into Islamic banking branches and the same shall be merged with and into MCB Islamic Bank Limited (‘MIB’) on the Effective Date against payment of cash consideration.

‘The Scheme shall inter alia be subject to the No Objection. Certificates of the State Bank of Pakistan (‘SBP’), approval of the shareholders of MCB and MIB, sanction by the Honorable Lahore High Court, Lahore (the ‘Court’) and other consents as may be directed by the Court and conditions attached thereto,’ the filing added.

MCB Bank Limited is a banking company incorporated in Pakistan and is engaged in commercial banking and related services.

Source: Pro Pakistani

The Board of Directors of MCB Bank Limited (MCB) in its meeting under the Chairmanship of Mian Mohammad Mansha, on April 24, 2024, reviewed the performance of the Bank and approved the condensed interim financial statements for the first quarter ended March 31, 2024.

The Board of Directors has declared the first interim cash dividend of Rs. 9.0 per share i.e. 90% for the quarter ended March 31, 2024.

Through focused efforts of the Bank’s management in maintaining a no-cost deposit base and optimizing its earning assets mix, MCB’s Profit Before Tax (PBT) for the first quarter of 2024 increased to Rs 32.5 billion with an impressive growth of 41%.

Profit After Tax (PAT) posted a growth of 27% to reach Rs. 16.6 billion; translating into Earning Per Share (EPS) of Rs. 13.97 compared to an EPS of Rs. 11.02 reported in the corresponding period last year.

On the back of strong volumetric growth in average current deposits (+13% on a YoY basis) and timely repositioning within the asset book, net interest income f
or 1Q’24 increased by 27% over the corresponding period last year.

Non-markup income increased to Rs. 9.1 billion (+54%) against Rs. 5.9 billion in the corresponding period last year with major contributions coming in from fee commission income of Rs. 6.1 billion (+46%), income from dealing in foreign currency of Rs. 1.9 billion (+97%) and dividend income of Rs. 1.0 billion (+55%).

Improving customer and interbank flows, diversification of revenue streams through continuous enrichment of service suite, investments towards digital transformation and an unrelenting focus on upholding high standards of service delivery supplemented a broad-based growth in income from fee commission; with trade and guarantee-related business income growing by 100%, cards related income by 48%, branch banking customer fees by 17% and income from home remittance by 55%.

The Bank continues to manage an efficient operating expense base and monitor costs prudently. Amidst a persistently high inflationary environment, rapidly escala
ting commodity prices and continued investments in human resources and technological upgradation, the operating expenses of the Bank were reported at Rs. 13.9 billion (+18%). The cost-to-income ratio of the Bank improved to 29.50% from 32.77% reported in the corresponding period last year.

Navigating a challenging operating and macroeconomic environment, the Bank has been addressing asset quality issues by maintaining discipline in the management of its risk return decisions.

Diversification of the loan book across customer segments and a robust credit underwriting framework that encompasses structured assessment models, effective pre-disbursement evaluation tools and an array of post-disbursement monitoring systems has enabled MCB to effectively manage its credit risk; the Non-performing loan (NPLs) base of the Bank was reported at Rs. 55.4 billion as at March 31, 2024. The coverage and infection ratios of the Bank were reported at 92.67% and 8.56% respectively.

On the financial position side, the total a
sset base of the Bank was reported at Rs. 2.41 trillion with a nominal decrease of 1% over Dec 2023. Analysis of the assets mix highlights that net investments and gross advances have increased by Rs. 39 billion (+3%) and Rs. 25 billion (+4%) over December 31, 2023 respectively whereas Lending to Financial Institutions decreased by Rs. 46 billion (-48%).

The Bank’s total deposits crossed Rs. 1.85 trillion while the domestic market share improved to 6.05% compared to 5.92% as at December 31, 2023.

The domestic cost of deposits was contained at 10.70% as compared to 7.15% in the corresponding period of last year despite the significant increase in average policy rate during the period.

Return on Assets and Return on Equity improved to 2.74% and 31.54% respectively, whereas the book value per share was reported at Rs. 180.02.

During the period under review, MCB attracted home remittance inflows of USD 892 million (+13%) to consolidate its position as an active participant in SBP’s cause for improving flow of
remittances into the country through banking channels.

While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 19.62% against the requirement of 11.5% (including capital conservation buffer of 1.50% as reduced under the BPRD Circular Letter No. 12 of 2020). Quality of the capital is evident from Bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio which comes to 16.50% against the requirement of 6%. Bank’s capitalization also resulted in a Leverage Ratio of 6.5% which is well above the regulatory limit of 3.0%.

The Bank reported a Liquidity Coverage Ratio (LCR) of 263.47% and Net Stable Funding Ratio (NSFR) of 160.47% against requirement of 100%.

Pakistan Credit Rating Agency re-affirmed credit ratings of MCB at ‘AAA / A1+’ for long term and short term respectively, through its notification dated June 23, 2023.

To retain and further consolidate its market position, the Bank has continued to invest in the upgradation of its existing locat
ions to enhance customer experiences while the digital access points are being continuously augmented to extend customer outreach.

The Bank on a consolidated basis is operating the 2nd largest network of more than 1,650 branches in Pakistan. The Bank remains one of the prime stocks traded in the Pakistani equity market with 2nd highest market capitalization in the industry.

Source: Pro Pakistani

Pakistan has formally requested $3.5 billion funds from Saudi Arabia for the Diamer-Bhasha Dam.

Saudis will respond to this request after consulting with their financial advisor for the dam project. Pakistan’s financial advisor will engage with an advisor from Riyadh to ensure coordination on the project’s financial aspects. The formal request from KSA is expected within 1.5 to 2 months, reported a national daily.

The total cost of the Diamer-Bhasha Dam is estimated at $8 billion, with a significant foreign component of $4 billion.

Of the requested $3.5 billion from KSA, WAPDA has asked for a concessional loan of $2.3 billion at a 2.25 percent interest rate for 25 years and a 6-year grace period.

Pakistan also wants $1.2 billion as equity investment in the project at a rate equivalent to the interest cost of US 10-year Treasury Bonds, which currently stands at 4.45 percent.

The Diamer-Bhasha Dam is being constructed with a 30 percent equity and 70 percent debt financing model and is touted as the larges
t dam in Pakistan.

When completed, the dam is projected to generate 18 billion GWh of electricity per year. Once completed, it will have a gross storage capacity of 8.10 million acre-feet (MAF) of water and a live storage capacity of 6.4 million MAF.

Source: Pro Pakistani