In the local banking industry, challengers, or so called smaller players, are furiously proving their mettle. To trespass the comfort zone enjoyed by a handful of the countrys largest banks, mid-sized banks have been raising their game. Barring NIB, which recorded losses, the other eight mid-sized banks; Faysal Bank (FABL), Bank Alfalah (BAFL), Standard Chartered Bank (SCBPL), Askari Bank (AKBL), Habib Metropolitan Bank (HMB), Bank Al Habib (BAHL), Meezan Bank (MEBL) and Soneri Bank (SNBL), cumulatively posted 22 percent, year-on-year, jump in profits in 1HCY11. Aided by a significant growth in their investment portfolios and higher KIBOR level, the aggregate (nine banks) top-line grew by a whopping 19 percent, year-on-year, in the 1HCY11; outperforming the five largest banks by around 4 percentage points. FABLs merger with RBS bank has had a favourable bearing on the groups top-line. Following in the financial industrys footsteps, the mid-sized players also stayed aggressive on the investment front, as they lifted the collective investment portfolio to Rs957 billion at the end of June, representing a jump of 27 percent in the first six months of CY11 and 48 percent higher than the investment base maintained at the end of CY09. This lifted the combined IDR (investments to deposits ratio) to 51 percent at the end of June, 2011, from 43 percent at the end of December 2010. At this level, the groups IDR is nearly 6 percentage points higher than the collective IDR for all commercial banks. In light of growth in deposits, mark-up expenses registered 17 percent gain in 1HCY!!, compared to the same period last year. The cumulative deposit base jumped by 7 percent during the first six months to Rs1,877 billion, as of June 30, 2011. At this level, the groups deposits base accounted for around one-third of the total deposit base held by all commercial banks. Apart from AKBL, all mid-sized banks witnessed improvement in the CASA ratio during the first six months of CY11. The mid-sized banks have collectively taken the gross spread ratio to 39 percent -a year-on-year jump of 1 percentage points - in 1HCY11, which is around 17 percentage points shy of the top five banks aggregated gross spread ratio. SCBPL enjoys the highest gross spread ratio at 64 percent, while NIB faces the lowest, at 13 percent. Investment banking activities also drove profitability upwards, as six out of the nine mid-sized banks witnessed a double-digit year-on-year growth in non mark-up income in 1HCY11. During this period, non mark-up expenses witnessed a mixed trend. NIB registered a 26 percent, year-on-year decline in expenses in 1HCY11. While, on the other end of the spectrum, FABL witnessed a 121 percent growth in expenses on account of acquisition of the operations of RBS Pakistan along with adoption of its administrative staff. However, the groups administration expenses as a percentage of total revenues stayed static at 27 percent in 1HCY11. The mid-sized financial intermediaries managed to peter down growth in NPLs to a merely 3 percent during the first six months of CY11 to Rs 150 billion at the end of June, 2011. On average, the infection ratio of the mid-sized banks, stood at 13 percent at the end of June this year; which was a notch below the five largest banks average of 13.2 percent. BAHL enjoys the lowest infection ratio, at 2 percent, followed by BAFL and MEBL, at 8 percent each, while NIB has the highest, at 36 percent, among the nine banks. To realize scale, increase reach, and reduce cost of operations, the way forward for mid-sized banks is to increase their footprints in branchless banking segment alike some larger players such as UBL and HBL.
=================================================== Nine mid-sized banks: combined P&L =================================================== PL Rs(mn) 1HCY11 1HCY10 chg =================================================== Markup Earned 117,314 98,754 19% Markup Expensed (72,057) (61,647) 17% Net Markup Income 45,257 37,107 22% Provisioning (12,408) (10,659) 16% Net Markup income after provisions 32,849 26,448 24% Other income 16,740 14,437 16% Operating revenues 61,997 51,545 20% Other expenses (37,263) (31,133) 20% Profit after taxation 9,116 6,637 37% ===================================================
Source: Company Accounts
Comments
Comments are closed.