KARACHI: Bill Winters Group CEO of Standard Chartered (SC) Bank is very optimistic about Pakistan’s economy and said that after facing some difficulties in the last couple of years, Pakistan’s economy is on the right track and gradually improving.
“Pakistan’s Central Bank has successfully managed currency inflows and outflows and the government put appropriate stabilizing measures in place and made the right changes to elicit the first round of IMF support. Now, Pakistan is working on a second IMF programme and all these steps have contributed to Pakistan’s improving trend,” he added.
Bill Winters, Group CEO of Standard Chartered recently visited Pakistan to celebrate 160th anniversary of Standard Chartered in Pakistan.
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During his visit to Pakistan, in a media roundtable along with Rehan Shaikh, CEO of Standard Chartered Bank Pakistan Ltd, he discussed the Pakistan’s economy, SC operation in Pakistan and future opportunities.
He said that the last couple of years were very difficult due to currency turmoil, higher interest rates, devaluations and monetary crisis. But this was not unique to Pakistan and many of the markets, in which SC is operating experience the same stresses and strains.
He appreciated the structural reforms initiated by Pakistan and said that these are very difficult things for countries to introduce the reforms and right now many markets have gone through for economic growth. “This (structural reforms) is a good improvement, but there will be some difficulties in this process,” he added.
Group CEO SC said that the banking sector in Pakistan is clearly in very good shape like global. The monetary policy is still relatively accommodative and higher interest rates are also good for banks as it allows banks to earn more margins between deposits and loans. Higher interest has also contributed to the profitability of banks in Pakistan as well, but for SC, all major markets have benefited from higher interest rates, he added.
The underlying growth that Standard Chartered is generating, will entirely offset the inevitable reductions that come from lower interest rates, he said and added, “We are very comfortable that we will continue to grow globally, and in Pakistan even as interest rates come off.”
He said that Standard Chartered will continue to invest in Pakistan in the digital tools that SC offers to local and international corporate clients and corporations to serve them better. “We are building our underlying infrastructure to support a complete digital operation. We will be converting our core banking system from an older system to our state-of-the-art in Pakistan, which will allow us to continue to invest in everything technology and operations-related off of our state-of-the-art platform, which is state-of-the-art in the industry,” he informed.
Winters said that SC is looking for an opportunity to establish Pakistan more fully as an operational centre for operations in the region including the Middle East and Africa. SC is self-contained in Pakistan and has all the operational, data analytics, data centres, and core skills that already exist in Pakistan. Accordingly, Standard Chartered is looking at these kinds of investments and that, of course, would mean hiring more people, filling up more space, and generating currency for the country,“ he added.
Group CEO SC said that Pakistan is not as export-oriented as the government would like it to be and it’s a challenge for the Central Bank to manage forex reserves levels when you have an imbalance between imports and exports.
Replying to a question on the issuance of international bonds, he said that issuance of Panda bonds is the best way for Pakistan to re-enter in the international bond markets. Standard Chartered have all those capabilities (to issue the bond) and talk to the government, not just about the best way to issue bonds, but the best way to prepare so that Pakistan can get the best result when the approach the market. “That’s the role we have played in Pakistan historically and will continue to play,” he assured.
On transformation of Pakistan’s banking system from conventional to Islamic, Winters said that it’s a government priority and SC has already offered Islamic Banking “Sadiq”, which is the best Islamic Banking services in the sector and most probably, the bank earns the majority of retail business income through Islamic instruments.
“We are very proud of it (Sadiq) and we offer this in many other markets as well. The Primary issue is that what customers want, and if our customers want it, we’re going to do everything we can to do it and if it’s aligned with the government policy, even better,” he said and added that SC has already invested heavily for Islamic banks and will continue to invest.
On the IMF programme, Winters said that Pakistan’s budget, just passed, was in the line of an IMF programme and the terms that the IMF would typically impose as a condition for releasing funds are achievable by Pakistan. There will be more requirements and detailed assessments of the requirements for the IMF to finally release the funds and Pakistan will fulfil these requirements, he added.
He said that Pakistan’s debt burden management is a major challenge, which is because of the imbalance between imports and exports and the way to manage the debt problem is to restrict borrowing.
Restricted borrowing is really the only way, but there is a need to address the structural problems by promoting export industries and promoting import displacement. Pakistan reducing the imports can produce more here for domestic consumption. “The government is in the right direction as the recent budget addresses the debt challenge and the fiscal imbalance,” he mentioned.
Winters mentioned that confidence is one important element of the way forward and to the extent that local business and international business people, confidence is improving in the country and is already much better than it was.
The government can force people to invest and need to build the confidence to bring the investment. “Confidence brings investment and foreign exchange in the country and generates growth. The best way to deal with a debt problem is to grow faster than you’re spending money,” he added.
Group CEO SC said that Pakistan has had a growth problem for the past several years and Pakistan has potential to grow at 6, 8, 9 percent per annum, but it’s not easy for any country. Pakistan could achieve healthy growth, given its natural resources, talent, rule of law, and technical foundations, he said.
Winters said that fundamental transformation is always hard and usually starts with a crisis because the changes are painful for business, individuals and even for the country and government.
He said that the international investor community has a lot of money that’s ready to go into high-impact, climate-related investing and SC also believed that it has the huge potential for two reasons, one is its necessary, and two is its cheap, it’s economic.
“Standard Chartered is very committed to Pakistan for a long period of time and my recent visit demonstrates our commitment to Pakistan and the people of Pakistan,” he added.
He informed that the President of Pakistan was very thankful for Standard Chartered Bank commitments particularly for female empowerment, commercial activities, philanthropic activities. SC’s philanthropic activities focused disproportionately to women, and typically younger women for the upgrading of the contribution of women to the economic environments.
Winters informed that Standard Chartered runs a programme “Women in Tech” in 14 countries and this is one of many programmes being run for women entrepreneurs. Under this programme, the bank is focusing on taking typically female entrepreneurs and helping them to establish their businesses at an early stage, including helping them to achieve funding, he mentioned.
He informed that the central bank has also appreciated SC for the work that the bank did to contribute to the stabilization of the currency regime during the recent currency crisis. Being a regulator, SBP also gave feedback on how the bank is working in terms of compliance and regulatory obligations in the country.
Copyright Business Recorder, 2024
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