The State Bank of Pakistan earned a profit of Rs 268.634 billion, up by 14 percent, for the financial year ended June 30, 2014 (FY14), compared to Rs 235.892 billion in the preceding year (FY13). According to SBP Annual Performance Review for the year 2013-14, the increase in profit has been mainly attributable to higher discount, interest/mark-up and/or return earned and increases in other operating income partly offset by the accumulated loss on re-measurement of defined retirement benefits due to revision in International Accounting Standard 19- Employee Benefit.
Overall, SBP''s profit was Rs 311.815 billion for FY14, however, Rs 43.181 billion loss occurred on re-measurement of retirement benefits due to revision in International Accounting Standards 19 (Employee Benefits), resulted in a surplus profit of Rs 268.634 billion for the year after charge of re-measurement of defined retirement benefits.
Out of total profit some Rs 10 million have been disbursed as dividend, while the remaining amount of Rs 268.624 billion transferred to the federal government. The total expenditure (including reversal of provisions against impaired assets) amounted to Rs 35.471 billion against the expenditure of Rs 31.254 billion during the corresponding year; an increase of Rs 4.217 billion. During FY14, expense under Bank Notes Printing Charges head stood at Rs 6.146 billion compared to the expense of Rs 5.635 billion during previous year, depicting an increase of 9 percent.
The Bank earns discount income on its holdings of Market Treasury Bills (MTBs), whereas interest/mark-up and return is derived on the foreign and domestic financial assets held by the Bank. The gross income under the head increased by Rs 55.280 billion, posting an increase of 22 percent compared to last year. Similarly, interest/mark-up expenses are incurred on borrowings from the International Monetary Fund, deposits of international organisations and foreign central banks and payable currency swap arrangement. Expenditure under the head increased by 100 percent as compared to previous year due to increases in borrowings under currency swap arrangements and expense on securities sold under agreement to repurchase.
The State Bank got commission income from the management of instruments of public debt, Market Treasury Bills, prize bonds, national saving schemes and government securities as well as issuance of drafts and payment orders. The commission income during FY14 decreased by 2 percent and stood at Rs 1.727 billion compared to Rs 1.759 billion during last financial year.
The net exchange gain/(loss) arise from the bank''s foreign currency assets and liabilities. The exchange gain mainly arises due to depreciation of PKR vis-à-vis foreign currencies particularly USD and SDR. Specifically, the foreign currency assets of the bank are mainly denominated in USD whereas the foreign currency liability exposure is mainly denominated in SDRs. Accordingly, the depreciation of PKR vis-à-vis USD results in exchange gain to Bank and vice versa, while the depreciation of PKR vis-à-vis SDR resulted in exchange loss and vice versa.
The net exchange gains amounted to Rs 14.112 billion during FY14 against the income of Rs 6.703 billion in FY13, marking increase of Rs 7.409 billion. The increase was mainly due to decline in exchange loss payable to the IMF amounting to Rs 10.319 billion and SDR amounting to Rs 1.100 billion due to strengthening of PKR vis-à-vis SDR. However, this is partly offset by decrease in exchange gain from foreign currency placements, deposits and other assets amounted to Rs 3.980 billion, forward covers under exchange risk coverage to Rs 21 million during the period under review due to strengthening of PKR.
The State Bank holds equity investments in banks and financial institutions. Dividend income of the bank decreased by Rs 4.353 billion to Rs 12 billion in FY14. Agency commission is paid to National Bank of Pakistan (NBP) under an agency agreement on account of handling government transactions and remittances on behalf of SBP. The expenditure on agency commission amounted to Rs 6.463 billion against the expenditure of Rs 6.344 billion posting an increase of 2 percent over the previous year.
Under general administrative and other expenses head, some Rs 23 billion have been spent during the period under review compared to Rs 20 billion in the previous year. During the FY 2013-14, provisions amounting to Rs 116 million against impaired assets were reversed on net basis as compared to net reversal of Rs 922 million during last financial year.
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