The Board of Directors of Bank AL Habib Limited, one of the largest commercial banks in the country, announced it will establish an Exchange Company (EC) as a wholly-owned subsidiary.

The development was shared by the bank in its notice to the Pakistan Stock Exchange (PSX) on Friday.

“The Board of Directors of Bank AL Habib Limited through circular resolution dated September 19, 2023 has approved the establishment of an Exchange Company with an authorized share capital of Rs1,000 million (Rs1 billion),” read the notice.

BAHL shared that the development is subject to approval and clearance by the State Bank of Pakistan (SBP) and completion of other regulatory compliance requirements.

“This EC would be a 100% owned subsidiary of the bank,” it added.

The development comes after MCB Bank Limited announced that it will establish an EC as a wholly-owned subsidiary. Meezan Bank Limited, United Bank Limited (UBL) also announced they would establish an EC as a wholly-owned subsidiary.

Earlier this month, the SBP, in its bid to strengthen controls amid the massive fall in rupee’s value in the open market, decided to introduce ‘structural reforms’ in the EC sector.

“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly-owned Exchange Companies (EC) to cater to the legitimate foreign exchange needs of general public,” said the SBP in a statement.

Further, the SBP also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.

As per BAHL's latest financial results, the bank achieved substantial growth in core earnings, resulting in a 69% year-on-year increase in Profit Before Tax (PBT) for the half-year ending on June 30, 2023, which hit Rs31.14 billion.

Profit After Tax (PAT) posted a growth of 90% to clock in at Rs18.2 billion; translating into Earning Per Share (EPS) of Rs16.39 compared to EPS of Rs8.63 reported in the corresponding period of the previous year.