After becoming a pioneer in implementing core banking application, National Bank of Pakistan (NBP) now intends to prioritise financing energy and agricultural sectors over the coming years. Talking to Business Recorder on Tuesday, President and CEO of NBP Dr Asif A Brohi said that National Bank had successfully implemented first core banking application in its main branch to provide ”superb” customer services, besides ensuring efficiency across the banking functions.
“The NBP is the first bank in the country which has launched core banking application to strengthen its internal banking system, facilitating its customers,” he said. After the successful launch of the main branch, the bank is planning to introduce core banking application in all its branches. According to the plan, core banking application will be implemented in 250 branches over the next four months, the NP chief maintained.
Dr Brohi said that the NBP has already completed a pilot project of online system and at present, with 1,294 online branches, the bank has become the country”s largest bank with 100 percent online branch network.
“As the entire country is facing a serious crisis of energy followed by mounting circular debt, the bank is also planning to extend its financing to the energy sector,” he said, adding that NBP “will finance energy-related project on top priority”. “So far, some 10 wind energy projects had been initiated in the country, of which seven have been financed by the NBP. Of these seven, five have already commenced operations and two more are expected to become operational shortly,” he said. On the whole, as much as financing facility worth Rs 98 billion had been extended to the energy sector, he said.
Answering a question regarding a cut in key policy rate, the NBP president said that 2012 was a difficult year for commercial banks because of persistent reduction in discount rates that significantly impacted the net interest income of all banks. He said that under a declining interest rate scenario, the bank was redefining its business model and at present, while most commercial banks were investing heavily in government securities, the NBP had effectively kept its fresh investment in government securities at a minimum level and was trying to fulfil the demand of the private sector.
“The bank is planning to offset the impact of low interest rate by expanding (its investment) in high-yield and low-risk products, low-cost deposit mobilisation, branch expansion and a reduction in non-performing loans (NPL),” Dr Brohi said. Positive results, he said, would be visible from this quarter onward.
He said that agricultural, advance salary and consumer gold are three main products of the NBP to facilitate masses, particularly people in rural areas, which had previously been deprived of banking facilities. A significant growth, he said, had been witnessed in agriculture and consumer loans over the past few years and at present, the NBP had the largest market share in terms of agriculture and consumer loans among domestic commercial banks.
“Consumer loans, especially against gold, have grown by 51 percent whereas the growth in agricultural loans was 30 percent during 2012. Total agriculture and consumer loans stood at Rs 131 billion at the end of December last year,” he said. Talking about the rise in investment in government papers, Dr Brohi said that while many local banks preferred to invest in government securities, the NBP witnessed a significant growth in advances locally as well as internationally. With an increase of 25 percent, total advances grew to Rs 657 billion by the end of December last year from Rs 525 billion in December 2011, he said.
NBP achieved a massive growth in lending to farmers: the bank achieved its target for this fiscal year by disbursing Rs 52 billion on account of agricultural credit disbursement during July-April of FY13. Providing details of the investment, Dr Brohi said: “The (bank”s) overall investment has surged to Rs 343.5 billion at the end of December last year, up from Rs 319.5 billion at the end of December 2011.
Talking about NBP”s branch network, he said that the bank was planning to set up 55 new branches across the country, including 40 conventional and 15 of Islamic banking. “We are focusing on rural areas…we have decided to open more branches in less developed areas, instead of urban areas,” he said. Out of 40 branches, he said, as many as 30-32 branches would be established in rural areas.
Commenting on the bank”s foreign operations, he said that NBP currently had 29 overseas branches, adding that the bank was gradually expanding. NBP, he said, was planning to set up a branch in Sri Lanka to facilitate trade and industry. “Talks with the central bank of Sri Lanka are in final stages,” Dr Brohi said. NBP, he said, would soon set up a branch in Russia, he added. “The bank is also successfully operating as many as four branches in Afghanistan and six in Central Asian Republics,” he informed.
According to him, NBP was also revitalising its Islamic banking operations. With the opening up of 15 new designated Islamic banking branches this year, the total number of such branches would rise to 23, Dr Brohi said. He expressed the hope that the joining of Zubair Haider as the head of Islamic banking was likely to provide new impetus to NBP”s Islamic banking services.
Talking about the bank”s home remittances services, he said that the NBP had aggressively extended its remittance correspondence base across the globe with the aim of facilitating overseas Pakistanis. Cumulatively, the NBP had struck agreements with 30 leading overseas remitting partners. Citing a major strategic move, he said that NBP had created a separate independent group named Global Home Remittances Management Group in 2009 to focus on inward home remittances business, adding that at present, NBP was the leader in the home remittances business.
Dr Brohi said that the domestic farming sector actually needed loans worth Rs 750 billion annually, while nearly Rs 300 billion was being disbursed via formal banking channels, leaving behind a gap of Rs 450 billion “which is being filled by informal channels charging very high mark-up rates from farmers”. NBP”s farming sector disbarments witnessed a massive increase of 68 percent over the past two years. Talking about non-performing loans (NPLs), he said that over the past two years, the banks” recovery against NPLs had improved and overall NPLs of the bank posted a slight increase of one percent to Rs 88.7 billion by the end of December last year.
