Financial markets: Standard Chartered gives thumbs-up to Pakistan

November 20, 2013 8:21 PM

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Region­al manage­ment says operat­ions in Pakist­an are still profit­able and attrac­tive.

In a roundtable conference with a select group of journalists on Wednesday, Standard Chartered PLC Chairman Sir John Peace, Standard Chartered Regional Chief Executive Officer, Middle East, North Africa and Pakistan Christos Papadopoulos, and Standard Chartered Pakistan CEO Mohsin Nathani made a strong case for investing in Pakistan while implying that security concerns are rather momentary in the grand scheme of things.

“I think Pakistan is a very important market for Standard Chartered. We have been here for 150 years and are doing extremely well,” the chairman of the multinational bank observed.

Indeed, financial accounts of Standard Chartered Pakistan prove the bank is remarkably profitable. Its profit after tax for the third quarter of 2013 was Rs2.6 billion, up 36.4% from the corresponding three-month period in 2012.

“One of the great advantages that Pakistan has is that it’s an easy place to do business. It is going to attract more investment (because) it is a great place to do business,” Peace said.

“In essence, Standard Chartered is today what it was in 1863: a trade bank. We are uniquely positioned to support Asia’s trade with the rest of the world as well as among Asian countries,” he said.

His comments about Pakistan’s business friendliness are contrary to the findings of the World Bank and International Finance Corporation. In the latest ‘Ease of Doing Business Report 2014’, Pakistan was ranked 110th among 189 economies of the world.

Responding to a question on whether Standard Chartered faces hurdles in mobilising deposits in Pakistan while competing against five large national banks, Standard Chartered Pakistan CEO Nathani said the country has always been a lucrative market as far as his bank is concerned. “It’s been the case maybe because we have a sizeable branch network that serves the purpose of deposit mobilisation well,” he commented.

Standard Chartered had deposits of Rs266.5 billion at the end of the last financial year, up 13% from the preceding year. In terms of customer deposits, which exclude deposits from financial institutions, Standard Chartered held the ninth position among all banks with Rs265.7 billion at the end of 2012.

Although deposits and profits of the bank are on the rise, it has decreased its number of branches in Pakistan considerably over the last many years. Standard Chartered maintained 162 branches in 2010. It has 116 branches in 22 cities now.

According to Standard Chartered Regional Chief Executive Officer, Middle East, North Africa and Pakistan, Christos Papadopoulos, the bank believes in maximum branch optimisation whereby it maintains and invests in only those branches that give it ‘real value’.

“We have been rationalising our branch network while investing heavily in upgrading existing branches in Pakistan,” he noted, adding that the bank’s gradual move towards electronic banking channels has also played a key role in this respect.

Many analysts believe that commercial banks with a large chunk of their deposits placed in savings accounts are going to suffer as a consequence of the new State Bank regulations that link the minimum deposit rate with the monetary policy rate.

With the Current and Saving Deposits to Total Deposits (CASA) rate of 88% at the end of 2012 − highest among all commercial banks in that year – analysts expect that margins of Standard Chartered may decline in the near future.

However, Nathani disagrees with the idea, saying that the highest CASA rate in the industry actually means that the overall cost of funds for Standard Chartered is low. “Our margins are going to be compressed a little bit, but that’s fine if it helps our depositors,” he noted.


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