Banking+Sector Bahria

8/8/2019 Banking+Sector Bahria

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Slide 1

LOCAL & GLOBALBANKING


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Slide 2

What well cover

Difference between a commercial bank and other financialinstitutions.

Dimensions of commercial banking.

State Bank of Pakistan

ALM

Risk Management in Banking

E-banking

Islamic Banking

Pakistani and global banking

Case studies


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Slide 3

Economy: Financial SectorEconomy: Financial Sector2

Exchange

Liquid Money =Currency + Deposits

WhoCreates it ?

Who decides:How much?Value?

Who manages money supply in a country?Monetary sector ?


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Slide 4

Financial Markets

System where any kind of financial transaction cantake place by facilitating buyers and sellerstogether.


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Slide 5

Financial Intermediaries

Entities that facilitate transactions in the financial market.They usually assume risk and are compensated by Fee inthe transaction


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Slide 6

(a) LOCAL BANKING BUSINESS

OVERVIEW-An Outline Pakistan Banking Industry Analysis.

Changing colors of Pakistans banking

industry and its challenges.

Competitive environment and SWOTanalysis.

IT in local banking business.HR challenges in the banking industry.


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Slide 7

Overview of State Bank of PakistanFunctions of SBP

Primary

Secondary

Non Traditional


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Slide 8

Issue of Currency

Management ofMonetary Policy

Supervision ofFinancial

Institutions

Bankers Bank

Banker toFederal/Provincial

Government(s)

Lender of LastResort

Management ofFX

Management ofPublic Debt

Financial Adviserto Government

Liason withForeignInstitutions

Promotion ofEconomicDevelopment

Promotion ofIslamic Banking

Trainings

Primary Functionsof SBP

SecondaryFunctions of SBP

Non TraditionalFunctions ofSBP


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Slide 9

LOCAL BANKING OVERVIEW

(I) PAKISTAN BANKINGINDUSTRY


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Slide 10

(I) PAKISTANI BANKING INDUSTRY

Financial Soundness Indicators.

Selected indicators of different Categories of

banks Capital Adequacy

Assets composition

Earning & Profitability Liquidity

Local Banking Overview


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Slide 11

(I) PAKISTAN BANKING INDUSTRY

Banks size is determined on thefollowing variables:

Assets

Deposits

Equity

Branches/outlets

Profitability (return on equity etc.)



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Slide 12


years

Totalonline

branchesNo. ofATMs

Value of ATMtransactions(Million Rs)

Credit CardAmtOutstanding(Million Rs)

2004 2475 786 37502 14145

2005 3265 1217 46675 27099

2006 3947 1948 77656 39198

2007 4091 2174 88079 40576

Source: www.sbp.org.pk



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Slide 13


years

TotalDeposit

(Million Rs)

Totaladvances

(Million Rs)Total

customer

2004 2219869.1 1542993.3 2201812

2005 2649573.6 1944080.4 2613464

2006 2967185.7 2363983.2 2926644

2007 3414270.6 2470902.1 3372551

Source: www.sbp.org.pk



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Slide 14

Banking Sector Overview

010000

20000

30000

40000

50000

60000

70000

80000

90000

online br ATM ATM transc crdit cards

2005

2006

2007



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Slide 15

Banking Sector Overview

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

deposits Advances Customers

2005

2006

2007



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Slide 16

(I) PAKISTAN BANKING INDUSTRYANALYSIS

GROUP WISECOMPOSITION OF BANKS


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Slide 17

GROUP WISE COMPOSITION OF BANKS

A. Public sector Commercial Banks 4

B. Local Private Banks 26

C. Foreign Banks 7

D. Specialized Banks 4

All Commercial Banks: A+B+C= 37

All Banks: A+B+C+D= 41

Hint: See details in your hand book



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Slide 18


Credit Rating of Banks and DFIs

Rating Agencies

Public Sector Commercial Banks.

Local Private Banks



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Slide 19


Foreign Banks

Specialized Banks

Development Financial Institutions(DFIs)

Microfinance Banks.



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Slide 20


(II) CHANGINGCOLORS OF PAKISTANBANKING INDUSTRY

AND ITS ANALYSIS


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Slide 21

(II) CHANGING COLORS OF PAKISTANBANKING INDUSTRY

Basel II Accord

MCR Enhancement and Capital chargeunder Basel II.

Impact of Basel II implementation on

CAR of Pakistani Banking System.



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Slide 22

Forces Affecting banking in Pakistan

Pakistani

Banking

Industry

Government

S.B.P

I.F.Is

F.D.I

NBFCs

Basel-II

Product Development

Local Foreign Banks

Informal Economy

Forex Markets

Corporate Consumer

Industrial consumer

International Factors

Low savings rate

Technology

National Saving Centers



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Slide 23

Forces Affecting Banking in Pakistan

(Potential Entrants)

HBL

National Bank of Pakistan

United Bank Ltd.

First Women Bank Ltd

Allied Bank of Pakistan

MCB Bank Ltd.

Newly established Pakistani

Private Banks (after 91)Foreign Pakistani Banks

Foreign Banks in Pakistan

NCBs,NonNCBs, PBs, & Foreign Banks

Individual

Customers

Corporate

Customers

State Bank of Pakistan

GOP/Finance Ministry

Educational Institutions

Computer/IT Industry

Petroleum Industry

New s Agencies

Insurance sector

Security Companies

Utilities (PTCL etc)

Foreign Investment,National Savings Centers, DFIs, Investment Banks,

Cooperative societies, SMEDA, prize Bonds,Khushali Bank, Inami schemes,

Stock Exchanges, Hundi system, Home Saving Committees, Gold, InsuranceSchemes, Real Estate firms, Leasing/Hire Purchase firms /Modarabas


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Slide 25

(III) COMPETITIVE ENVOIRNMENT &

SWOT ANALYSIS

Group wise Balance Sheets and IncomeStatements of Banks.

Banks wise major statistics.

Loans and Advances

Total Assets



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Slide 26

(III) COMPETITIVE ENVOIRNMENT &SWOT ANALYSIS

Deposits

Capital

P&L before and after tax

Banks wise performance indicators:

Capital Adequacy Ratio

NPLs to loans



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Slide 27

(III) COMPETITIVE ENVOIRNMENT &SWOT ANALYSIS

NPLs to loans (Net)

Return on Assets (ROA) after tax

Selected indicators for different categories ofBanks in terms of size

(Hint: see page 128, Annex-F for further details)



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Slide 28


(IV) Information

Technology In LocalBanking


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Slide 29

(IV) IT IN LOCAL BANKING BUSINESS

Opportunities and challenges of Electronicbanking.

E-Commerce--- an introduction.



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Slide 30

(IV) IT IN LOCAL BANKING BUSINESS

Reason for popularity

Convenience

Customer Demand

Accessibility & Availability

Competition

Profitability



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Slide 31

FACILITIES OFFERED BY E-BANKING

Onlineaccess

of account

Internetbanking

Automaticbill payment

Phonebanking

Onlinetransferof funds

View &cancel

debit card

DownloadStatements

E-BANKING



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Slide 32

(IV) IT IN LOCAL BANKING

OPPURTUNITES AND AVENUES

ATM

Credit Cards (Plastic Money)

Smart Cards

Mobile Wallet

Internet Banking

Online Shopping



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Slide 33


Automated Clearing House (ACH)

Virtual Banks

Wireless Banking

Marketing.

Online Bill Payment



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Slide 34


THREATS/CHALLENGES

Non-Technological Challenges

Technical Challenges



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Slide 35


Non Technological Challenges

Regulatory challenges

Macroeconomic challenges

Jurisdictional /legal challenges



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Slide 36


Marketing challenges

Privacy Law

Electronic Disclosure challenges

Management challenges



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Slide 37


Technological Challenges

Availability of technical expertise

Consumer training In-House threats



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Slide 38


DoS (Denial of Service) Attacks

New Virus attacks

Wireless network

Internet Frauds

Credit Cards frauds

ATM Cards frauds



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Slide 39


Fake emails Phishing

PIN theft

Website Spoofing

Data integrity



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Slide 40


Steps taken by SBP for smoothfunctioning & risk mitigation of E-Banking.

Role of Credit Information Bureau inFinancial System.

A Perspective on ECIB in Pakistan



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Slide 41


(V) HR Challenges inthe Banking Industry


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Slide 42

The Journey to HCM

Managers achieve results through people

From 1960s up to the mid-1980s term mostcommonly used Personnel Management

Last 20 years HRM term gained popularity

Reflect changing focus of functionality

HRM stresses the development of people as

assets



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Slide 43

Managerial Skills

Conceptual skills

The ability to analyze and diagnose a situation anddistinguish between cause and effect.

Human skills The ability to understand, alter, lead, and control the

behavior of other individuals and groups.

Technical skills

The specific knowledge and techniques required toperform an organizational role.



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Slide 44

Skill Types Needed by

Managerial Level


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Slide 45

Business Environment

Globalization (Pakistani banksowned by MNCs)

Industrial economies

Transformation of the enterprise

Technology



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Slide 46

Globalization

Management & control

Competition in world markets

New threats to domestic business also

Global work groups & teams

Global delivery systems



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Slide 48

Transformation of EnterpriseFlattening

Against hierarchical fixed set of procedures

Decentralization OR Centralization in operations

Flexibility

Location independence

Selection of customers

Low transaction costs

Empowerment

Collaborative work



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Slide 49

Technology in HCMModern technology impact

HRIS redefined

Processes and functions altered

Decentralization

Empowerment

Decision making

Information sharing

Physical barriers gone-total paperlessenvironment



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Slide 50

Human Capital ManagementHuman Capital Management

Human Capital Management includes all activitiesused to attract & retain employees and to ensurethey perform at a high level in meetingorganizational goals.

These activities are made up of:

1. Recruitment & selection.

2. Training and development.

3. Performance appraisal and feedback.

4. Pay and benefits.

5. Change management role.



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Slide 51

GLOBAL BANKING

OVERVIEW


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Slide 52

(b) GLOBAL BANKING OVERVIEW

Globalization and WTO

Most Successful banks of the world

Foreign Investment in Pakistan and itsimpact on Pakistani banking industry

GDRs issued by Pakistani banks in

foreign countries Leading financial markets of the world


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Slide 53


(I) GLOBALIZATION &WTO


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Slide 54

(I) GLOBALIZATION & WTO

Brief history and background of WTO.

Impact on Banking Industry

Banks performance and governance

Lending patterns

Financial stability

Capitalization

Policy Issues

Global Banking Overview


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Slide 55

(I) GLOBALIZATION & WTO

WTO & PAKISTAN

Financial sector reforms in Pakistan--- Direct control to liberalization.

Impact of Financial reforms on

banking sector



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Slide 56

(I) GLOBALIZATION & WTO Trade liberalization policy of Pakistan

Financial sector of Pakistan---present scenario



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Slide 57

Privatized Transaction of Banks (1991-2006)

Banks Share Sale price (Rs

in million)

Date of transfer Buyer name

ABL 51% 971.6 Feb-91 EMG

MCB 75% 2420 April-91 National Group

Bankers EquityLtd

51% 618.7 June-96 LTV Group

Habib Credit &Exchange

70% 1633.9 July-97 Sh. Nahyan binMubarik Al-Nahyan

UBL 51% 12350 Oct-02 Consortium of Bestway & Abu

Dhabi Group

Bank-Alfalah 620 Dec-02 Abu Dhabi Group

HBL 51% 22409 Dec-03 Agha Khan Fund


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Slide 58

Mergers & Acquisitions

Banks Share Sale Price(Rs inmillion)

Date oftransfer

Takenover by

Primecommercial

Bank

93.4% 226.9million $

2006 ABN Ambro

Union Bank 96% 487 million$

2006 SCB

PICIC - 342 million

$

2007 NIB

Arif Habib 90% - 2007 Rupali Bank

Privatized transaction of Banks


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Slide 59

(IV) GLOBAL DEPOSITORY

CERTIFICATES (GDRs) A Global Depository Receipt (GDR) is acertificate issued by a depository bank, whichpurchases shares of foreign companies and

deposits it on the account.

It is also defined as a transferable financialsecurity; depository receipts though traded on alocal stock exchange represent equities issued

by a foreign publicly listed company.



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Slide 60

(IV) GLOBAL DEPOSITORY

CERTIFICATES (GDRs) How GDRs is created and traded

GDRs advantages

Increasing liquidity

Borrowing on the global stage

Promoting mergers & acquisition

Pros & Cons of GDRs




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Slide 61

Capital Market TransactionsBanks share Sale Price

(Rs inmillion)

Date of

transfer

Buyer name

MCB 6.8% 563.2 Jan-01 MCBemployees PF& Pension

FundNBP 37.3 million 373.0 Feb-02 Listing/Public

offer

MCB (CDC) - 664.0 Oct-02 Generalpublic

through stockexchange

NBP 3.2% 604.0 Nov-03 -do-

UBL 4.2% 1087.2 Aug-05 -do-



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Slide 62

(IV) GLOBAL DEPOSITORY CERTIFICATES(GDRs)

Issuance of GDRs by Pakistani Banks

MCB

UBL

NBP



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Slide 63


(V) LEADINGFINANCIAL MARKETSOF THE WORLD


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Slide 64

(V) LEADING FINANCIAL MARKETS OFTHE WORLD

What is financial market.

Main characteristics of financialmarkets

Leading Financial markets of the world

American Stock Exchange (AMEX)

Tokyo Stock Exchange (TSE)

London Stock Exchange (LSE)


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Slide 65

(V) LEADING FINANCIAL MARKETS OFTHE WORLD

Divergent Trends-New Exchanges andconsolidations.

Regional Exchanges and the Over-the-

Counter Market

Analysis of the Exchange Markets

Global Markets changes


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Reference websites:

www.sbp.org.pk

www.secp.gov.pk

www.hbl.com

www.pacra.com

www.ibp.gov.pk

www.imf.org.com

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