Pakistani bank focuses on customers

Pakistani bank focuses on customers

By Ibrahim Khan

KARACHI, Pakistan (Reuter): Pakistan's Moslem Commercial Bank (MCB), revitalized since privatization in 1991, is planning new services to meet customer demand.

"The trend is towards universal banking, endeavoring to create a structure under which the customer will have far more choices and will be transformed from king to dictator," MCB president Hussain Lawai told Reuters in an interview.

"In the process, bank profits will get leaner in this intense competitive environment," he said.

MCB has just declared a healthy pre-tax profit of 475.20 million rupees for the first half to June, 75 percent up on the 272.64 million rupees it made in the same period a year ago.

"The results are extremely encouraging," said dealer Asif Jan of Kausar Abbas Bhayani, a Karachi-based securities house.

He said Lawai had played a major role in boosting the bank's profits by chasing and recovering bad debts.

Lawai himself attributed MCB's profitability to higher interest rates, aggressive switching from low-yielding loans and investments to higher-yielding ones, low deposit rates and customers who were not too sensitive to interest rates.

The MCB result, while exceeding brokers' expectations, did not lift its scrip much on the Karachi Stock Exchange, which has been depressed by uncertainty about Pakistan's economic and political outlook.

MCB's 10-rupee stock closed just 0.25 up at 32.75 last Wednesday, the day the result was announced.

The bank achieved a pre-tax profit of 928 million rupees in calendar 1995, 31 percent up on 707 million in 1994 and more than four times the 213 million it had recorded in 1991.

Net assets rose to 119.7 billion rupees in 1995, from 98.6 billion in 1994 and 45.2 billion in 1991. Deposits swelled to 99.6 billion from 81.5 billion in 1994 and 35 billion in 1991.

Earnings per share rose to 2.44 rupees in 1995 from 2.26 in 1994. Book value per share rose to 22.86 from 21.98 in 1994.

Dealer Ali Raza Mooney said MCB, which paid 20 percent bonus stocks and 15 percent rights issue for 1995, against 18 percent bonus stocks for 1994, was a good scrip with growth potential.

Lawai now has his sights set on pulling MCB into the next century by adopting fast-changing technologies to deal with globalization, deregulation and privatization.

"The time has come to look forward to the 21st century, develop a vision of the future and adopt strategies for a change," he said. "We are already witnessing the change from traditional banking to financial service industry, in which each financial institution wants to get into the business of others."

MCB has plans to introduce on-line banking and to install automated teller machines at 200 branches, Lawai said. It will also promote longer-term savings schemes and develop low-cost credit products for small borrowers.

"Having realized customer expectations for the next century, MCB is going all out to meet them," Lawai said.