Cover story:

An ex­clu­sive in­ter­view with Dr. Asif A. Brohi, Pres­i­dent, National Bank of Pak­istan

Enterprise - - Contents -

While other banks merely func­tion within their pre­scribed lim­its, National Bank of Pak­istan (NBP) plays a more proac­tive and dy­namic role in the life of the na­tion and ven­tures above and be­yond its laid down pa­ram­e­ters to func­tion not just as a bank but as a national in­sti­tu­tion.

This is a con­cept that is well-en­shrined in the stated vi­sion of the Bank, namely, to be rec­og­nized as a leader and a brand that is syn­ony­mous with the peo­ple’s trust and re­spected for the high­est stan­dards of ser­vice qual­ity, best busi­ness prac­tices and demon­strated so­cial re­spon­si­bil­ity. NBP to­day has over 16,000 em­ploy­ees and a branch net­work that com­prises 1,304 lo­ca­tions in Pak­istan and 28 over­seas of­fices, along with rep­re­sen­ta­tive of­fices in 4 coun­tries. It is the coun­try’s largest pub­lic sec­tor com­mer­cial bank and counted among the world’s top 1,000 banks.

At the head of this il­lus­tri­ous bank­ing in­sti­tu­tion is Dr. Asif A. Brohi, the Bank’s Pres­i­dent and Chair­man of the Board. A dy­namic pro­fes­sional, Dr. Brohi is highly re­spected in fi­nan­cial cir­cles, as well as among NBP em­ploy­ees, for his deep in­sights and proven abil­ity to lead by ex­am­ple. No won­der, his proven track record notched up the NBP share price at the Karachi Stock Ex­change by 6% within three days of his as­sum­ing charge as Pres­i­dent of NBP. This was a sure re­flec­tion of the con­fi­dence that the in­vestors re­pose in him as head of the coun­try’s top com­mer­cial bank. Dr. Brohi has been as­so­ci­ated with NBP for the past three decades and has played a very pos­i­tive role in the long jour­ney that has seen NBP be­com­ing the coun­try’s first com­mer­cial bank to cross the 1 tril­lion mark in to­tal as­sets in 2010.

When Dr. Brohi as­sumed charge of the bank in Jan­uary 2013, the national econ­omy was in the throes of very chal­leng­ing times. This can be gauged from the fact that Pak­istan achieved mod­er­ate growth of around 3.7% in GDP in 2011-12 with the coun­try fac­ing a tough eco­nomic en­vi­ron­ment em­a­nat­ing from volatile se­cu­rity con­di­tions, struc­tural im­bal­ances in the econ­omy, an over­ar­ch­ing en­ergy cri­sis, a lower tax to GDP ra­tio and higher sub­si­dies.

Even in such an ad­verse op­er­at­ing en­vi­ron­ment, with pres­sure on net in­ter­est mar­gins and other con­tribut­ing fac­tors, NBP posted af­ter­tax prof­its of Rs. 16.2 bil­lion in 2012. Pre-tax re­turn on eq­uity stood at 20.5% and pre-tax re­turn on as­sets at 2.0%. The bank’s cap­i­tal ad­e­quacy ra­tio as of year-end De­cem­ber 2012 was at a healthy 16.5%.

The Bank’s to­tal de­posits in­creased by Rs. 110 bil­lion or 12%, while ad­vances in­creased by Rs. 132 bil­lion or 25%. NBP has the largest Ad­vances book in the bank­ing in­dus­try of Pak­istan. In­creased fo­cus on agri­cul­ture and re­tail port­fo­lios re­sulted in th­ese growth fig­ures. Cap­i­tal and re­serves were at Rs.151.3 bil­lion, higher by 14% from last year.

Dr. Brohi says that as part of NBP’s strate­gic plan the main pri­or­ity ar­eas of the Bank are fi­nanc­ing for the en­ergy and agri­cul­ture sec­tors, the ad­vance salary scheme and con­sumer gold scheme – all de­signed to fa­cil­i­tate the masses. The fo­cus is par­tic­u­larly on ru­ral ar­eas as peo­ple in this sec­tor had pre­vi­ously been de­prived of bank­ing fa­cil­i­ties. Con­se­quently, peo­ple who never had ac­cess to fi­nance, in­clud­ing those in ur­ban ar­eas, are now able to avail of th­ese fa­cil­i­ties. As a re­sult, the Bank has recorded sig­nif­i­cant growth in terms of agri­cul­ture and con­sumer loans over the past cou­ple of years and has the largest mar­ket share to­day in th­ese cat­e­gories amongst all com­mer­cial banks. A vi­tal out­come of th­ese ini­tia­tives un­der­taken by NBP is the pos­i­tive con­tri­bu­tion be­ing made to the econ­omy.

NBP has re­mained at the fore­front of en­ergy sec­tor pro­ject fi­nanc­ing in Pak­istan. To date, NBP’s to­tal ex­po­sure to the en­ergy sec­tor stands in ex­cess of Rs. 160 Bil­lion. The Bank has fo­cused its fi­nanc­ing ef­forts to­wards im­ple­men­ta­tion of Wind and Hydel projects in the past two years. Such re­new­able en­ergy projects shall re­main a ma­jor pri­or­ity for the Bank due to their pos­i­tive con­tri­bu­tion to­wards Pak­istan’s en­ergy mix and long-term sus­tain­able elec­tric­ity gen­er­a­tion ca­pac­ity. In the past 2 years, NBP has fi­nanced 3 wind power projects and is aim­ing to fi­nance 3 more such projects in the near fu­ture. In ad­di­tion to th­ese, NBP has also fi­nanced hy­del­based projects; th­ese wind and hydel projects will con­trib­ute over 325 MW to the national grid. NBP con­tin­ues to eval­u­ate co-gen­er­a­tion projects for in­dus­try, es­pe­cially those that fo­cus on the use of in­dus­trial waste and/or coal/biomass for elec­tric­ity gen­er­a­tion. This ef­fort will re­duce the in­dus­try’s re­liance on the national power grid.

Dr. Brohi says NBP achieved great suc­cess on the agri­cul­ture front in terms of lend­ing to farm­ers. The Bank dis­bursed Rs. 51 bil­lion by way of agri­cul­ture credit in 2012-13 (July-May). He says that ac­cord­ing to es­ti­mates the do­mes­tic agri­cul­ture sec­tor re­quires loans worth Rs. 750 bil­lion an­nu­ally. While Rs. 300 bil­lion is dis­bursed through for­mal bank­ing chan­nels, there is a gap of Rs. 450 bil­lion which is filled by in­for­mal chan­nels that charge very high markup rates to farm­ers. NBP is striv­ing to fill this gap and its farm­ing sec­tor dis­burse­ments have seen a mas­sive in­crease of 52% over the past 2 years.

An­other star per­former is the NBP Ad­vance Salary prod­uct which rep­re­sents a grow­ing share in the Bank’s ad­vances and prof­its port­fo­lio. The Bank has fur­ther en­cour­aged ap­pli­cants by en­hanc­ing the max­i­mum bor­row­ing limit from Rs. 500,000 to Rs. 1 mil­lion. In­ter­est­ingly, this has be­come the largest con­sumer prod­uct with the low­est rate of de­fault while pro­vid­ing an ex­cel­lent rate of re­turn. Un­der the easy-in­stall­ment scheme, govern­ment em­ploy­ees and em­ploy­ees of semi-govern­ment in­sti­tu­tions / au­ton­o­mous bod­ies

who re­ceive their salaries through NBP are el­i­gi­ble to ap­ply for loans. They can draw up to 20 times their take-home salary with­out pay­ing any col­lat­eral.

Dr. Brohi says the other suc­cess­ful con­sumer prod­uct is the ‘Cash & Gold’ loan that peo­ple can ac­quire against their gold jewelry. The loan does not in­volve a min­i­mum in­come re­quire­ment, has a one year roll-over pe­riod and is ideal for ed­u­ca­tion, mar­riage, con­sumer and other do­mes­tic needs. In 2012 the Gold loans port­fo­lio in­creased by 51%. Through th­ese Gold loans NBP is also reach­ing out to the poor fam­i­lies of ru­ral ar­eas and by this not only is NBP un­der­tak­ing a vi­able com­mer­cial propo­si­tion but is also ex­tend­ing a help­ing hand in the ru­ral up­lift of the na­tion.

Dr Asif Brohi views SME fi­nanc­ing as an area of im­mense po­ten­tial. This sec­tor suf­fered dur­ing 2012 due to ad­verse ex­ter­nal fac­tors like neg­a­tive im­pact of law & or­der sit­u­a­tion, power short­ages, high in­fla­tion & in­ter­est rates and re­duc­tion in ex­port or­ders. How­ever, even in th­ese chal­leng­ing times the Bank in­creased its SME port­fo­lio by 8% in 2012. Go­ing for­ward, the Bank is plan­ning to iden­tify re­gion spe­cific sec­tors and wooing back the qual­ity old clients who have switched their busi­ness to other banks.

Fur­ther­more, NBP has ef­fec­tively kept its fresh in­vest­ments in govern­ment se­cu­ri­ties at a min­i­mal level and has in­stead fo­cused on credit de­mand by pub­lic sec­tor en­ter­prises and the pri­vate sec­tor. The Bank is plan­ning to off­set the im­pact of lower in­ter­est rates by ex­pand­ing its ad­vances in high-yield and low-risk prod­ucts, low­cost de­posit mo­bi­liza­tion, branch ex­pan­sion and re­duc­tion in non­per­form­ing loans.

The NBP Pres­i­dent spe­cially men­tions the man­ner in which the Bank has man­aged to sus­tain its role as a mar­ket leader dur­ing 2012 by pro­vid­ing cor­po­rate fi­nan­cial so­lu­tions. The Bank, he says, has built strong cor­po­rate re­la­tion­ships and with a strat­egy of ‘ bet­ter wallet siz­ing along with bet­ter fo­cus on trade busi­ness’ for tar­geted growth, has shown con­sid­er­able im­prove­ment in terms of loan growth (34%), trade (47%) and fee based in­come (45%), dur­ing the year.

While NBP al­ready main­tains the coun­try’s sec­ond largest net­work of do­mes­tic branches, it aims at fur­ther ex­pand­ing this net­work with an eye on serv­ing new cus­tomers in more parts of the coun­try and over­seas. It is plan­ning to es­tab­lish 43 new branches across Pak­istan in 2013, of which 36 would be reg­u­lar bank­ing branches and 7 Is­lamic bank­ing branches, with spe­cial fo­cus on ru­ral ar­eas. NBP is cur­rently in the process of re-strength­en­ing and re-brand­ing its Is­lamic bank­ing net­work to pro­vide Sharia-com­pli­ant ser­vices to more cus­tomers. In­ter­na­tion­ally, NBP plans to ex­pand its pres­ence in Sri Lanka and is also un­der­tak­ing a study to es­tab­lish pres­ence in In­dia, Rus­sia and United Arab Emi­rates.

The Bank plays a lead­ing role in sup­port­ing the Govern­ment of Pak­istan (GoP) in var­i­ous ways. Presently NBP col­lects all types of taxes on be­half of the govern­ment through its en­tire net­work of do­mes­tic branches. The Bank is cur­rently serv­ing 7.7 mil­lion ac­count hold­ers which rep­re­sent about 25 % of the to­tal bank­ing sys­tem ac­counts. The coun­try has ap­prox­i­mately 3 mil­lion pen­sion­ers of which 2.4 mil­lion (80%) are be­ing served by NBP.

Dr. Brohi takes pride that NBP is one of the largest con­trib­u­tors to the national ex­che­quer through di­rect taxes and div­i­dends. The bank paid over Rs. 73 bil­lon in­come tax dur­ing the last 5 years, while over Rs. 42 bil­lion was con­trib­uted to the govern­ment as cash div­i­dend dur­ing the same pe­riod.

For en­hanc­ing cus­tomer ser­vices a num­ber of ini­tia­tives have been taken in­clud­ing di­rect credit of pen­sions, in­tro­duc­tion of bio-met­ric sys­tem for withdrawal of pen­sions through ATMs, web based util­ity to fa­cil­i­tate cus­tomers for pay­ment of var­i­ous taxes and a 24/7 call cen­ter to ad­dress var­i­ous queries / com­plaints of cus­tomers. Be­sides con­ven­tional branches, NBP has also opened 19 cus­tomer fa­cil­i­ta­tion cen­ters for col­lec­tion of util­ity bills and pay­ments to pen­sion­ers.

NBP has also main­tained fo­cus on in­creas­ing its Home Re­mit­tances busi­ness through which not only is the Bank fa­cil­i­tat­ing its cus­tomers but is also con­tribut­ing to­wards earn­ing of much needed for­eign ex­change sent in by ex­pa­tri­ates. NBP will soon be launch­ing a tai­lor made de­posit prod­uct specif­i­cally de­signed for fam­i­lies re­ceiv­ing pe­ri­odic home re­mit­tances from abroad. NBP has posted phe­nom­e­nal growth in home re­mit­tances in the last three years and is the re­cip­i­ent of “Max Fac­tor Award of the Year” by Xpress Money Ser­vices which is the 3rd largest money ser­vice provider world­wide.

As far as IT ca­pa­bil­ity is con­cerned, the Bank has suc­cess­fully

con­verted its en­tire branch net­work to the ‘on­line’ plat­form in 2012. The Bank has em­barked on an en­deavor to im­ple­ment Core Bank­ing au­to­ma­tion across all key ar­eas of its busi­ness in­clud­ing Con­sumer, Cor­po­rate, Trea­sury, Trade, HR and Fi­nance which shall en­able the Bank to serve its cus­tomers bet­ter as well as bring ef­fi­ciency across its at­trib­uted busi­ness func­tions. The tar­get is to im­ple­ment the core bank­ing so­lu­tion in 250 branches within the next year. NBP has in­creased its num­ber of ATMs to 360+ in 2012 from 254 and plans to in­stall 1,000 ATMs in the next 3 years.

NBP’s fi­nan­cial per­for­mance un­doubt­edly places it way ahead of the pack. But what brings it out head and shoul­ders above other banks is its unique ser­vice mix – its cus­tomers com­prise the largest cor­po­rates to un­der­priv­i­leged ru­ral farm­ers and in­di­vid­u­als. NBP’s han­dling of govern­ment busi­ness posts con­fi­dence in the brand whereas its ex­ten­sive ru­ral fran­chise and over­seas foot-print gives it the re­quired reach for mar­ket pen­e­tra­tion and in­creases cross sell po­ten­tial. The Bank’s ded­i­ca­tion to cor­po­rate so­cial re­spon­si­bil­ity, to pro­mot­ing ed­u­ca­tion, al­le­vi­at­ing poverty and serv­ing national sports also makes it stand out as a truly national in­sti­tu­tion. Dr. Brohi is es­pe­cially proud of the fact that NBP hon­ors eth­i­cal val­ues and re­spects so­ci­ety and com­mu­ni­ties in meet­ing their needs by cater­ing to the de­vel­op­ment of fu­ture gen­er­a­tions with pride and dig­nity. To this end, he leads the Bank with great con­fi­dence and takes ini­tia­tives that are sus­tain­able and have a mean­ing­ful im­pact on so­ci­ety by con­nect­ing with the Bank’s busi­ness and core com­pe­ten­cies.

While Dr. Brohi be­lieves in fa­cil­i­tat­ing the role of ed­u­ca­tion as a vi­tal in­gre­di­ent for eco­nomic de­vel­op­ment, he en­sures that the Bank lays equal em­pha­sis on health, women de­vel­op­ment, child wel­fare, cul­ture and timely re­lief to af­fectees of nat­u­ral dis­as­ters. NBP has al­ways stood firm in the na­tion’s hour of need, whether it was the dev­as­tat­ing earth­quake of 2005 or the floods and rains in the last three years. NBP and its em­ploy­ees have al­ways been at the fore­front in help­ing the af­fectees both fi­nan­cially and through vol­un­teer work. Sports owe a lot to NBP which has ac­tively pa­tron­ized var­i­ous dis­ci­plines over the years. Dr. Asif Brohi also takes spe­cial in­ter­est in NBP’s role in this di­rec­tion and en­sures that the Bank plays a proac­tive role in the man­age­ment of its cricket team. To fur­ther en­rich its role as a lead­ing pa­tron of sports, NBP spon­sored some 55 events in Cricket, Hockey, Football, Squash, Bad­minton, Boxing, Soft Ball, Rugby, Snooker, Golf, etc., dur­ing 2012. Be­sides sports NBP be­lieves in gen­der equal­ity and women em­pow­er­ment whereby women in the Bank’s work­force have al­ways been given key posts and ca­reer ad­vance­ment.

In terms of its fu­ture out­look, Dr. Brohi says NBP will fo­cus on ra­tio­nal­iza­tion of man­power for im­proved uti­liza­tion thereby im­prov­ing the cost to in­come ra­tio, im­prov­ing Cur­rent and Sav­ings de­posits ra­tio, in­creas­ing vol­umes, re­duc­tion of non-per­form­ing loans, fur­ther in­crease in lend­ing to agri­cul­ture, SMEs and gen­eral con­sumers, con­cen­tra­tion on trade busi­ness, fur­ther ex­pan­sion of con­ven­tional and Is­lamic Bank­ing branch net­works, both at home and abroad, and im­prove­ment in IT in­fra­struc­ture. All this should fa­cil­i­tate NBP in greatly in­creas­ing its rev­enues in the com­ing times.

Dr. Brohi says that as part of NBP’s strate­gic plan the main pri­or­ity ar­eas of the Bank are fi­nanc­ing for the en­ergy and agri­cul­ture sec­tors, the ad­vance salary scheme and con­sumer gold scheme – all de­signed to fa­cil­i­tate the masses.

The NBP Pres­i­dent be­lieves in fa­cil­i­tat­ing the role of ed­u­ca­tion as a vi­tal in­gre­di­ent for eco­nomic de­vel­op­ment. He also en­sures that the Bank lays equal em­pha­sis on health, women de­vel­op­ment, child wel­fare, cul­ture and timely re­lief to af­fectees of nat­u­ral dis­as­ters.

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