By Ali Ahmad · Friday, Aug 31, 2012 1 Comment
When CitiBank Pakistan announced to offer its consumer division for sale following HSBC’s news to close its operations in Pakistan – there were rumors within a circle of banking industry that Standard Chartered Pakistan might follow the footsteps of later. 
Banking experts were reasoning back then that the available spreads to Standard Chartered are squeezing leaving very little charm for them and given the trend of international banks to scale down its operations, there is a strong likelihood of Standard’s departure from Pakistan.
Mohsin Nathani, CEO Standard Chartered Pakistan, hinted something else while commenting on Standard’s financial results for first half of 2012. Look what Mohsin Nathani said:
“The Bank continues to deliver a strong set of results for the first half of 2012. The growth in revenue is encouraging, while we continuously endeavour to keep cost growth at moderate levels, ensuring necessary investment in our businesses to keep the momentum rolling. The Bank is dedicated to continuing to grow our business here and to provide the high quality of service and products to our customers.”
Looks like Mohsin Nathani was well aware of those rumors. Given Standard Chartered’s results for first half of 2012, there are no reasons for them to scale down Pakistan’s operations.
According to its financial statements, Standard Chartered’s Profit before tax has grown by 45% to Rs 390 Crore, with earnings per share up at Rs 0.65 per share from Rs 0.44 per share in first half of 2011. An interim cash dividend of 7.50% (Re. 0.75/- per share) in respect of the half year ended June 30, 2012 has been declared by the Board of Directors.
“I don’t think so he meant that. State Bank recently reduce interest rates and it will definitely put pressure on banking sector profits. Things can change overnight”, a banking expert told us, on condition of anonymity, while discussing these results with Mohsin’s Nathani’s special focus to grow the bank in Pakistan.
By aamir · Friday, Aug 31, 2012 2 Comments
In a late evening development yesterday, it is learned that Abu Dhabi Group has decided to split the boards of Warid and Wateen Telecom to make both the companies entirely separate entities, we have confirmed with sources. 
A notable outcome of this development has already surfaced as Mr. Zouhair A. Khaliq has resigned from Warid’s board, to continue serving as a member of Wateen’s board.
A Warid spokesperson confirmed ProPakistani, a sister concern publication of EconomyAge, of the development by saying that this top level change is carried out on direct orders of Sheikh Nahyan bin Mubarak Al Nahyan, Chairman of Abu Dhabi Group, to make both the group entities self sustainable and to streamline the operational procedures in both companies.
It maybe recalled that Mr. Khaliq was appointed as Group Executive Director in January 2011. He was representing Dhabi Group on boards of Warid and Wateen Telecom since then.
It is too early to speculate the long term impact of the move on Warid and Wateen Telecom, which appears like a major strategy shift from Dhabi Group for its telecom arms in Pakistan.
By Nabila Mujtaba · Friday, Aug 31, 2012 4 Comments
Deputy Mission Director, US Agency for International Development (USAID) Edward Birgells witnessed an MoU signing between President, Institute of Chartered Accountants of Pakistan (ICAP) Rashid Rahman and chief of the party for the USAID funded Assessment and Strengthening Programme – Associates in Development (ASP-AiD) in Karachi on Thursday. 
At the signing ceremony, Birgells stated,
“This MoU is significant because it will accomplish critical goals necessary to ensure strong professional training of chartered accountants while strengthening ICAP’s ability to regulate adherence to professional financial standards.”
He added that this agreement will enable ICAP to improve the quality of audit and non-audit services throughout Pakistan.
Under the MoU, ASP-AiD and ICAP will strengthen ICAP’s education programme by revamping syllabus/curricula, study material, training methodology and testing systems.
They will also develop partnerships and collaboration between ICAP and Pakistani business schools and universities to improve the quality and quantity of ACA students’ intake. They will develop additional professional development programmes for ICAP.
The MoU is also intended to strengthen ICAP’s regulatory role and ability to scrutinise the activities of its members while expanding its branding capacity as a leading financial regulatory entity.
The USAID funded ASP-AiD Programme works to strengthen Pakistani institutions in support of Pakistan’s growth and development by improving organisations’ financial, administrative, and managerial functions and enhance their accountability and transparency.
In response to a question about the amount of investment that will be made, Birgells said he was not in a position to state the actual amount that USAID was going to spend under this agreement. He said it was an ‘open-ended’ initiative, adding that he could not comment on its duration.
By Nabila Mujtaba · Thursday, Aug 30, 2012 1 Comment
“Homework for the privatization of Oil and Gas Development Company (OGDC) has already been completed, however the process was delayed to attract better prices”, said Federal Minister for Privatization, Ghous Bux Mahar, in a response to a question during a ceremony to sign an MoU with International Finance Corporation. 
The Privatization Commission of Pakistan (PC) and International Finance Corporation (IFC) here on Wednesday signed a Memorandum of Understanding (MoU) for the value evaluation of all those state-owned entities that are to be privatized.
MoU in this regard was signed by Federal Minister for Privatization, Ghous Bux Mahar and IFC Chief Representative for Pakistan, Nadeem Siddaqui. The MoU would be valid up to two years period and could be further extendable.
Talking to media persons on the occasion, the federal minister said that the valuation of the national entities would be done in accordance with the international standards so that maximum possible in come could be generated through the privatization process.
He said that IFC would be providing free of cost services for valuation, so Pakistan would not be paying any money for this process, adding that work on it has already been started.
By Ali Ahmad · Thursday, Aug 30, 2012 2 Comments
The Ministry of Petroleum and Natural Resources has failed, unfortunately Again, to control the circular debt of the Pakistan State Oil (PSO) that has now reached to 431 billion.
If you’re following EconomyAge you might remember that Pakistan State Oil was on a verge of bankruptcy. Ministry of Petroleum and Natural Resources, in a letter to recently elected Prime Minister Raja Pervaiz Ashraf, had sought grant of Rs 1,200 Crore on daily basis to save cash-starved Pakistan State Oil (PSO) from bankruptcy. 
According to official data, the oil giant total payables to local and international fuel suppliers have touched Rs 186 billion mark while receivables from power sector and other sectors stand at Rs 244 billion.
Sources in the Pakistan State oil told ‘Online’ that agency is supplying oil to the different sectors according to their demand however monthly payback from departments is meager due to which state oil agency outstanding dues are increasing constantly. Sources told circular debt of PSO is increasing at the rate of Rs15-20 billion per month due to inefficiency, non-recoveries and subsidies.
According to official data, power sector is main defaulter of PSO with Rs 212 billion outstanding. Hub Power Company Limited (HUBCO), which itself is fighting a tax battle with FBR, is the leading defaulter of PSO with Rs 109 billion followed by WAPDA with Rs 63 billion and Kot Addu Power company (KAPCO) with Rs 38 billion.
The company has to receive two billion from Pakistan International Airline (PIA), Rs 524 million from OGDCL, Rs 10 billion from Karachi Electric Company (KESC), Rs 1.447 billion from Pakistan Railways.
State oil agency has to pay back Rs 186 billion to local and international refineries of which Rs24 billion to Pak Arab Refinery Limited (Parco), Rs 17 billion to Pakistan Refinery Limited (PRL), Rs 9 billion to National Refinery Limited (NRL), Rs 31 billion to ARL and Rs 2 billion to Biscor and Rs 88 billion to others.
The PSO has to payback Rs 98 billion to Kuwait Petroleum Company Limited and other international fuel suppliers on account of Letter of Credit payments.
By aamir · Thursday, Aug 30, 2012 3 Comments
Pakistan Telecommunication Authority has been asked by Senate Sub-Committee on Ministry of Information Technology (MoIT) to not to allow telecom companies to participate in upcoming 3G spectrum auction that are allegedly involved in evading PKR 47 billion taxes. 
These directives were issued after the former Director General Large Taxpayer Unit (LTU) Islamabad and existing Member Inland Revenue Service Ijaz Hussain Shah confessed that he was verbally pressurized for waiving telecom companies the taxes of PKR 47 billion on inter-connections revenues.
The five telecom companies in the alleged tax evasion are identified as National Telecommunication Corporation, Ufone, Telenor, Pakistan Mobile Communication (Mobilink), and Warid.
Sub-Committee met in the parliament house with Anusha Rehman as chairperson to collect facts about the mega tax evasion scam.
Committee heard the viewpoint of the Former Member IR and Member Training FBR Shahid Hussain Asad, Chief Automation Abdul Sattar Aora and Secretary IR Fahad Chaudhry. Former DG LTU Islamabad and present FBR Member IR Ijaz Hussain Shah, Chief Income Tax Muhammad Iqbal and other officials of FBR were also present on the occasion.
Chairperson further asked the PTA to make available the required record and invoices of telecom companies to know the facts regarding the tax dispute.
Member Training FBR Shahid Hussain Asad, told the committee that waiver of taxes was drafted but it was never issued in the official gazette. He said that telecom companies had deposited Rs. 6.7 billion for the proposed waiver of taxes but the notification was never issued and hence tax-exemption was never made official.
Former DG LTU Islamabad and existing FBR Member IR Ijaz Hussain Shah reveled that telecom companies had approach tribunal for the waiver of FED on inter-connection charges, however, Tribunal had given its decision in the favor of LTU Islamabad by saying that tax on inter-connection charges won’t be waived.
DG LTU told committee that his team had communicated the tribunal’s decision to Mumtaz Haider Rizvi, then Chairman of FBR.
Later on, DG LTU informed the committee, Mumtaz Haider Rizvi, former chairman of FBR met with legal advisors of the telecom companies and somehow agreed to waive the tax if they submit their request letter to LTU.
Ijaz further revealed the committee that he had forwarded this letter to the FBR for necessary action. But, he alleged that he was pressurized on behalf of the former FBR chairman to comment in favor of allowing tax-waiver to telecom companies.
Ijaz Hussain Shah informed the committee that despite his strong opposition to proposed exemption, FBR officials did not consult him being DG LTU and reached a deal with telecommunication companies on the legal opinion of Sindh Revenue Board (SRB).
Ijaz said that All the telecom companies fall within the jurisdiction of the LTU Islamabad but LTU’s viewpoint was not taken in this regard.
Committee will carry forward the proceedings in next meeting, where PTA is likely to furnish records and invoices of telecom companies and former Chairman FBR will record his statement before the committee.
Via Business Recorder
By Ali Ahmad · Wednesday, Aug 29, 2012 2 Comments
If you’re holding one of these ‘currency paper’ (see picture) then you are only left with 4 weeks of time to get rid of it. 
The State Bank of Pakistan (SBP) has again reminded general public to exchange old design and bigger size banknote of Rs 500 from the field offices of SBP Banking Services Corporation (SBP BSC) and over 10,000 branches of banks throughout the country till the close of banking hours on October 01, 2012.
The State Bank of Pakistan/SBP Banking Services Corporation (SBP BSC) will neither exchange nor be liable to pay any value of such banknote to any person or a bank after the above mentioned deadline.
It may be recalled that Rs 500 old design and bigger size banknote had already been demonetized by the Federal Government and, hence, cannot be used as a legal tender. However, it can be exchanged from the field offices of SBP BSC and branches of banks till October 01, 2012.
By Nabila Mujtaba · Wednesday, Aug 29, 2012 0 Comments
Fatima Fertilizer, a subsidiary of Arif Haib Group, posted its half yearly financial results and declared a profit of Rs 259 Crore, a massive improvement as compared with previous year when its posts a loss of Rs 15 Crore. 
The growth result from an increase in revenues. Fatima Fertilizers manages to sold 170,000, 185,000 and 87,000 tons of urea, calcium ammonium nitrate (CAN) and Nitro-Phosphate (NP) respectively, a report from analysts suggests.
According to AKD Research, the support in sales came from increased urea demand which stood at a sizable 130k tons in 2nd Quarter of 2012, which is six times more than the 1st quarter of 2012. While CAN offtake also registered a healthy increase of 300% than previous quarter to stand at 140k tons during 2nd Quarter of 2012.
The Board of Directors of Pakarab Fertilizers recommends to distribute 45 million shares of Fatima Fertilizer to the shareholders of Pakarab Fertilizers as second interim dividend.
“The results are below our expectation. We estimated Net Profit of Rs 273 Crore. Deviation from estimates primarily came from the topline where the company offered heavy discounts on products compared to peers in order to boost sales”, a report by AKD Research said.
Its’ worth mentioning here that Arif Habib Group is reportedly under pressure from United States Govt which shows concerns with Fatima Fertilizers.
By Nabila Mujtaba · Tuesday, Aug 28, 2012 0 Comments
The Registrar of Companies, Securities and Exchange Commission of Pakistan on Monday, issued certificates of re-registration to the stock exchanges under the Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012, as an evidence of their change in status from companies limited by guarantees to public companies limited by shares. 
The stock exchanges will now operate as for-profit, demutualized entities thereby ensuring a clear segregation of ownership rights from trading rights.
Brokers/Trading Rights Entitlement (TRE) Certificate Holders, who previously predominantly controlled the affairs of the stock exchanges, will as a result of this demutualization now not be able to hold majority on the board of directors and be entitled to a maximum 40%voting shares of the stock exchange.
The SECP while approving the plans for segregation of commercial and regulatory functions of the exchanges has ensured that the demutualised entities exhibit enhanced governance and transparency and greater balance between interests of various stakeholders while supporting independent management.
This conversion of the stock exchanges reflects a significant transformation of the Pakistan Capital Market and marks the successful completion of corporatization process under the Act which was promulgated on May 7, 2012.
New Directors will be Elected
Upon receipt of the certificates of re-registration, the existing directors on the Boards of the stock exchanges shall cease to hold office and be replaced by the first directors, i.e., 6 directors nominated by the SECP and 4 broker directors nominated by each respective stock exchange. Within 30 days of the date of demutualization each stock exchange shall elect four TRE certificate holders to replace the broker directors.
The Chairman of the Board the exchanges shall be from among directors who do not represent the TRE Certificate Holders. As envisaged in the Act, the next phase of the exercise will entail the sale of shares of the stock exchanges to the strategic investors, general public and financial institutions.
Participation of strategic investors shall result in making the country’s capital market more accessible for the international community while ensuring strategic alliances, influx of state of the art technologies and making the stock exchanges more competitive investment destinations.
By Ali Ahmad · Tuesday, Aug 28, 2012 7 Comments
After collecting trophies for posting horrible losses – NIB Bank is finally managing itself on recovery. Although its financial results for first half of 2012 shy away from profits but its manages to reduce its losses to Rs 15 Crore from a horrible Rs 370 Crore in similar period in previous year. 
We can all recall that almost eight months ago – there were rumors of that majority shareholder Temasek Holdings may offload its stake in NIB to the Industrial and Commercial Bank of China (ICBC). Although the appointment of new CEO and President Mr Badar Kazmi, enable the bank to turn its fate.
According to recent financial statements, NIB’s total revenue increased by 43% to Rs 250 Crore, and net interest income and non-interest income increased by 51% and 34% respectively. Meanwhile, the bank’s administrative expenses increased by 9%.
What CEO Badar Kazmi is not Telling us?
Commenting on the results, NIB Bank President Badar Kazmi said: “These results indicate that the fundamentals of the business are showing a healthy trend.”
But what Badar Kazmi is not commenting is the NIB’s coming plans which, if proved successful, will bring NIB Bank in a different league. Its share price which is currently standing at PKR 2 per share must be watched closely.
Just months ago, out of nowhere, NIB bank jumped into the acquisition fight to acquire CitiBank Pakistan’s consumer division, a healthy portfolio with elite class customers. This might be surprise for few but many industry professionals hinted this to EconomyAge when CEO Badar Kazmi stole Adil Rashid from Bank Alfalah, and he was given the task to establish and run NIB Bank’s consumer division.
According to our sources, around Rs 150 Crore has been allocated to this project and Adil Rashid has been quite busy in building up his team and network in Lahore. Acquiring CitiBank’s consumer division will be a strategic move to jump start its consumer division.
Industry sources close to the negotiations between CitiBank and NIB Bank are very confident about a successful acquisition but this is worth mentioning here that NIB will be competing with Faysal, Habib and Bank Alflalah for this acquisition. Given the number of competitors in game – this might not be an easy fight for Badar Kazmi.
