Meezan Bank to triple Pakistan branches and tap Middle East market

[MirBadshah]

Meezan Bank to triple Pakistan branches and tap Middle East market



By Naween A. Mangi Bloomberg NewsPublished: May 30, 2007

http://www.iht.com/articles/2007/05/30/business/sxpakbank.php


KARACHI: Meezan Bank, Pakistan's biggest Islamic lender, plans to open banks overseas and triple the number of branches at home after capturing half the market in the world's second-most populous Muslim nation, its chief executive said.

"We have received requests to set up affiliate companies in Arab countries where we will keep a minority shareholding and manage the banks," Irfan Siddiqui, the chief executive, said in an interview at the bank's head office in Karachi on Tuesday. "We feel positive about Syria and others such as Egypt and Dubai are still in the initial thought process."

Meezan wants to extend its lead in Pakistan before ABN AMRO and Standard Chartered open more branches, to benefit from an expected fivefold increase in Islamic finance. Global assets complying with Shariah law are worth $500 billion and growing by more than 10 percent a year on rising oil wealth in the Middle East, Standard & Poor's estimates.

"Conventional banks have expanded regionally into the Gulf to capture trade finance and remittances flow," said Yasir Syed, an investment analyst at AKD Securities in Karachi. "This strategy could equally benefit Islamic banks, but other than these areas there is enough growth to take advantage of inside Pakistan."

Remittances from Pakistanis living overseas increased 23 percent to a record $4.45 billion in the 10 months that ended on April 30, central bank data show.

Pakistani exports rose to a record high of $13.9 billion in the same period and imports climbed to a high of $25 billion, according to the Federal Bureau of Statistics.

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Meezan, Pakistan's first Islamic bank, will spend as much as 1.5 billion rupees, or $25 million, to extend its network to 200 outlets in 50 cities by the end of 2009, Siddiqui said. Meezan has 64 branches in 21 cities across Pakistan.

"The market for Islamic finance is ripe in the most unexpected places across the country," said Siddiqui, who has been at the helm since the bank was licensed in 2002.

 

[Shehz]

Meezan Bank is 30 percent owned by Pak Kuwait Investment, an alliance between the governments of Pakistan and Kuwait. Shamil Bank of Bahrain, Kuwait-based Noor Financial Investment and Islamic Development Bank respectively own 26 percent, 16 percent and 9 percent of the bank.

The bank's profit almost tripled to 604 million rupees in the year that ended on Dec. 31, from 223 million rupees in 2002, according to its annual report.

Lending to companies accounts for 65 percent of the bank's 28 billion rupees in loans.
One-fifth of its loans are for cars and homes, and 15 percent are to small companies.
Meezan's shares, which have risen 33 percent this year, fell 1.1 percent to 26 rupees (KSE).

It opened 34 branches in 2006, and will increase the number of branches to 95 by December 2007.
The Islamic finance industry in Pakistan may grow fivefold over the next five years to 15 percent of all banking assets. It is expected to be one of the fastest-growing segments in banking.

Islamic law bans the payment and receipt of interest, prohibits investment in businesses like gambling and alcohol, and stresses profit sharing. Pakistan is the world's second-most populous Muslim nation after Indonesia, and 97 percent of its 160 million people are followers of the faith.

Six companies, including Dubai Islamic Bank and Emirates Global Islamic Bank, hold Islamic banking licenses and operate 108 branches.

Thirteen conventional banks, including National Bank of Pakistan and MCB Bank, have also opened a total of 58 Islamic branches, according to central bank data. Three conventional banks had Shariah-compliant branches in 2003.

Meezan had 37.5 billion rupees in deposits as on March 31, accounting for almost half the total deposits at Islamic banks.

Pakistan's Islamic banking industry expanded its assets by 42 percent in the six months that ended on March 31, to 134.6 billion rupees.

Meezan is planning to raise its capital to 6 billion rupees by December 2008 through "internal generation," from 4 billion rupees.
Plans to raise additional capital may be considered if "major overseas expansion plans" are finalized.
The bank's shareholders will be partners in the new ventures overseas.

The bank is also planning to introduce agriculture credit and microfinance products.

 

[MirBadshah]

Banking industry in Pakistan is one of the fastets growing sectors and in recent years have created large number of jobs as well apart form playing role in rapid growth in economy, but one thing which needs to be improved is the investment for SME's which stands at 15% now must be brought around 30% and also further increase in housing loans.

These are two sectors which financed properly can make the povert a thing of past in next few years because the SME's and housing sector can employ less educated and non profession labour force which at this time is major segment under poverty level.