State Bank Suffers 43% Decline in Profits

State Bank of Pakistan has unveiled its annual report for FY16 which shows that the bank has suffered a 43 percent decline in profits.

The Annual Performance Review for the year 2015-16 (FY16) was issued on Monday. In previous year, SBP earned a net profit of Rs 401.751 billion compared to this year’s Rs 229.535 billion, a decline of exactly 42.9 percent.

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The reasons for the decline are said to be due to massive reduction in the discount and other operating incomes, according to the report.

The major source of income for SBP has been through Market Related Treasury Bills (MRTBs). Other various methods through SBP earned profits include, “the interest/markup earned on short-term lending to banks under reverse repo arrangements, foreign currency investments and placements, and loans to banks under export finance and related schemes of the central bank.”

The decline details are as following:

  • Operating Income of SBP Decline of Rs 2.756 billion.
    • From Rs 103.343 billion in FY15 to Rs 100.587 billion, this year.
  • Refinance Facilities Decline of Rs 7.552 billion.
    • From Rs 16.716 billion to Rs 9.164 billion.
  • Net Exchange Gain — Decline of 10.742 billion.
    • From Rs 36.418 billion to Rs 25.676 billion.
  • Exchange Loss Decline of Rs 12.596 billion.
    • PKR depreciated against the SDR from Rs 9.36 to Rs 3.071.

Other details regarding FY16 report included:

  • Total Expenditure  Rs 40.855 billion against Rs 38.674 billion in FY15.
  • Banknotes Printing Charges Rs 7.731 billion from Rs 6.690 billion in FY15.
  • Agency Commission Paid to NBP and BOP  Rs 8.969 billion from Rs 7.243 billion in FY15.
  • General Administrative Expenses Increase of Rs 379 million to Rs 24.25 billion, in total, at the end of FY16 due to increase in repairs and maintenance, training, depreciation and fund managers’ expense partly offset by decrease in retirement benefits.
  • Balance-sheet Footing of the Bank Increase from Rs 5,234 billion to Rs 6,450 billion.

The annual report also states that:

“The Rs 40 billion increase in the value of the gold reserves held by the Bank was due to spike in the gold rate in the London Bullion Market.”

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