In 1HCY24, Standard Chartered Bank (Pakistan) Ltd reported a net profit of PKR 21.48 billion (EPS: PKR 5.55), reflecting a 14% YoY increase from PKR 18.78 billion (EPS: PKR 4.85) in the previous year. Net Interest Income grew 13% YoY to PKR 48.04 billion, up from PKR 42.52 billion in the SPLY. Total non-markup income surged by 140% YoY to PKR 9.88 billion from PKR 4.12 billion in 1HCY23. However, operating expenses rose by 19% YoY to PKR 9.43 billion, driven by inflationary pressures, compared to PKR 7.90 billion in the SPLY. The bank achieved its highest-ever half-year revenue of PKR 57.92 billion, compared to PKR 46.34 billion in the SPLY. The revenue breakdown includes 37% from retail banking, 45% from corporate and institutional banking, 18% from non-client activities such as treasury markets and central functions, and 17% from Islamic banking. Key financial metrics reported include a CAR of 20.1%, ADR of 28.6%, and ROE of 43.8%. SCBPL maintained the highest CASA mix in the industry at 98% during 1HCY24. SCBPL achieved the lowest cost-to-income ratio in the banking industry at 18%. Strong recovery efforts and disciplined risk management led to a net reversal of PKR 1.77 billion, compared to PKR 12 million in 1HCY23. The bank has embraced digital transformation, with 93% of its transactions now conducted digitally and only 7% over the counter. Total assets grew by 5% YoY to PKR 1.05 trillion, while liabilities declined by 15% YoY to PKR 116.82 billion (CY23:PKR 137.93 billion). Net investments increased by 136% YoY to PKR 534.95 billion, up from PKR 226.71 billion, due to interest rate volatility. The weighted average interest rate repricing profile stood at two months. Net advances decreased by 5% YoY to PKR 208.45 billion, reflecting the impact of higher interest rates, inflation, and ongoing political and economic uncertainty. Around 70% of the advances book is short-term (less than one year), focusing on trade and working capital lines with improved returns. The bank holds a 1.7% market share in advances.
Deposits grew by 14% YoY, reaching PKR 816.86 billion, with current accounts registering a 10% YoY growth in 1HCY24. The deposit mix comprises 49% current accounts, 49% savings accounts, and 2% fixed deposits. SCBPL holds a 2.5% market share in deposits and 5% in income and profitability, while its profitability market
share stands at 8.3%. Management noted a 6% YoY decline in deposits and a 0.5% YoY decline in advances in wealth and retail banking, while deposits in corporate and institutional banking grew by 27% YoY, though advances fell by 5% YoY due to subdued economic activity. SCBPL serves over 700,000 customers in wealth and retail banking, 600 global customers, 400 local corporates, medium enterprises, the government, and other SOEs in Pakistan. In Islamic banking, the bank caters to 200,000 customers. The bank operates 40 branches in Pakistan and plans to convert conventional branches to Islamic branches by 2027. Management disclosed that SCBPL manages PKR 4-5 billion in foreign currency deposits. The implementation of IFRS-9 resulted in a PKR 0.5 billion impact on earnings. Going forward, management stated that the bank is well-positioned to capitalize on an economic recovery and lower interest rates. However, challenges may arise if interest rates decline and foreign exchange pressures increase, potentially affecting the bank’s ability to meet obligations. Pricing discipline will remain a top priority, and SCBPL plans to expand by supporting local industries. The bank also aims to maintain a sustainable dividend and ADR policy, without targeting a specific ADR level.
Important Disclosures
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