Silkbank plans 200 plus new branches in next two years

KARACHI: Silkbank planned to add 200 plus branches over the next two years and would expand its distribution footprint by launching smart and full-service branches, said bank’s president Azmat Tarin in an interview with The News.

Q: What is your future strategy after the injection of new capital from the investors?

A: The bank has developed a strategic plan for 2016 and beyond. Our focus will remain on lower cost of funds and improving our deposit mix. We are making aggressive marketing and sales efforts to solicit new accounts with lower cost of funds. We plan on expanding our distribution footprint by launching smart and full-service branches, most of which will be dedicated to Islamic banking. We plan to add 60 new branches in the next 12 months and another 200 plus branches over the next two years. This will take the total distribution to 250 branches by the end of 2018. This increase in branch footprint will boost our Islamic and conventional banking business solicitation ability and improve the balance sheet size rapidly. We aim at reducing our non-earning assets by Rs8-10 billion by the year end 2016, and sell bank-owned properties to accrue capital gains. Many productivity and expense rationalisation initiatives are being rolled out to achieve cost savings and fund future growth through the current cost base.  With the decline in discount rates, purchasing power is improving which is increasing the demand for consumer products. We aim to cater to this demand with innovative consumer finance offerings and achieve higher spreads. We also intend to revive our mortgage portfolio. We will be investing even more in trainings and development of our staff.

 Q: Despite substantial cut in interest rates, why banks are shy in consumer financing?

A: It is important to understand that every bank is now offering consumer products and under intense competition, if you don’t stay competitive, you don’t stay in business for long. As far as client base is concerned, our consumer portfolio is much diversified. We have customers from multinationals, government, self-employed professionals and businessmen etc. Since we are offering unsecured products, it is very important to diversify our risks and not rely on any one particular segment. We are focused to achieve high growth in consumer finance and cards business. We are now well positioned and geared towards expanding our reach by tapping the potential of other cities. The existing target cities for unsecured products were Karachi, Lahore and Rawalpindi/Islamabad. Soon we will be offering our products in Hyderabad, Faisalabad and Peshawar as well. 

Q: Does Silkbank have plans to finance infrastructure and energy projects in the country?

A: Yes, the Silkbank is focusing on energy and infrastructure related projects. In transactions of this nature we usually maintain the lead advisor role, structuring the credit and syndicating the transaction. In transactions where there is huge pent up demand, we generally sell down to create a secondary market for the credit. We also do see an enormous potential for Shariah-compliant product offerings for infrastructure development projects. The government finances developmental projects through borrowings from commercial banks. Now, with the introduction of sukuks, Islamic banks are seizing the opportunity to tap into the public sector. The sukuk is also expected to enable Islamic banks and mutual funds to invest their liquid funds in tradable government-guaranteed Islamic instruments.

Q: Do you want to tap into this new emerging Islamic finance market?

A: Yes, we would definitely like to tap the rising demand for sukuks in Pakistan. Having the backing of a strong consortium of local and international sponsors of repute, Emaan Islamic banking, Islamic division of Silkbank, is well-positioned to issue government-sponsored sukuks  along with providing conglomerate financing, advisory services and investment banking solutions.

Q: What is the bank’s current plan in the areas of corporate and investment banking?

A: For corporate banking, our strategy is very clear. Our primary focus is on trade-related, short term self-liquidating facilities across industries that demonstrate high growth prospects. On the investment banking side our focus is on debt syndications, equity placements and initial public offerings, mergers and acquisitions and project finance. In terms of future plans, corporate asset growth will be led by short term facilities with emphasis on non-funded business. For investment banking the bank will continue to advise existing as well as new customers on their financing and corporate strategy needs through provision of innovative solutions. 

 Q: What are Silkbank’s upcoming initiatives in SME’s sector?

A: Silkbank is adequately meeting and considering SMEs’ business requirements, which is evident through an almost 15 percent portfolio growth in the SME business during 2015-2016.  We are focusing on program-based lending to vendors in various sectors by using “Supply Chain Financing” methodology.